Shares in Ablynx NV fell more than 18 percent Friday after Pfizer Inc. terminated an alliance on the development of nanobodies targeting tumor necrosis factor alpha (TNF-alpha).

New York-based Pfizer is handing back rights to two clinical-stage molecules, ATN-103 (ozoralizumab), which has completed two Phase II clinical trials in a total of 312 rheumatoid arthritis (RA) patients, and a back-up compound PF-05230905, which is undergoing Phase I trials.

"I don't see it as a big surprise, but we are still disappointed," Jan De Kerpel, analyst at KBC Securities in Brussels, Belgium, told BioWorld Today.

Pfizer had injected some uncertainty into the future of the alliance as far back as May, when data from a 253-patient Phase II study of ATN-103 were unveiled.

"Only the highest dose, of 80 mg at four weekly intervals, showed significant difference with respect to placebo," De Kerpel said. None of the other four dosing regimens in the study reached statistical significance on the primary endpoint measure, patients' ACR20 response compared with placebo after 16 weeks.

Pfizer is also developing an oral JAK inhibitor, tofacitinib, which completed Phase III trials in RA earlier this year and is on track for a regulatory filing before the year end. It inherited the 2006 alliance with Ablynx from Wyeth, which it acquired in 2009. The deal was potentially worth $212.5 million in upfront and milestone payments, plus royalties on product sales.

"We obviously fell afoul of big [pharma] R&D restructuring and reprioritization," Ed Moses, CEO and chairman of Ghent, Belgium-based Ablynx, told BioWorld Today.

But he welcomed the end of the present hiatus. "We've been very keen that either they get on or we get it back and we get on," he said. "We like the look of the product - we think it is eminently partnerable."

Post hoc analyses indicate that the topline data from the Phase II trial may not fully reflect ATN-103's potential. About one quarter of the patients in the study, who were recruited from eastern Europe, may not have been stable on methotrexate therapy, one of the study's inclusion criteria. This could have contributed to the high placebo response rate seen in the study – 42 percent of those on placebo achieved an ACR20 response at week 16.

"If you take that group of patients out then all of a sudden the data looked different," Moses said, although he cautioned that those additional observations lack statistical power.

Ablynx aims to find another partner by the end of next year. In the meantime, it will conduct an additional study on the pharmacodynamics and pharmacokinetics of ATN-103, to explore different dosing options. Theoretical modeling data from Pfizer suggest that a 160 mg dose could be sufficient to allow dosing at eight-week intervals. "Coming up with an eight-weekly dose regimen - that would be a very strong and unique selling point," De Kerpel said.

"We don't think eight-weekly dosing is make or break for the product, but we think it would nicely differentiate it," Moses said.

Pfizer retains a residual interest in the program. Should Ablynx find another taker and should ATN-103 gain approval, Pfizer would receive up to $50 million in milestones after approval is granted, plus a small fraction of Ablynx's sales royalties, in return for handing over large quantities of clinical trial supplies, assay methods and manufacturing processes for future use. "They sunk a large amount of money into this program," Moses said.

The ATN-103 Phase II data represented the first clinical proof of concept of Ablynx's nanobody platform, which is based on the development of antibody fragments derived from small-sized, single-domain antibodies that are produced by camelidae (camels and llamas). ATN-103 is a bivalent molecule, comprising two nanobodies that bind TNF-alpha linked to a third nanobody that binds human serum albumin and thus extends the molecule's half-life. PF-05230905 is a similar molecule, but it employs pegylation for half-life extension.

Ablynx has a total of seven compounds in the clinic and ongoing alliances with Boehringer Ingelheim GmbH, the Merck Serono arm of Merck KGaA and Novartis AG. It is due to report data in the coming weeks from its lead internal drug candidate, ALX-0081, an anti-Von Willebrand factor nanobody, which is in a Phase II comparison trial in high-risk acute coronary patients undergoing a percutaneous coronary intervention (PCI) procedure.

The ability of ALX-0081 plus standard anti-thrombotic therapy to the number of reduce bleeding events is being compared with that of standard therapy plus ReoPro (abciximab), which is marketed as an adjunct to PCI by Eli Lilly & Co., of Indianapolis.

Shares in Ablynx (BRUSSELS:ABLX) closed Friday at €2.93 (US$4.03), down €0.65. KBC lowered its target price on the share from €10 to €7 and lowered its rating from 'buy' to 'accumulate'.