Encysive, Please Stop

Annnnnnd the award for Most Stubborn Management Team of the Year goes to ... Encysive Pharmaceuticals (Nasdaq: ENCY  ) ! The drugmaker announced today that the FDA had rejected the company's appeal in its attempt to get lead drug Thelin onto the U.S. market.

Encysive's pulmonary arterial hypertension drug candidate is approved in several markets throughout the world, including the European Union and Canada. The drugmaker has received three approvable letters outlining what the FDA wants to see before making a decision on approval, but Encysive has not conducted the necessary tests. The agency's denial of its appeal today marks the fourth time it has rejected the drug in the United States.

The FDA's reason for not approving Thelin is that the drugmaker hasn't shown needed proof of efficacy. Ever since Encysive received its first approvable letter in March 2006, the agency has been asking the drugmaker to run another clinical trial to prove the drug's effectiveness. Thelin's safety is not at issue.

Trying to butt heads with the FDA never works, as I predicted when Encysive initiated this ridiculous dispute-resolution route a couple of months ago. Since the first approvable letter, Encysive has tried to get the FDA to change its mind on its call for more clinical trial work, rather than just running a simple phase 3 efficacy study that likely would be near completion by now. (Not to mention all the cash the company burned maintaining its U.S. sales force in the interim.)

Encysive said in a statement released after today's rejection that it is still considering avenues other than a clinical trial. Ironically, despite its unwillingness to test the compound further in pulmonary arterial hypertension (PAH) patients, it has started studies of Thelin in other indications, such as diastolic heart failure.

While Encysive contemplates its next move for Thelin in the U.S., competitors like Gilead Sciences (Nasdaq: GILD  ) and United Therapeutics (Nasdaq: UTHR  ) continue to market their PAH compounds, and Pfizer (NYSE: PFE  ) will be trying to persuade an FDA advisory panel next month to recommend expanding the use of its PAH treatment, Revatio, to children. The question is: What sort of market will there even be for Thelin if Encysive doesn't hurry up its efforts to get it onto the market in the U.S?