Drug Development Risk #364: Poorly Run Clinical Trials
Sep 23rd 2013 4:30PM
Updated Sep 23rd 2013 4:32PM
Merck's clinical development team needs to wake up.
The pharma giant announced today that the Food and Drug Administration rejected its anesthesia drug Bridion for the second time.
The first rejection was back in 2008 when Schering-Plough still owned the drug. The FDA went against a unanimous recommendation by its advisory committee and rebuffed the drug, requesting additional data on its potential effect on hypersensitivity.
Merck bought Schering-Plough in 2009, started marketing Bridion in more than 50 countries where it's approved for sale, and ran a study to help convince the FDA that the drug was safe.
Rather than providing its blessing, however, the FDA now has "concerns about operational aspects" of the clinical trial. It appears the agency is concerned about a specific clinical trial site that conducted the hypersensitivity study.
Improperly run clinical trials are an inevitable risk of drug development.
Peregrine Pharmaceuticals , for instance, saw its shares plummet 80% after announcing that a company the biotech hired to send out vials used in its non-small-cell lung cancer trial incorrectly coded the bavituximab drug and the placebo. Without knowing which test subject received which drug, data interpretation becomes impossible -- not that Peregrine didn't try.
Vertex Pharmaceuticals didn't have any problems running its clinical trial testing VX-809 and Kalydeco, but the first report of its trial data was incorrect due to an error made by a contractor hired to perform statistical analysis. The data were still solid, just not as solid as investors were initially led to believe.
You'd hope the risk of screwing up a clinical trial would be less for a large pharma like Merck than it would be for smaller biotechs, but even pharmas aren't immune to botched trials. The FDA rejected Johnson & Johnson's antibiotic ceftobiprole because it didn't feel the company maintained sufficient oversight over its clinical trial sites. This resulted in an arbitration tribunal ordering Johnson & Johnson to hand the drug back to its partner Basilea and pay about $130 million for the screw up.
Merck was light on the details of exactly what the FDA is concerned about, but it doesn't look like it'll get resolved quickly. The FDA delayed a decision on the drug back in March, presumably to get to the bottom of the issue.
Worst case scenario, Merck has to run another clinical trial to prove the drug is safe. Let's just hope it doesn't take another five years to get back in front of the FDA.
That's why you should consider diversifying into other dividend-paying stocks
Dividend stocks can make you rich. It's as simple as that. While they don't garner the notoriety of high-flying growth stocks, they're also less likely to crash and burn. And over the long term, the compounding effect of the quarterly payouts, as well as their growth, adds up faster than most investors imagine. With this in mind, our analysts sat down to identify the absolute best of the best when it comes to rock-solid dividend stocks, drawing up a list in this free report of nine that fit the bill. To discover the identities of these companies before the rest of the market catches on, you can download this valuable free report by simply clicking here now.
The article Drug Development Risk #364: Poorly Run Clinical Trials originally appeared on Fool.com.Fool contributor Brian Orelli has no position in any stocks mentioned. The Motley Fool recommends Johnson & Johnson and Vertex Pharmaceuticals. The Motley Fool owns shares of Johnson & Johnson. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.
Copyright © 1995 - 2013 The Motley Fool, LLC. All rights reserved. The Motley Fool has a disclosure policy.