Preliminary results from Regeneron Pharmaceutical Inc.'s Phase III trial with the obesity drug Axokine are being called mixed, but the market's reaction was unambiguous, taking away 56.6 percent of the stock's value.
The Tarrytown, N.Y.-based company's shares (NASDAQ:REGN) closed Monday at 7.52, down $9.79, but Leonard Schleifer, CEO of Regeneron, said the market failed to understand the early data's meaning.
As compared to placebo, Axokine met primary and secondary endpoints. That's the good news for Regeneron. The bad news is that the incidence of neutralizing antibodies, which began after about three months of treatment, was 70 percent.
"But what does that limit our [potential] market to? Thirty percent of 60 million obese people in the U.S.," Schleifer told BioWorld Today. "People have missed that."
The antibody development led to less efficacy in the 70 percent group than Axokine's would-be competitors: Xenical (orlistat), from Nutley, N.J.-based Hoffmann-La Roche Inc., and Meridia (sibutramine hydrochloride monohydrate), from Knoll Pharmaceutical Co., of Mt. Olive, N.J.
Axokine in all studies has boasted a better safety profile with fewer side effects, however, Schleifer noted. Xenical is known to bring with it flatulence and explosive diarrhea for some patients. Meridia can raise blood pressure.
"Remember the battlefield," Schleifer said. "A rifle doesn't look so good up against a cannon, but up against a bow and arrow it looks pretty good."
Regeneron gave 1,467 patients Axokine and 501 placebo at 65 sites, in the study begun in the summer of 2001. The average baseline weight was 235 pounds. (See BioWorld Today, Aug. 1, 2001.)
In the two primary endpoints, a greater proportion of Axokine-treated patients lost at least 5 percent of their initial body weight compared with placebo-treated patients (25.1 percent compared to 17.6 percent, p < .001), and those given Axokine had a greater average weight loss than those receiving placebo (6.2 lbs. compared to 2.6 lbs., p < .001).
Results in all secondary endpoints were positive, too, such as proportion of patients who lost at least 10 percent of their initial body weight (11.3 percent compared to 4.2 percent, p < .001).
Maged Shenouda, analyst with JP Morgan in New York, downgraded the stock from "overweight" to "neutral" based on the Phase III news. "Average placebo-adjusted weight loss was 8.1 pounds in patients who [developed] antibodies," Shenouda wrote, estimating that at least a 10-pound weight loss was necessary to make Axokine commercially viable.
Schleifer defended the results, pointing out that analysis is ongoing.
"People are making this into an emotional thing, but it's a data thing," he said. "What do the data tell us? The drug causes weight loss, and it increases the proportion of people who have a 5 percent loss in their weight, and it was generally well tolerated. In an easily identifiable population, there is no doubt the drug has the magnitude of weight loss associated with other drugs on the market," without the side effects.
The 12-month treatment period is being followed by an open-label safety extension phase also lasting 12 months, in which all participants are being given Axokine and monitored for side effects. Company officials had only the weekend to study the preliminary Phase III data, Schleifer said, and he didn't know when the final results would be available.
"I'm only 48 hours into this," he said.
Regeneron also said it will soon finish the analysis of a recently concluded pilot study in obese individuals with Type II diabetes, and complete ongoing Axokine short-term treatment studies. Then all data will be reviewed with the FDA, and plans for Axokine will be decided.
The drug's history goes back to 1997, when it was part of a deal with Procter & Gamble Co., of Cincinnati. Early testing suggested the drug might work only in herpes simplex virus-negative patients, and P&G restructured the deal in 2000. Regeneron, meanwhile, pushed ahead with an adjusted dosing schedule in HSV-positive and -negative patients. Axokine, now unpartnered, is intended for both types of patients. (See BioWorld Today, Oct. 1, 1997; Sept. 3, 1999; and Aug. 7, 2000.)
Last week, Regeneron entered a deal with Basel, Switzerland-based Novartis AG for the former's Interleukin-1 Trap technology now in Phase II trials, to be used against rheumatoid arthritis and other indications. The agreement calls for Novartis to pay $27 million in cash and make a $48 million equity investment in Regeneron. (See BioWorld Today, March 31, 2003.)
Schleifer noted Novartis also is providing a manufacturing facility and paying for development, for which he did not provide numbers but which could mean as much as $500 million more in value. The deal also carries $275 million in potential milestone payments.