Ipsen may take a writedown up to €180m after FDA action against its API CMO, Lonza, created supply uncertainties.
The writedown comes after the US Food and Drug Administration (FDA) sent Lonza a warning letter in September. In the letter to the Hopkinton, Massachusetts plant the FDA focused on production of an Eisai API (active pharmaceutical ingredient) but increased oversight is now affecting Ipsen.
“Lonza, our supplier of IGF-1 (the Increlex API), is facing a regulatory challenge by the FDA. Products manufactured for the US in this plant are currently on hold. The FDA should be carrying out further plant inspection shortly”, Ipsen said.
Uncertainties around supply of Increlex and reassessment of sales at Inspiration Biopharmaceuticals, of which Ipsen owns 41 per cent, prompted the French drugmaker to warn of a potential writedown. The non-cash writedown could total €150m ($200m) to €180m before tax against earnings in 2011.
Ipsen had hoped the warning letter would have minimal impact on its supplies. In September Ipsen and Lonza both told our sister publication in-PharmaTechnologist that the FDA’s concerns focus on the API for Eisai’s Ontak (denileukin diftitox).
“None of the observations relate to the manufacturing process of Increlex, which remains robust and reliable. We are taking measures to ensure continuous supply of Increlex”, the company said in an emailed statement in September.
Fixing the problem
Speaking one week ago Stephan Kutzer, head of custom manufacturing at Lonza, said he expects the FDA revisit Hopkinton in the next month is “very confident” the company can resolve the problem.
The warning letter related to an analytics issue with one product, Kutzer said. In previous years Lonza doubts the regulators findings would have prompted a warning letter but it now faces a new FDA.
“We have to face the fact that the regulatory authorities have raised the bar significantly. We have to adapt to that and we have to raise our regulatory standards accordingly. This will obviously cost money [and] take some time”, Kutzer said.
Shares in Ipsen were down six per cent at the time of publication.