Shares of drugmaker Wyeth (NYSE:WYE) gleefully rallied more than 2% yesterday on news that the FDA cancelled a September meeting related to its market application for the company's experimental antidepressant, DVS-233. The company stated that it was "encouraged by this development" and expects the FDA to issue a ruling in October.
The treatment is a once-a-day serotonin-norepinephrine reuptake inhibitor (SNRI), just like the company's blockbuster depression drug, Effexor XR, the leading antidepressant worldwide. It's important that Wyeth obtain FDA approval for DVS-233, since Effexor XR will lose patent protection in 2008. The company is also examining applications of the drug to treat menopausal symptoms and fibromyalgia, and for chronic pain stemming from injured nerves.
This kind of cheery news is what the company needs as it heads into the first round of litigation prompted by liability claims related to Prempro, a hormone replacement therapy. In a federal case opening today in Arkansas, the plaintiff is claiming that she developed breast cancer after taking the medication for years, and that the company failed to warn of the risks and was negligent. It's far from clear how successful the plaintiff may be. After all, hormone replacement drugs were approved by the FDA and continue to be sold.
Wyeth is no stranger to costly drug-failure lawsuits. The company has paid out more than $21 billion in fen-phen cases. While it's not anticipated that the company's liability will approach any figure close to the diet drug disaster, a favorable ruling by the FDA on DVS-233 could help stave off any financial depression from the extended litigation posed by the 5,000 Prempro suits currently filed.
Fool contributor S.J. Caplan does not own any shares of the company. The Fool has a disclosure policy.
