Centocor Stock Plunges After It Withdraws Drug
Centocor Inc. stopped testing its flagship drug in the United States and suspended sales in Europe on Monday, saying increasing numbers of people have died after receiving the treatment.
Once-admiring investors dumped Centocor shares on the NASDAQ market, making it by far the most active stock. The price dropped by $11.375, or nearly two-thirds, to $6.375, with more than 12.7 million shares changing hands.
Until recently one of the nation’s most promising biotechnology companies, Centocor will be forced to scale back operations to survive without the drug, called Centoxin, analysts said.
The Malvern, Pa.-based company stopped U.S. trials of Centoxin, which was being tested as a treatment for septic shock.
Eli Lilly & Co., the drug’s principal distributor, also will pull the drug off the market in Europe and wherever else it has been approved for sale, pending further analysis.
“This latest development may have material adverse consequences for the company and its financial condition,” Centocor said in a statement.
The company did not say how many patients died after taking the drug, and it failed to return repeated phone calls after the initial statement.
Centocor’s chief executive, David Holveck, said the company will continue to seek Food and Drug Administration approval of Centoxin and hopes that it will be able to re-enter the European market with the drug.
Centoxin is known in biotechnology circles as a monoclonal antibody product, which means it contains synthetically produced antibodies that destroy disease-causing proteins.
Centocor sold the rights to Centoxin to Eli Lilly for $100 million in order to finance clinical trials.
The tests were intended to provide the FDA with new evidence that Centoxin is effective against septic infections such as sepsis, which threaten patients who suffer from infectious, cardiovascular and autoimmune diseases.
Sepsis, a bacterial infection that affects about 500,000 Americans a year, is a leading cause of death among hospital intensive-care patients.
The FDA rejected Centoxin for marketing in the United States last April, saying it would not render approval without further testing. But Centocor hoped that it would still win approval by the end of 1993.
Eli Lilly stock fell $1.50 to $59.875 on New York Stock Exchange after Centocor’s announcement.
Shares in XOMA Corp. and Chiron Corp., two biotechnology companies developing monoclonal antibody drugs for septic shock, fell in sympathy with Centocor. Xoma stock lost $1.25 to $8, Chiron fell 87.5 cents to $55.125, and Synergen Inc. stock fell $1.75 to $59.50 a share.
