SangStat and Abbott are considering launching Abbott's generic cyclosporine oral solution Gengraf following the July 10 recall of SangStat's cyclosporine SangCya, the companies said.

Based on a May 1999 agreement, Abbott and SangStat have been co-promoting cyclosporine oral solution SangCya and Abbott's cyclosporine capsules Gengraf (¹ Also see "SangStat/Abbott SangCya Co-Promotion Provides Entry To Managed Care" - Pink Sheet, 17 May, 1999.).

The co-promotion deal primarily concerned the more lucrative capsule market, where both companies had pending ANDAs. SangStat and Abbott agreed to co-promote the first generic approved, which turned out to be Gengraf, on May 15 of this year.

The agreement also enlisted Abbott to help promote SangCya oral solution, which had been approved in October 1998, and called for Abbott to forestall marketing of its own oral solution. Gengraf oral solution was approved in March, but has not been launched.

On July 10, SangStat voluntarily recalled approximately 2,500 vials of SangCya from U.S. wholesalers. The Class II recall was issued after a study in healthy volunteers demonstrated that SangCya is not bioequivalent to Novartis' Neoral oral solution when mixed with apple juice as recommended in its labeling, the company said.

The clinical study was "completed before the approval of the application," an FDA "Talk Paper" explains, although, according to SangStat, the study was not part of the SangCya ANDA. SangStat said the study was conducted between the time of the ANDA filing (November 1996) and approval (October 1998).

The study was rediscovered at the end of June when a foreign distributor inquired if bioequivalence research had been conducted in an aqueous media, such as apple juice, SangStat said. The distributor hoped to use the data for an Australian filing, SangStat explained.

According to a December 1997 agreement, Amgen has exclusive rights to register and market SangCya in Australia, as well as in New Zealand, China and Taiwan.

At the end of June, SangStat also provided FDA with the bioequivalence study results, the company said.

The study "showed that taking SangCya oral solution with apple juice diminishes its absorption relative to Neoral oral solution," FDA stated. Because the drug's labeling suggests that it be taken with apple or orange juice, the agency asked the sponsor to recall the product, FDA said.

"FDA is reviewing all data related to this product and will take any appropriate further steps needed to assure the safety [of] patients," the agency said.

SangCya will be discontinued in the U.S., SangStat said. The product was not selling well and the compnay had been losing money on the product, SangStat said. The company predicted that the recall would have no impact on future revenues, with a slightly positive effect on future earnings.

Instead of re-launching an oral formulation, Abbott and SangStat may choose to focus their efforts on gaining market share with the capsule formulation. SangStat has estimated that the oral formulation comprises only 4% of the cyclosporine market.

FDA approved SangCya oral solution as the first generic of the Novartis' blockbuster antirejection agent Neoral. A lawsuit filed by Novartis challenging the oral solution approval is ongoing (² Also see "FDA Elimination Of Neoral "Microemulsion" Designation Disputed By Novartis" - Pink Sheet, 15 February, 1999.).

In February 1999, Novartis filed a suit against FDA in D.C. federal court, alleging that FDA "did not follow its own regulations in approving SangCya." Novartis has argued that "because Neoral oral solution and SangCya oral solution are based on different formulation technologies, they should be classified as different dosage forms," SangStat's financial filing for the quarter ended March 31 explains.

On July 13, Novartis filed a motion requesting that the court reconsider a previous ruling on the administrative record and require that FDA produce the complete SangCya ANDA as well as the information which led to the recall. The company intends to amend its complaint and may seek additional relief in light of the new information, Novartis stated.

Novartis has also filed a patent infringement suit, and SangStat has filed a countersuit claiming antitrust violations. According to SangStat's SEC filings, a trial date for the patent dispute has been set for October 23 in Delaware federal court.

Bioequivalence to Neoral was demonstrated for SangCya approval through a study in healthy volunteers in which the product was taken with chocolate milk, SangStat said.

Approved U.S. labeling, however, states that the combination of SangCya with milk can be unpalatable. "To make SangCya more palatable, it should be diluted preferably with orange or apple juice that is at room temperature," labeling instructs. These instructions mimic Neoral's labeling, SangStat explained, noting that a generic must use the same vehicle as its branded counterpart in order to gain approval as an equivalent.

Gengraf oral solution was approved based on a bioequivalence study that used orange juice as a vehicle, SangStat pointed out.

Approved May 15, Gengraf capsules have had to compete with another generic that entered the market the same day, Eon Labs' cyclosporine modified. Eon recently reported that it had captured 6.4% of the capsule market since launch, while Abbott/SangStat's product had achieved a 2.3% market share.

A July 10 "Dear Doctor" letter outlining the SangCya recall has been sent to about 12,000 healthcare professionals. The letter includes recommendations to be followed until patients can be switched from SangCya to another cyclosporine product.

SangStat will report a one-time charge of $10.5 mil.-$13 mil. in the second quarter in connection with the recall, the company said. The major portion of the reserve is a non-cash charge since it relates to inventory that has already been paid for, SangStat explained. Second quarter results will be reported on August 8.

The SangCya recall will result in less than $700,000 in lost revenues for the second quarter, the company said, noting that the product accounts for 3%-4% of SangStat's total U.S. revenues. The company said it expects second quarter net revenues of $19.5 mil. to $20.5 mil., up from $14.4 mil. for second quarter 1999.

SangStat will continue to sell oral formulation cyclosporine in Europe. The company plans to update its UK labeling to specify the product should be taken only with milk or chocolate milk. The current label states, "SangCya oral solution can be diluted with cold milk, cold chocolate drink, fruit juice (e.g. orange juice) or cola, according to individual taste, immediately before drinking."

Abbott/SangStat May Launch Oral Solution Gengraf To Replace SangCya

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