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SmithKline defends drug
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September 1, 1999: 10:25 a.m. ET
U.K. drug maker insists Avandia diabetes treatment is safe as stock slips on rumor
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LONDON (CNNfn) - British drug maker SmithKline Beecham leapt to the defense of its newly launched anti-diabetes drug Avandia Wednesday after shares in the company abruptly fell amid rumors that a patient using the drug had contracted an illness.
SmithKline (SB) stock dropped 3.5 percent but quickly recouped some of its losses to trade down 2.7 percent at 787 pence in London as the rumor spread across the market.
SmithKline spokeswoman Lynn Smith told CNNfn.com the company is unaware of any health or safety problems tied to the drug, which has been prescribed to 150,000 patients since its launch in the United States in June following a green light from the U.S. Food and Drug Administration.
Avandia isn't sold in Europe, though the company hopes to launch the drug here in the foreseeable future.
"The efficacy and safety profile remains consistent with our extensive clinical trials experience and this is reflected in the FDA-approved prescribing information approved at the end of May," Smith said.
Smith speculated that the rumor may have originated in the analyst community, though she acknowledged it may have started elsewhere.
"It's very unclear where the source is or what the rumor is," she said.
Avandia is one of a handful of drugs in the United States, along with Warner Lambert Co.'s Rezulin and Eli Lilly & Co.'s Actos, used to treat type-2 diabetes. The disease, which afflicts mostly people over the age of 40, differs from the insulin-dependent type-1 strain in that the body continues to produce insulin but is unable to use it.
Avandia and its rivals work at the bodies' level of resistance, improving its ability to use the insulin it produces.
Smith said Type-2 diabetes often occurs in elderly patients who can experience serious complications that have little or nothing to do with the treatment they are taking.
One analyst, who wished to remain anonymous, told Reuters that rumors are common in the fiercely competitive pharmaceutical industry, especially in cases where just a few companies are competing for bragging rights to the most effective drug.
SmithKline shares have weathered a choppy period over the past several months. The stock has fallen 6.2 percent this year, but recently rallied back from a year-low of 724 pence on Aug. 10. 
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SmithKline Beecham
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