(Adds background on clinical trials)
SILVER SPRING Nov 13 (Reuters) - A federal advisory panel recommended approval of Sanofi SA's experimental multiple sclerosis drug Lemtrada on Wednesday, but said the drug should be reserved for patients who have failed other therapies.
In a surprise decision, an advisory panel to the Food and Drug Administration voted 14 to 0 that the drug should be approved despite its potential to cause cancer and other serious conditions.
"Do I want to take this drug? No way!" said Dr. Nathan Fountain of the University of Virginia School of Medicine and the panel's chairperson. But for some patients, he said, it could be appropriate. "I wouldn't want to deny those people," he said.
The panel's recommendation follows an initial report last week by reviewers for the FDA, who raised grave concerns about the drug's potential to cause an array of autoimmune conditions, in which the body mistakenly attacks its own cells, as well as its potential to cause thyroid, skin and breast cancer.
Advisory panelists, who met in Silver Spring, Maryland, said the risks could be worth it for some difficult-to-treat patients.
"The risks are very substantial, but this is a really bad disease," said Dr. Paul Rosenberg of the Johns Hopkins University School of Medicine.
Multiple sclerosis is a chronic, autoimmune disease that affects more than 2.5 million people worldwide and up to 500,000 in the United States, according to the Multiple Sclerosis Foundation. It can cause muscle weakness, pain, and speech and cognitive difficulties.
Lemtrada is designed to treat relapsing remitting multiple sclerosis, the most common form of the disease, in which flare-ups are followed by periods of recovery.
The drug, which was approved in Europe in September, was at the heart of Sanofi's lengthy, $20.1 billion takeover battle for Genzyme Corp., which developed the drug. Sanofi finally acquired Genzyme in 2011.
As part of the takeover deal, Genzyme shareholders received contingent value rights, known as CVRs, entitling them to future payments of up to $14 a share if certain goals were met, including approval for Lemtrada.
The price of the CVRs has fallen 67 percent to 66 cents since the FDA posted its review last week.
If Lemtrada, also known as alemtuzumab, is approved, it is expected to generate peak sales of $752 million by 2018, according to seven analysts polled by Thomson Reuters.
The FDA is not bound to follow the advice of its advisory committees but typically does so.
Two late-stage clinical trials showed that patients taking Lemtrada were significantly less likely to experience a relapse over the course of two years than patients taking Rebif, a standard therapy made by EMD Serono, a subsidiary of Merck KGaA and Pfizer Inc.
But patients and investigators knew which treatment they were getting, raising questions as to whether the results could have been biased. Sanofi argued that it was difficult to disguise who was taking which treatment given the differences in how they are dosed.
Lemtrada is a monoclonal antibody that is thought to selectively deplete T and B cells, while sparing other infection-fighting elements of the immune system. It is given intravenously for five days and then for three days a year later.
If the drug wins approval it would likely compete most closely with Biogen Idec Inc's Tysabri, which is one of the most effective drugs for multiple sclerosis on the market but can cause a potentially fatal brain infection known as PML.
That risk has limited Tysabri's usage to patients who have failed other treatments -- a group which Lemtrada, if approved, would also target.
Most MS drugs are either injected or infused. The market is increasingly moving toward oral treatments, of which Biogen's recently launched Tecfidera is expected to be the market leader, with peak annual sales of more than $3 billion.
Oral drugs are expected to eventually take market share from injectibles, which also include Teva Pharmaceutical's Copaxone.
(Reporting by Deborah Zabarenko in Silver Spring, Maryland; writing by Toni Clarke; Editing by Leslie Adler)