Icon is facing compensation threat over tests on MRSA drug
ICON, the Dublin-based drug testing company, could be forced to compensate US drugmaker Johnson & Johnson (J&J) after the Irish company failed to carry out clinical tests to the correct standards on a treatment for the MRSA superbug, Goodbody Stockbrokers said yesterday.
Icon employs about 5,600 people in the Dublin suburb of Leopardstown and overseas.
It could be forced to make payments after J&J ended a partnership with Switzerland, Basel-based Basilea Pharmaceutica to develop an antibiotic to treat skin problems including MRSA.
Infections such as MRSA, or methicillin-resistant staphylococcus aureus, are becoming increasingly resistant to standard treatments such as penicillin, oxacillin and amoxicillin, prompting the development of more powerful antibiotics.
MRSA costs about $20bn (€14.7bn) annually to treat, according to the US-based Centres for Disease Control and Prevention.
The partnership collapsed after the European Medicines Agency (EMEA) refused to approve the drug last week.
The powerful US-based Food and Drug Administration (FDA) refused the drug two months ago.
Both agencies expressed concerns about the testing that was carried out by Icon.
The EMEA halted the approval process solely on concerns over good clinical practice during the tests. Basilea is seeking damages from J&J, which could be at least €66m, Goodbody analyst Ian Hunter said yesterday in a note to investors.
"In an industry differentiated by quality of service, the FDA warning could damage Icon's future business wins," Mr Hunter said.
"A further unknown is whether or not J&J can, or will, seek compensation from Icon, should it have to pay damages to Basilea."
US regulators rejected the experimental antibiotic back in December because clinical trial data were "unreliable" and looked for new trials that would have taken three years to complete.
The drug is already available in the Ukraine, Switzerland and Canada.
Basilea filed an arbitration claim against J&J last February for damages as a result of a delay and looked for more money because of December's setback, executives were quoted as saying late last year.
The FDA said in November 2008 that it wanted to make more inspections of clinical sites involved in the drug's testing.
The FDA had cited a "failure to ensure proper monitoring of the studies" that had been run by Icon. Icon told the stock exchange in December that it had received a warning letter from the FDA regarding its services on two studies for an unspecified client between 2004 and 2006.
A spokeswoman for Icon said the company does not comment on trials for clients. (Additional reporting, Bloomberg)