By Lisa Seachrist, Washington Editor and
Lynn Yoffee, Senior Managing Editor
Negative reaction to disappointing news that a pivotal Phase III trial of brain-derived neurotrophic factor (BDNF) failed to show efficacy in the treatment of amyotrophic lateral sclerosis (ALS) sent Regeneron Pharmaceutical Inc.'s stock into a tailspin Friday, losing 43 percent.
BDNF was Regeneron's lead product and its second to fail in pivotal Phase III trials in as many years.
"This takes all the immediate upside away from Regeneron," said Reijer Lenstra, an analyst with Smith Barney Shearson in New York. He suggested that like Synergen * which suffered two product failures * Regeneron may now be a takeover target. The company's partner in BDNF development, Amgen Inc., would be the "natural buyer," he said. (See BioWorld Today, Special News Bulletin, Nov. 18, 1994.)
Regeneron's stock (NASDAQ:REGN) lost $8.25 to close at $10.875 on the news. Amgen (NASDAQ:AMGN) slipped $2.813 to end the day at $55.062.
"I thought it wouldn't have made a difference to Amgen," Lenstra said. "The market overreacted and the stock dropped three points."
Amgen, of Thousand Oaks, Calif., cushioned the blow by releasing positive results of a Phase III clinical trial of stem cell factor (SCF), an early-acting blood cell growth factor, in cancer patients undergoing chemotherapy.
That trial showed that SCF in combination with Neupogen helped breast cancer patients overcome potentially toxic doses of chemotherapy when compared to Neupogen alone. Amgen said it plans to file a new drug application for this indication within the next few months.
For Regeneron, of Tarrytown, N.Y., the bad news won't be as bad as in 1994. (See BioWorld Today, June 24, 1994, p. 1.) After discontinuing a Phase III trial for ciliary neurotrophic factor (CNTF) because it failed to show efficacy in ALS, the company had to lay off 25 percent of its work force. Regeneron told BioWorld Today it does not expect layoffs to occur with this product failure.
"We have worked for two years to ensure that the results of any one clinical trial won't jeopardize our ability to operate," said Leonard Schleifer, president and CEO of Regeneron. "We have a rich technology pipeline to fall back on."
Schleifer told BioWorld Today that the company is on strong financial footing, finishing 1996 with almost $100 million in the bank which constitutes several years of operating expenses. In addition, he noted that partnerships with Amgen and Proctor & Gamble were unaffected by the results of the trial.
Amgen has an 18 percent stake in Regeneron. (See BioWorld Today, April 17, 1996, p. 1.)
"The only conclusion that can be made from this trial is that BDNF is not effective for ALS when delivered in this manner," Schleifer said. "It doesn't imply that neurotrophic factors have no role in neurodegenerative disorders."
The failed trial tested subcutaneous injections of BDNF. Regeneron is continuing to develop BDNF for the treatment of ALS * a disease marked by a progressive degeneration of neurons in the spinal cord and portions of the brain, but is delivering the drug directly to the spinal cord of the patient. The drug is currently in Phase I/IIa trials for this delivery method. In addition, the company is looking at indications for the drug in diabetic neuropathies.
"Clearly we are disappointed," Schleifer said. "But the most disappointed people are going to be the patients. Let's not forget why we are doing this in the first place."
Regeneron is continuing to develop neurotrophin 3 for peripheral neuropathy, interleukin-6 for a variety of cancers and Axokine, a molecule related to CNTF.
Although Lenstra predicted in early December that there was a 40 percent chance of failure in the BDNF trial and downgraded his rating, he indicated that Regeneron will be able to weather the storm. "I don't think there will be an enormous consequence. They have more cash now and corporate partners. Amgen owns a nice chunk. I don't know what the final consequences will be, but, like Synergen, they could sell out." *