Assistant Managing Editor

Genzyme Corp. is dropping further work on its advanced phosphate binder (APB) - the product expected to save the Cambridge, Mass.-based firm's renal franchise from the looming patent cliff - after it failed to show improvement over Renvela in a Phase II/III trial, leaving analysts and investors to wonder what's next for the big biotech, which has suffered more than its share of bad news in the past several months.

And, on Monday, billionaire investor and activist shareholder Carl Icahn disclosed in an SEC filing that he had acquired a 1.45 million share stake in the company, a signal that he might try to press for a sale. Icahn previously succeeded in pushing through acquisitions of MedImmune Inc. (by AstraZeneca plc) and ImClone Systems Inc. (by Eli Lilly & Co.), though attempts at putting Biogen Idec Inc. on the selling block have so far come to nothing.

Icahn had acquired a similar stake in Genzyme in 2007, only to sell it the following year after it became clear that the firm wasn't interested in being sold.

But there's a possibility investors could be more receptive now. After all, the company's stock (NASDAQ:GENZ), which was trading in the $70 range in February, has been sliding steadily since then, as FDA rejections for Lumizyme and Clolar, followed by manufacturing troubles and a temporary shortage of enzyme replacement therapies Cerezyme and Fabrazyme, have shaken investor confidence. (See BioWorld Today, March 4, 2009, Sept. 2, 2009, and Nov. 17, 2009.)

Genzyme shares closed at $49.77 Wednesday, down 55 cents.

The latest news strikes at the company's renal franchise, which, while not as lucrative as its ERTs for genetic diseases, still pulls in hefty revenues. Third-quarter sales of Renvela (sevelamer carbonate) and Renagel (sevelamer hydrochloride) totaled $181.7 million.

But Renvela and Renagel face patent expirations starting in 2014, though near-term bundling issues following the Centers for Medicare & Medicaid Services proposed rule on oral phosphate binders earlier this year could start eating at product sales as early as 2011. Genzyme had been developing APB as a next-generation product to extend the renal drug franchise. (See BioWorld Today, Sept. 17, 2009.)

As it was, there was little room for error, noted analyst Christopher Raymond, of Robert W. Baird & Co. Assuming positive data from the latest trial, a Phase III study was to have started by the end of 2011, with a new drug application filed in 2013 and product approval in 2014, just barely ahead of the Renvela/Renagel patent cliff.

"We see this development as a game-changer," Raymond wrote in a research note, while analyst Brian Abrahams, of Oppenheimer & Co., said he sees "little opportunity to extend the life of the Renagel/Renvela franchise."

But Joshua Schimmer, analyst at Leerink Swann, said the CMS bundling rule meant any branded oral phosphate binder stood only a limited chance of commercial success. He also found a positive in APB's disappointment, since Genzyme won't have to spend money on a large Phase III program.

"If anything, there may be a nice SG&A savings if the company winds down its nephrology sales force once Renagel/Renvela starts to go away," he wrote in a research note.

The APB study enrolled 349 adult hemodialysis patients with hyperphosphatemia, and results showed that the drug met its primary endpoint of lowering phosphate levels compared to placebo. But APB, which had been designed to more effectively bind phosphate, failed to show significant improvement over Renvela.

Trouble spots have appeared elsewhere in the pipeline as well. In September, the FDA's Oncologic Drugs Advisory Committee said a single-arm Phase III trial was not sufficient for approval of Clolar (clofarabine) in previously untreated acute myeloid leukemia patients, and the FDA agreed a month later, issuing a complete response letter and recommending that Genzyme conduct a randomized trial in that indication.

Genzyme plans to meet with the FDA to discuss a path forward, but the delay is disappointing, given that the drug's expanded use was a key factor in the company's $345 million buyout of partner New York-based Bioenvision Inc. two years ago. (See BioWorld Today, May 30, 2007.)

A placebo-controlled Phase III trial comparing Clolar in combination with cytarabine vs. cytarabine alone in relapsed and refractory AML patients 55 years and older is ongoing.

Earlier this week, Genzyme and partner Isis Pharmaceuticals Inc., of Carlsbad, Calif., pushed back the filing for cholesterol drug mipomersen in patients with homozygous familial hypercholesterolemia until the first half of 2011, a delay that has investors worried about the drug's risk/benefit ratio, despite promising Phase III data presented at this week's American Heart Association meeting in Orlando, Fla. (See BioWorld Today, Nov. 18, 2009.)

In the meantime, the firm still is dealing with the fallout from manufacturing troubles at its Allston Landing facility. A six-week shutdown earlier this year following the detection of a virus in two bioreactors resulted in a shortage of Gaucher drug Cerezyme (imiglucerase) and Fabry drug Fabrazyme (agalsidase beta), reflected in the company's third-quarter earnings, with net income down 87 percent from the same quarter in 2008. (See BioWorld Today, June 17, 2009, and Oct. 22, 2009.)

Genzyme restarted production at Allston in late September, but the conclusion of an FDA inspection last week pointed to foreign particles, including stainless steel fragments, nonlatex rubber from vial stoppers and fiber-like material, had been detected in vials for small percentage of products. The agency did not order the plant shut down, but a few days later, it issued its second complete response letter for Lumizyme, a 2,000 L version of Pompe drug Myozyme, citing deficiencies related to the Allston facility. (See BioWorld Today, Nov. 16, 2009, and Nov. 17, 2009.)

Published  November 19, 2009