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Judge weighs Cangene closure against need for cancer treatment

A federal judge could decide as early as Wednesday whether a Baltimore drug manufacturer must cancel a long-planned winter shutdown to make hundreds of thousands of doses of a colorectal cancer treatment.

But if the judge’s candid comments at the end of Tuesday’s hearing are any indication, Cangene bioPharma’s plans to close its doors on Dec. 3 appear more certain than Spectrum Pharmaceuticals Inc.’s future supply of Fusilev — or the health of patients who depend on it.

After the full-day hearing in U.S. District Court in Baltimore, Senior Judge Marvin J. Garbis said he would like to order Cangene to stay open and churn out batches of Fusilev, itself a replacement for another drug in short supply. Without a sound legal basis, though, such a ruling would be “like a snowball on a hot seat in Richmond,” he said, referring to the 4th U.S. Circuit Court of Appeals.

“I’ve got to get [Cangene] liable to do it,” Garbis told Spectrum attorney Mark A. Pals at the end of the hearing on the preliminary injunction. “I’m trying to make them liable.”

Humanitarian urges aside, Garbis had serious concerns about Cangene’s obligation to produce several batches of Fusilev on short notice under its May 2008 Master Supply Agreement with Irvine, Ca.-based Spectrum.

Spectrum, as it was obligated to do under the contract, predicted in November 2009 that it would need one batch — usually 34,800 vials — in the third quarter of 2010 and one more batch in the fourth quarter.

But when it learned in June of a shortage of Leucovorin, the main colectoral cancer chemotherapy rescue drug, it immediately sent orders to Cangene, its only supplier, for 10 smaller batches of Fusilev, or 190,000 vials.

Pals said that was adequate notice under the agreement.

“It’s no notice at all,” Garbis said.

Spectrum has continued to request more Fusilev — nearly 700,000 vials as of Nov. 10.

Cangene has produced 145,000 vials but says it cannot meet Spectrum’s demand, despite offers of more money from Spectrum.

“Nothing would please Cangene more than to do this,” said its lawyer, Frederick L. Whitmer. “We can’t do it.”

Cangene, the 100-employee division of the Canadian company of the same name, told its 30 customers in January about its plans to shut down in order to check its air filtration system, install a second lyophilizer (which freeze-dries the drugs) and run other tests.

It expects to reopen in March and promised to put Spectrum’s order at the front of the line, but the California company is not satisfied.

While the lawyers argued about whether the contract is one for goods, to be governed by the Uniform Commercial Code, or for services, there is also the question of what happens to the ultimate consumers.

Colorectal cancer is the second-leading cause of cancer deaths in the U.S., according to Spectrum’s lawsuit, and will kill more than 50,000 Americans in 2010 alone.

Leucovorin is approved to “prolong patient survival as part of a palliative course of treatment,” the suit says. While Fusilev is “not indicated or marketed” for that purpose, it is often prescribed as a substitute.

There are no alternatives to Fusilev currently available, said George F. Tidmarsh, Spectrum’s chief scientific officer.

“Patient lives will be shortened,” he testified. “People will die.”

Whitmer argued Spectrum was not obligated to make Cangene its sole supplier and that Cangene can’t drop everything for one customer when its other customers also make important drugs and have to deal with the shutdown as well.

“What happened here is a classic example of why there are forecast provisions in the contract,” he said.

Spectrum’s vice president of business solutions and government affairs testified that through May, the company had sold fewer than 30,000 units of Fusilev.

From June, when the Food and Drug Administration announced the Leucovorin shortage, through November, it has sold more than 234,000 doses to its wholesalers, who supply it to physicians and hospitals.

Ricardo J. Gonzalez, Spectrum’s vice president, said its current supply won’t last until Christmas. He estimated a five-month delay before it can get more Fusilev “will permanently damage our relationships and good will.”

From the start of the hearing, Garbis said he had a good handle on the balance of the harms to the companies and the public interest calculations inherent in deciding whether an injunction was in order. He wanted to hear about the contract and what it obligated Cangene to do at Spectrum’s direction.

“If there’s no legal obligation, you can turn it into a slot machine parlor,” he said, perhaps a reference to the ongoing fight to build a slots parlor less than half-mile south on Russell Street.

Recognizing the controversy as a “matter in which there is great urgency,” Garbis said if he can’t deliver a decision before Thanksgiving, he would have one by noon Monday.

Spectrum, publicly traded on Nasdaq as SPPI, closed at $4.51 on Tuesday, down 9 cents on the day.

Cangene Corp., Cangene’s parent company, closed unchanged at $3.10 Canadian.