By Michael Erman

NEW YORK (Reuters) – Swiss Drugmaker Novartis AG on Wednesday said it knew about discrepancies in data it submitted to regulators as it sought approval of its more than $2 million gene therapy Zolgensma, but delayed notifying authorities until it completed an internal investigation.

Novartis faces possible civil or criminal penalties from the U.S. Food and Drug Administration, which said on Tuesday that some data was manipulated from early testing of Zolgensma, the world’s most expensive treatment. The FDA said the company was aware of the problems for as much as two months before the drug’s U.S. approval.

“We made the decision to progress our quality investigation prior to informing FDA and other regulatory authorities so that we could provide the best information and technical analysis, which we did promptly on completion on June 28,” Novartis Chief Executive Vasant Narasimhan said on a conference call with analysts.

Narasimhan said the decision to delay notifying regulators was not tied to timing of the drug’s approval process.

The FDA official who wrote a memorandum detailing the manipulation released on Tuesday said he believes that had regulators been aware of the problems, Zolgensma approval would have been delayed. However, he also said he believes it would have ultimately been approved.

Zolgensma was approved in late May as a one-time treatment for spinal muscular atrophy (SMA), the leading genetic cause of death in infants.. The disease often leads to paralysis, breathing difficulty and death within months for babies born with the disease.

The FDA said it did not believe the manipulation affects the safety or later human testing of the therapy, and it believes the treatment should remain on the market. The manipulated data was used to illustrate comparability between an early version of Zolgensma and the current version, which is manufactured using a different process.

Narasimhan said Novartis learned of allegations of data manipulation in mid-March, more than two months before the gene therapy’s U.S. approval.

The company finished a preliminary investigation into the allegations in early May, confirming data discrepancies and raising data integrity concerns, the CEO said.

Novartis followed that up with a “full technical quality investigation” of the data. On June 28, Narasimhan said the company communicated its findings to the FDA.

It notified regulators in Europe and Japan shortly afterward, and does not expect the issues to affect timing of Zolgensma’s development there.

Novartis acquired the therapy’s maker, Avexis, in 2018. The drugmaker said it was in the process of “exiting” the Avexis scientists responsible for the manipulation and does not believe the issue extends beyond those scientists.

Zolgensma is no longer on track for accelerated approval in Europe, but the company said it still expects approval there in the fourth quarter.

Shares of the Swiss drugmaker fell 2.9% to 86.1 Swiss francs on Wednesday.

(Reporting by Michael Erman; Editing by David Gregorio and Bill Berkrot)