December 27, 2000|By BLOOMBERG NEWS
CLEVELAND - Gliatech Inc. shares fell as much as 27 percent after the surgical products maker said U.S. regulators suspended the review of an anti-scarring gel as they questioned the validity of data Gliatech submitted with applications to expand the gel's use.
Shares of the Cleveland company closed down $1.25 to $5 yesterday, after dropping as low as $4.56.
The Food and Drug Administration suspended its review of pre-marketing applications for ADCON-L gel, used to prevent internal scarring and pain after spinal surgery, until questions about testing are answered, the company said Saturday in a statement.
Gliatech seeks labeling changes and approval for use of ADCON-L in gynecological surgeries. The gel, the company's only marketed product, was approved in 1998 for use in spinal surgeries.
In August, the FDA said some data from ADCON-L clinical trials had been altered. A month later, the company said the studies, offered with applications to expand the gel's use, were not conducted properly.
The company said it has altered procedures to better supervise data collection and hired outside auditors for its applications.
"This is the kind of injunction brought by the FDA when there is a pattern of conduct that raises questions about the reliability of clinical data," said Robin Young, an analyst with Stephens Inc., who rates the stock "neutral."
"It's the FDA's way of hammering home that process is critically important," he said.
Gliatech officials did not return calls seeking comment.
The company had hoped for approval of the expanded use in mid-2001. The FDA's action is expected to delay that as much as nine months, Young said.
Questions surrounding ADCON-L study data have caused sales to slip.
During the third quarter, ADCON-L revenue dropped 27 percent to $6.1 million, from $8.3 million a year earlier, partly because Gliatech and Guilford Pharmaceuticals Inc. of Baltimore called off their merger in late August after the FDA raised questions about clinical trials data involving ADCON-L, the only drug Gliatech has for sale in the United States.
Young expects 2000 sales to decrease to $26.7 million from $28 million in 1999.
ADCON-L is also available in 29 international markets along with ADCON-T/N, Gliatech's product for the inhibition of post-surgical adhesion after tendon and peripheral nerve surgery. ADC-T/N is not sold in the United States.
