Novartis discontinues hepatitis C, antifungal treatments, takes $590 million 3Q charge

Novartis drops 2 drugs, expects $590M charge

NEW YORK — Novartis AG said Tuesday it will take a charge of $590 million during the third quarter as it discontinues development of a potential hepatitis C drug and an antifungal product.

The Swiss company and its partner Human Genome Sciences Inc. had expressed concerns earlier in the year that the potential hepatitis C treatment Joulferon, known as Zalbin in the U.S., would not pass regulatory authority reviews. Studies had shown that the drug candidate was as effective as current treatments on the market that are given about once a week but required fewer injections.

Hepatitis C is an infectious disease that damages the liver and is currently treated with a mix of antiviral drugs.

In June, Human Genome said Zalbin would likely not gain Food and Drug Administration approval at its proposed 900-microgram, twice-monthly dosage, citing feedback from the agency. That statement followed a move by Novartis to pull the drug’s application with European regulators over concerns additional studies would be requested.

Human Genome released a statement Tuesday saying it received an FDA request for more information, called a “complete response letter,” and that the partners decided to end development of Zalbin.

Novartis also said it is ending development of the antifungal agent Mycograb, which was aimed at treating a common yeast infection.

Analysts have estimated the total market for hepatitis C drugs at $9 billion, and several companies are working on new treatments. Merck & Co. is developing boceprevir, which it acquired through its merger with Schering-Plough. In August, that drug met key goals in a late-stage study, and the company expects to ask for FDA approval by the end of the year.

Vertex Pharmaceuticals Inc. and partner Tibotec are developing telaprevir, which also has produced positive results. Vertex plans to seek approval by the end of the year. Bristol-Myers Squibb Co. and Zymogenetics also are developing a hepatitis C drug candidate.

Novartis said it expects the charges for the program cuts to be partly offset by a $400 million gain in the fourth quarter from the sale of U.S. rights for the bladder treatment Enablex to Warner Chilcott PLC.

Novartis said the move to discontinue the hepatitis and antifungal treatments reflects an “enhanced focus on differentiated medicines most likely to address unmet medical needs.”

In April, the company said it was further streamlining its business in anticipation of expected product approvals and new specialty medicines. The move included creating three specialty businesses focused on multiple sclerosis, respiratory disease and neuroscience. The company has an existing oncology business.

Novartis’ U.S. shares rose 95 cents, or 1.7 percent, to $58.