According to a regulatory filing, specialty pharmaceutical company Depomed, Inc. (DEPO) announced Thursday a voluntary recall from wholesalers of fifty-two lots of its type II diabetes drug Glumetza 500mg, citing presence of a chemical in the bottle, which cause temporary, non-serious gastrointestinal upset.The Menlo Park, California-based company has suspended product shipments of 500mg Glumetza to its customers pending further investigation and discussions with the FDA. Further, it expects to resume shipments in four to eight weeks.
The supply of 1000mg formulation of Glumetza, which currently constitutes approximately 40% of total Glumetza net product sales, is unaffected. Further, the company believes that it has sufficient inventory of Glumetza 1000mg, which is sourced from a different contract manufacturer, and would continue to ship that product to its customers.
In the financial front, Depomed sees recall-related administrative fees and manufacturing costs to be up to $2.0 million, for replacing the recalled product. The company anticipates the supply disruption to adversely affect the company’s Glumetza product revenues in the second and third quarters of fiscal 2010.
The San Diego, California-based promotion partner for Glumetza, Santarus, Inc. (SNTS) foresees adverse impact of supply disruption on Glumetza promotion revenues in the second and third quarters of fiscal 2010. Santarus indicated that it intends to focus its promotional efforts on Glumetza 1000mg until the supply of Glumetza 500mg is resumed.
As per the terms of promotion agreement, Depomed is liable to reimburse Santarus for its reasonable, documented, direct, out-of-pocket costs incurred in connection with participating in the Glumetza recall.
The recalll, which is currently being carried out to the wholesaler level, is due to the presence of trace amounts of a chemical called 2,4,6-tribromoanisole or TBA. The presence of TBA of may cause temporary, non-serious gastrointestinal upset when present in amounts detectable by smell. The company reasoned that the contamination might have resulted from breakdown of a chemical, which is sometimes applied to wood in pallets previously used to transport Glumetza 500mg tablet bottles to contract manufacturer in Puerto Rico.Each lot of Glumetza 500mg tablets includes approximately 4,000 bottles containing 100 Glumetza 500mg tablets per bottle. Depomed estimates that wholesalers in the aggregate typically hold approximately 10,000 to 15,000 bottles of Glumetza 500mg tablets.
Depomed noted that an investigation emerged due to a product complaint of a smell and taste consistent with TBA. The company ceased the shipment of Glumetza 500mg tablets produced using materials that may been shipped on such wood pallets and urged the bottle supplier to discontinue the use of such pallets.
Depomed added that the recall was precautionary and not due to risks to patient health. The health effects of TBA are yet to be well studied. However, prior cases of TBA detected in products like wine and milk showed no serious events documented in the medical literature.
In the most recent first quarter, Depomed booked total revenues of $15.4 million, contributed by Glumetza product sales growth of $5.8 million.
For the quarter ended March 31, Santarus’ Glumetza promotion revenue was $8.8 million, of which approximately 60% was from sales of Glumetza 500mg and 40% was from sales of Glumetza 1000mg.
In the filing with the Securities Exchange Commission, Santarus revealed that the FDA rejected its proposed brand name: “ZEGERID” for its immediate-release omeprazole/sodium bicarbonate/ magnesium hydroxide tablets in 40 mg and 20 mg dosage strengths of omeprazole. Santarus is in the process of assessing its regulatory and commercialization strategy for the product. In December, the FDA approved Zegerid NDA for various indications.
DEPO closed Wednesday’s trade at $3.10, on the NYSE.
SNTs closed Wednesday’s trade at $2.76, on the NYSE.
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