Basilea Dives as Key Drug Fails to Get FDA Approval

ZURICH Tue Mar 18, 2008 1:06pm EDT

ZURICH (Reuters) - Shares in Swiss biotech firm Basilea(BSLN.S) tanked after the firm failed to get approval from the U.S. Food and Drug Administration for its ceftobiprole broad spectrum antibiotic to treat the deadly superbug MRSA.

The FDA only issued an approvable letter, indicating that the drug application was approvable, subject to further assessment of clincial study and data, Basilea said in a statement.

Basilea shares lost nearly 30 percent in early trade and were down 21 percent by 0857 GMT at 146.80 Swiss francs.

The firm said it was closely working with its development partner Johnson & Johnson (JNJ.N) to address the questions from the FDA quickly.

U.S. authorities had granted the drug a standard review in July, disappointing hopes of an accelerated review, and analysts had expected approval by March or April 2008.

Basilea chief executive Anthony Man told journalists in a telephone conference that he could not speculate about the timeframe for a FDA approval.

"The FDA may have more questions (after the review of already submitted data)," Man said.

The emergence of hospital superbugs such as MRSA, which are resistant to existing medicines, has increased the need for alternative treatments and re-focused attention on antibiotics.

(Reporting by Sven Egenter and Paul Arnold; Editing by Quentin Bryar)