Schering AG of Germany suffered a knockback by the US Food and Drug Administration (FDA) yesterday when the agency declined to approve its vascular imaging agent Vasovist (gadofosveset trisodium).

But the news was particularly damaging for Schering’s US partner for the product, EPIX Pharmaceuticals, which promptly announced that it would have to cut staff and R&D projects in early 2006 to cut its burn rate, currently eating up around $25 million dollars a year out of EPIX’ $145 million cash reserves.

The FDA asked for ‘at least one’ additional clinical trial of Vasovist, as well as a re-appraisal of the images obtained in previously completed Phase III trials, before it could approved the drug, used in magnetic resonance imaging (MRI) procedures. Schering said the FDA had not raised any safety or manufacturing issues in its ‘approvable’ letter on the product.

The FDA’s decision came out of the blue for Schering, which won approval in Europe for Vasovist last month. Under the European labeling, Vasovist is indicated for visualisation of abdominal or limb vessels in patients with known or suspected vascular disease such as stenosis or aneurysms. It is due for launch next year, and will be positioned as an alternative to a much more invasive procedure known as catheter-based X-ray angiography.

Earlier this year, Schering chairman Dr Hubertus Erlen pointed to Vasovist as one of the products that would drive growth in the coming years.

This is also the latest in a series of product setbacks for the German company. Last month that it would stop giving its uterine fibroid drug asoprisnil to patients in trials after seeing endometrial changes in some individuals.

Meanwhile, in the summer Schering and Novartis said they were reviewing plans for cancer drug PTK/ZK after the drug failed to extend survival in a trial involving patients with advanced colorectal cancer. And in May Berlex Laboratories, the US affiliate of Schering, said it was facing a significant delay in bringing its bone metastasis agent Bonefos (clodronate) to market in the USA, after the FDA said it would not approve the drug until an ongoing clinical trial is completed.

Schering’s shares barely moved on the Frankfurt stock exchange, dipping fractionally to 4.40 euros, while EPIX shares slumped over 14% in the USA to close trading yesterday at $5.18.