UPDATE: Gilead May Get FDA Warning Letter For Calif. Facility

Gilead Sciences Inc. (GILD) said it may receive a warning letter from the Food and Drug Administration after an inspection of its San Dimas, Calif., manufacturing and distribution facility found a number of problems.

The routine inspection, in January and February, found maintenance and procedural problems at the site. Gilead, which is known for dominating the HIV treatment market, learned in May that the FDA may issue a warning letter in connection with the findings, according to a regulatory filing Monday.

The problems come as drug makers have been plagued with manufacturing issues, causing substantial problems for some major companies.

A Gilead spokesman declined to comment beyond the information included in the filing.

Shares of Gilead fell 10 cents to $35.72 in recent trading.

The facility is the only site where Gilead makes fungal infection treatment AmBisome, sold with Astellas Pharma Inc. (4503.TO), and Cayston, an inhaled antibiotic used to improve breathing in certain cystic fibrosis patients that was approved by the FDA in February.

The company also conducts the final stage of the manufacturing process for Macugen, an eye-disease treatment sold by Eyetech in the U.S. and Pfizer Inc. (PFE) overseas.

AmBisome had sales of $300 million last year. Lazard Capital Markets projects Cayston sales of $105 million next year. Gilead had total product sales of about $6.5 billion last year.

The San Dimas location is also used to package Gilead's biggest selling products including Truvada, Atripla, and Viread in their finished form.

In the inspection, the FDA found problems with the maintaining of "aseptic processing conditions" in the manufacturing of AmBisome; maintenance issues in the warehousing facility; problems with the company's batch sampling; and its completion of annual product quality reports on time.

In the filing, the company said it believes that it has "addressed all of the concerns raised by the FDA in its inspection." But Gilead warned that a warning letter may make it unable to get "export or regulatory approvals for AmBisome or any other products at issue," which could lead to a product shortage.

Production issues have been a problem for several other major drug makers.

Johnson & Johnson (JNJ) recently shut down a manufacturing plant because some children's medicines were found to contain too-strong doses and tiny metallic particles. Genzyme Corp. (GENZ) had multiple setbacks at its Allston, Mass., facility that caused shortages of its top-selling drugs, regulatory intervention, and significantly hurt its business. Both Merck & Co. (MRK) and GlaxoSmithKline PLC (GSK) have dealt with manufacturing issues related to their vaccines businesses in recent years.

-By Thomas Gryta, Dow Jones Newswires; 212-416-2169; thomas.gryta@dowjones.com

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