Friday, March 23, 2007

So Cimzia Will be Late, After All

It's official: UCB's Cimzia will be late. (Or rather, even later.) No one really doubted that UCB's anti-TNF antibody fragment would fail to meet its planned 2Q 2007 launch for Crohn's disease, ever since the FDA Complete Response Letter in December 2006. (UCB shares have tumbled 20% since then.)

The only surprising part was CEO Roch Doliveux's apparent refusal to contemplate any slippage. "We're preparing everything for the launch," he declared at UCB's preliminary results meeting barely a month ago.

The preparations will be long (let's hope they haven't hired any reps yet). Turns out that FDA wasn't happy with the design of one of Cimzia's trials, so UCB announced today it needs to do another one, to "confirm the induction of clinical response" in Crohn's patients. That's worrying; so is the fact that it'll take until late next year to do the study.

Cimzia matters to UCB. Not just financially, although the drug is--or was--expected to contribute significantly to UCB's EBIT, but also strategically, in terms of defining and confirming UCB's transition from a chemicals conglomerate into a biopharmaceuticals firm. Doliveux has made much of this transformation, triggered by the $2.7 billion acquisition of Celltech Group in 2004. Thus setbacks to Cimzia casts doubt not just on one legacy project from Celltech (already delayed for a variety of reasons), but on UCB's skills in integrating large-molecule science with its chemistry heritage.

It doesn't do management's credibility much good, either. By and large, Doliveux and his team have done a bloody good job--don't forget he also bought Schwarz Pharma last fall, a move which looks more perceptive as Cimzia's troubles deepen. But management's apparent confusion as to the nature of the FDA response and subsequent meetings--whether reflecting real uncertainty or just caginess--concerns some analysts.

When and if Cimzia does get to market, it will face plenty of competition, not least from Abbott's Humira, which filed for approval in the US and EU last September and is easier to administer. UCB's plan was to get to market in Crohn's before Humira (which is already on the market for RA). Now it's not a question of whether it will be behind, but how far behind. The additional trial won't be done until late 2008, and although UCB says it's unclear whether will be a pre- or post-approval requirement, I know where my money is.

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