Editor

A drug's blow-up in Phase III trials is hardly easy to take in stride, but Biogen Inc. came out of its failure last week seeming not much the worse for wear in the eyes of Wall Street, even if nobody at the company was popping champagne corks.

CDP-571 (also known as Humicade), an anti-tumor necrosis factor treatment partnered with Celltech Group plc for Crohn's disease, missed its primary endpoints for patients with moderate to severe forms of the disease. Biogen said the companies will "review the scope of their collaboration" after more analysis of the data.

Consequences appeared mild for Biogen, at least immediately. The day of the disclosure regarding the two Phase III trials, Biogen's shares helped by a market upswing ended 24 cents higher than the day before, at $36.19.

"It was kind of unusual," said Michael King, analyst with Banc of America Securities. "The market wanted to put a positive spin on everything that day. But [analysts] had to bring their numbers down" for the Humicade failure, reducing revenue estimates, albeit not by a great deal.

Although Elise Wang, analyst with Salomon Smith Barney, said in a research note the stock might "take a psychological hit," Biogen managed to avert even that.

Celltech fared worse, closing down $1.36, or 9.8 percent, at $12.48.

Other analysts noted the derailment of CDP-571 means the firm has that much more of its eggs in the Amevive (alefacept) basket especially since Avonex (interferon beta 1-a), Biogen's drug for multiple sclerosis and the company's only marketed product, must now compete with Serono SA's Rebif (also interferon beta 1-a), approved this year.

In June, the FDA issued a complete response letter for Amevive, which is being developed for moderate to severe chronic plaque psoriasis. Although the agency asked for "clarification" (possibly related to depletion of T cells seen in some patients), it did not demand further trials.

Wang predicted an approval for Amevive against psoriasis in the second half of this year, to go along with Avonex for MS. In the same period, she noted, Biogen has Phase II studies likely to start with its lymphotoxin beta-receptor Adentri (an adenosine A-1 antagonist) being developed with CV Therapeutics Inc. for congestive heart failure. It blocks a receptor in the kidney to preserve function and promote excretion of sodium and fluid. Another milestone expected in that period: Phase II trials of Biogen's LFA-1 antagonist for immune disorders in the fourth quarter.

Regarding CDP-571 and Crohn's disease, Biogen and Celltech said in April they would collaborate to develop and sell the drug, splitting research, development and registration costs down the middle. Biogen would take over manufacturing from Elan Corp. plc if the product reached approval and launch, an eventuality which would have involved some technology-transfer costs for Biogen as well as about $5.5 million in payments to Celltech.

That's not likely now. John Sonnier, analyst with Prudential Securities, predicted in a research report that Biogen will "either completely dissolve the partnership or materially change the terms of the agreement."

But the company has another Crohn's disease drug up its sleeve, and Elan is involved there, too, as a partner in the study of Antegren (natalizumab), undergoing Phase III trials that started late last year in Crohn's and multiple sclerosis.

Nor is Biogen alone in the field. Would-be drugs for Crohn's disease an inflammatory disease of the intestines, named after the physician who "discovered" it in 1932 (others had painfully discovered it earlier) in various stages of development dot the biotechnology landscape.

Last month, Centocor Inc. won approval to use its already-marketed monoclonal antibody Remicade (infliximab) for long-term remission-level control of symptoms associated with Crohn's disease. Already on the market for about four years, it had been cleared earlier for use in reducing signs and symptoms in moderately to severely active Crohn's in patients who have had an inadequate response to conventional therapy.

In June, Isis Pharmaceuticals Inc. began its second Phase III trial of alicaforsen (also known an ISIS 2302), an antisense inhibitor of intercellular adhesion molecule-1. The company said it would enroll 150 patients at 35 sites in Europe in a randomized, double-masked, placebo-controlled study.

And Cell Pathways Inc. recently started a pilot Phase II trial of CP461, one of a class of compounds called selective apoptotic anti-neoplastic drugs, as a Crohn's treatment. The drugs inhibit cyclic GMP phosphodiesterases 2 and 5, thus activating protein kinase G and triggering downstream cellular pathways leading to programmed cell death.

Others have met with setbacks. IDEC Pharmaceuticals Corp. voluntarily stopped clinical trials of its anti-CD40 ligand monoclonal antibody, IDEC-131, in June after one patient developed a blood clot in the lower leg. The drug was being studied in three Phase II trials in patients with conditions including Crohn's.

For science, Crohn's is a challenge. Corticosteroids often are given prednisone (which can have wicked consequences when used over the long term) and methylprednisolone along with anti-inflammatory drugs such as sulfasalazine (also with nasty side effects) and the immunosuppressants 6-mercaptopurine and azathioprine.

The search is on for something better.

Surgery is an option, but not one that most patients want, since the problem tends to recur in whatever intestinal tissue remains, and sometimes the patient ends up with an ileostomy, and the dreaded "bag" that is worn to collect waste.

It's a disease that seems to have a genetic component, since Crohn's often surfaces in members of the same family, and Jewish people tend to get it more, while blacks get it less. Otherwise, not much is known about causes, except that gut bacteria could be implicated and (as in other inflammatory ailments) the immune system is involved. Diagnosis is not simple, either. Blood and stool tests plus X-rays of the small intestine combine with a sigmoidoscopy and colonoscopy to narrow it down.

King said anti-TNF drugs seem like the best route for Crohn's, although CDP-571 is a humanized IgG4 antibody that doesn't kill T cells and works somewhat differently.

"IgG4s bind to TNF but they don't clear it, which allows TNF to get back on the cell and do the bad things it does," he told BioWorld Financial Watch, adding that analysts didn't put many chips on the Biogen drug because it was "kind of doomed from the start."

The situation is similar with Enbrel (etanercept), the anti-TNF rheumatoid arthritis drug from Immunex Corp., which "doesn't work because it doesn't clear TNF in the same way Remicade does."

Noting that he hasn't examined the Crohn's area because "it's not that exciting of a market," King pointed to another promising drug on the horizon: Celgene Corp.'s Celgene's selective cytokine inhibitory drugs, also known as SelCIDs, which seem to inhibit phosphodiesterase type 4 enzyme, resulting in less TNF.

"I know some thalidomide is being used, too," King said.

Regarding CDP-571, "I had very modest numbers," he said, adding that he is "very conservative on all my numbers, but particularly on Humicade, which was hardly crucial to Biogen."

"They've got more going on for themselves, but so does Celltech," although the latter is "further away from profitability," King said.