UPDATE 4-Sanofi, Vical limb ischemia drug fails key study

Wed Sep 22, 2010 9:18am EDT

* NV1FGF found no better than placebo in Phase III trial

* Sanofi evaluating all options for experimental drug

* Shares in partner Vical slump 35 pct in U.S. pre-market

* Sanofi shares fall 1 pct

(Adds Vical shares falling in pre-market trading)

By Caroline Jacobs and Ben Hirschler

PARIS/LONDON, Sept 22 (Reuters) - Sanofi-Aventis (SASY.PA), which is seeking to buy Genzyme GENZ.O to boost its drug portfolio, suffered a pipeline setback when an experimental medicine for limb ischemia failed in a late-stage trial.

The failure of NV1FGF took a heavy toll on U.S. biotech company Vical (VICL.O), which licensed the technology behind the drug to the French drugmaker 10 years ago, and its shares tumbled 35 percent in pre-market trading on Wednesday.

Sanofi said the treatment did not meet the primary endpoint in a Phase III trial designed to demonstrate superiority over placebo in preventing major amputation or death.

The gene-based drug seeks to treat patients with severe disease caused by obstruction of large arteries in the arms or legs by inducing the formation of new blood vessels that could improve blood flow.

Shares in Sanofi, which has been reviewing its pipeline of drugs, fell 1 percent by 1316 GMT compared with a 1.1 percent drop in the STOXX European health sector index .SXDP.

Many analysts had taken into account a possible failure of the candidate drug.

"We had not factored it into our estimates, we didn't have enough data to be confident about it," Evolution Securities analyst Dominic Valder said. "It's a novel mechanism of action and it's been in clinical trials for the past decade."

Marc Cluzel, Sanofi's research head, said in a statement the company was disappointed by the setback and was now "evaluating all options" for NV1FGF's development.

In an interview with Reuters in June, Cluzel had said that if late trial tests confirmed a mid-stage outcome of fewer deaths or amputations, Sanofi would submit the file for a fast-track review in the United States. [ID:nLDE6511Y8]

"If it can be made to work it's the sort of product the (U.S. regulators) FDA want -- a new mechanism of action that treats unmet medical need," Evo Securities' Valder said.

Sanofi began the so-called TAMARIS Phase III trial with 500 patients in September 2007, following the original deal in 2000 between with Vical and Sanofi, then Rhone-Poulenc. Vical got an initial payment of $1 million. Details of milestone fees and potential royalties were not disclosed.

Critical limb ischemia is a severe and costly ailment. In the 12 months after the first episode of critical limb ischemia, more than half of patients require amputation or die.

In the United States and Europe the disease costs more than $8 billion, according to Vical estimates in 2007.

Full results of the unsuccessful trial will be presented at the American Heart Association annual meeting on Nov. 16.

(Editing by Hans Peters and Michael Shields)

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