Friday, February 13, 2009

FDA Scores Big Piece of the Blame

Emphasys Medical Inc., developer of an endobronchial valve, put itself up for sale this week following a rough couple of months. (VentureWire Lifescience had the first report.) It’d be easy to hold the economy responsible for the company’s fate. But CEO John McCutcheon is serving the biggest piece of blame pie to the Food and Drug Administration.

Emphasys executives were shocked in December when the FDA's anesthesiology and respiratory therapy device panel voted 13-2 vote against recommending approval of the Zephyr Endobronchial Valve. In the panel's eyes, the device showed promise, but it didn't work well enough to warrant approval. (It's worth noting the two dissenting panel members--those that favored approval with conditions--also happened to be the board's only two pulmonologists.)

Prior to the meeting, Emphasys led the pack of device companies developing new methods of treating sufferers of late-stage emphysema. The valve is used to block airways leading to diseased lung tissue, effectively reducing the volume of the lung, allowing patients to breathe more easily.

Company executives walked into the hearing room carrying six months of data showing the device hit the endpoints laid out in the clinical trial design. Patients could breathe more effectively and showed greater endurance in six-minute walks. (We’ve got lots more on this in our December issue of IN VIVO.)

But the agency countered with data collected at 12 months after the implantation, where patients were breathing better but did poorly on their endurance tests. The panel also considered other measures of "clinical importance" into consideration. Overall, the agency's reviewers said the Zephyr fell short.

McCutcheon says the agency sought analysis of six months of data and received analysis of six months of data, saying the slipping endurance scores could be explained by the general poor health of the patient. He also noted that patients with late-stage emphysema really have no other options for treatment, so even a device that provided a little relief could help.

Emphasys execs sought and received a follow up meeting with the FDA where they suggested slicing the data differently. But the company received no word until last week when the FDA sent a letter saying it would consider a “confirmatory trial,” with no details on what that required.

That last bit of uncertainty spooked Emphasys’ investors. Just negotiating the new trial would take six months and Emphasys was out of money. The company had been counting on good news from the FDA to help it to another round. All together, the investors had poured $75 million into the company. That’s on top of $15 million debt the company took on after pulling an IPO attempt in 2008.

McCutcheon, who says he's buried in emails from disappointed patients and pulmonologists, hopes a corporate buyer will have the muscle and stomach to push for approval. The company laid off 50 of its 55 employees.

Clearly, the current economic conditions didn’t help. And many of Emphasys’ investors have been with the company since its 2000 start, so the well was likely running dry. But McCutcheon says the FDA, not the economy, is to blame. His primary complaint is inconsistency. He says the agency shouldn't move regulatory goal lines on device companies. Of his device executive brethren, McCutcheon says, "We're more worried about the trends at the FDA than we are about the economy.”

Read more in our upcoming START-UP magazine.

"Pie chart" from flickr user by net_efekt used under a creative commons license.

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