Friday, October 17, 2008

Phase III Ain't What It Used to Be

sometimes the bear gets you

Baseball seasons sure are long.

In fact, back when Bush 43 braved the boos at the new Nationals stadium to throw out the year's first pitch, back when the NL pennant wasn't yet even a twinkle in Cole Hamels' eye, the ink was just drying on Cell Genesys' impressive $50 million upfront alliance with Takeda for the biotech's Phase III GVAX cancer vaccine.

The 2008 season isn't over yet. But what a difference six months makes.

Yesterday Cell Genesys essentially pulled the plug on GVAX after it failed a second Phase III clinical trial in prostate cancer patients. An independent data monitoring committee's futility analysis suggested the trial had only a slim chance of meeting its improved survival endpoint.

Check out The Pink Sheet Daily's coverage of the news, here. The decision to conduct the futility analysis came after another Phase III study of GVAX failed back in August. So GVAX is now on 'hold', according to Cell Genesys, while the partners review their options. Meanwhile, 75% of the biotech's staff are out of jobs, and further restructuring is expected early next year.

With $128 million in the bank projected for the end of the year, Cell Genesys will have plenty of options: it could play the role of shell or consolidator; it could give the cash back to shareholders and close the company's doors; it could even press ahead with GVAX, which is in Phase II trials for leukemia and pancreatic cancer as well.

It certainly hasn't been the best of years for Phase III drugs at the center of top-dollar alliances. Most conspicuously Myriad Genetics' Flurizan Alzheimer's candidate was spectacularly licensed in Europe by H. Lundbeck for $100 million upfront, only to spectacularly crash and burn only a few weeks later. (Forget an entire baseball season, the playoffs last longer than that.)

And let's not forget Trovax, another cancer vaccine and the subject of Sanofi-Aventis' $39mm up-front deal with Oxford BioMedica. That deal, signed in March 2007, hasn't officially ended--but Trovax's hopes were dealt a significant blow this summer when a DSMB said a Phase III trial in renal cancer would not meet its endpoints. OXB shares have lost about 90% of their value since that deal was signed--though data from the renal cancer trial will get analyzed and the companies are pushing forward with a Phase III program in colorectal cancer.

Of course then there's Asentar--the small molecule cancer treatment Schering-Plough licensed from Novacea in May 2007 for $72 million up-front. The trial failed late last year and in April 2008 Schering terminated the deal.

Look, drugs fail. That happens because drug development is very difficult. Even Phase III drugs fail, probably more than they used to, thanks to stiffer endpoints and attempts to tackle trickier diseases. Lilly Research Laboratory president Steve Paul lamented at our recent PSA meeting that Phase III is "still pretty lousy," in terms of attrition rates -- around 50%. And not always for the reasons you'd expect. "You shouldn't be losing Phase III molecules for lack of efficacy," he said, but it's happening throughout the industry. (If you missed it, a recap of the PSA goings-on will be in the next IN VIVO.)

But we would expect these failures to come mostly from pharma's home-grown crop of drug candidates, not so much from the drugs accessed via high-priced biotech collaborations.

Of the 16 deals involving single-Phase III products licensed for $20 million or more up-front since the beginning of 2007, four have either failed completely or are on death's door. A further two have endured signifcant hiccups, though may pull through with flying colors--Merck/Dynavax's Hep B hopeful Heplisav, which remains on clinical hold by FDA, and the much-discussed mipomersen from Isis/Genzyme (our recap of that situation is here).

So what's happening? Are pipeline-poor pharmas lowering their standards?

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