(c) 2013, Bloomberg News.

(c) 2013, Bloomberg News.

GENEVA Sanofi has failed to win U.S. regulatory approval for its multiple sclerosis drug Lemtrada, denting the company's ambitions of capturing a larger share of the $20 billion market for the disease.

The Food and Drug Administration said Sanofi's Genzyme unit didn't submit evidence from "adequate and well-controlled studies" showing that the benefits of Lemtrada outweigh its side effects, the Paris-based company said in a statement Monday. Sanofi disagrees with the conclusion and plans to appeal, the company said.

Lemtrada, which was approved in the European Union in September, and in Australia and Canada this month, was a key part of Sanofi's $20.1 billion acquisition of Genzyme in 2011. The FDA indicated one or more additional trials of different design and execution comparing Lemtrada to another drug are needed for approval, Sanofi said.

"We are extremely disappointed with the outcome of the review and the implications for patients in the U.S. suffering with multiple sclerosis who remain in need of alternative therapies to manage a devastating disease," Genzyme President David Meeker said in the statement.

The market for MS drugs will grow to $20.2 billion annually by 2017, according to a 2011 report by GlobalData, a London- based research company. Treatments against the disease totaled $11.6 billion last year, according to data compiled by Bloomberg Industries, in a market dominated by Teva Pharmaceutical Industries's Copaxone, Biogen Idec's Tecfidera, Avonex and Tysabri, Novartis's Gilenya and Merck's Rebif.

Sanofi submitted two late-stage clinical trials comparing treatment with Lemtrada to Rebif. An FDA advisory panel last month said Lemtrada was effective for preventing flare-ups, even as it said the trials weren't conducted well enough to assess it. FDA staff determined in a Nov. 8 report that Lemtrada has "serious and potentially fatal safety issues" including risk of cancer and autoimmune and thyroid diseases.

"We strongly believe that the clinical development program, which was designed to demonstrate how Lemtrada compares against an active comparator as opposed to placebo, provides robust evidence of efficacy and a favorable benefit-risk profile," Meeker said in the statement. "This evidence was also the basis for the approvals of Lemtrada by other regulatory agencies around the world."

The agency was scheduled to decide by Dec. 27 whether to approve Lemtrada for relapsing-remitting MS, the most common form of the disease.

Sanofi rose 1.4 percent to close at 76.54 euros on Dec. 27 in Paris. Bayer, which has the right to co-promote Lemtrada in the United States if it's approved and would receive payments based on sales, climbed 1.5 percent to 103.05 euros on Dec. 27.

Multiple sclerosis is a debilitating disease in which the immune system attacks the central nervous system, causing symptoms that can include coordination problems, sexual dysfunction and spasticity, according to the National MS Society. Relapses, or flare-ups, are episodes of worsening neurological function.

Lemtrada, also known as alemtuzumab, is a so-called monoclonal antibody given in two annual courses of infusions. The drug targets CD52, a protein on the surface of the immune system cells that are thought to cause the disease. It was approved as Campath in 2001 to treat a form of leukemia, but is no longer for sale. Sanofi also sells Aubagio, which like Tecfidera and Gilenya is an oral medicine for MS.

As part of its acquisition of Genzyme, Sanofi issued so- called contingent value rights, or CVRs, to the U.S. company's investors. Holders of the rights, which are publicly traded, stood to receive payments of as much as $14 a share by the end of 2020 if Sanofi met certain goals, most of them tied to the approval and sale of Lemtrada. Sanofi said in 2011 it missed the first of the goals.

The rights plunged 62 percent on Nov. 8 after the FDA published a report saying the drug may not offer enough benefit to patients to outweigh risks including cancer. The CVRs closed Dec. 27 at 82 cents in Nasdaq Stock Market trading.

Sanofi said it doesn't expect that one of the milestones that will trigger a payment, Lemtrada approval in the U.S. by March 31, 2014, will be met.

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