ZymoGenetics Drug Trial Halted Because of Infection Risk

10/27/08Follow @xconomy

ZymoGenetics has some bad news out this morning on its atacicept drug candidate. The Seattle biotech company said its partner, Germany-based Merck KGaA, halted a final-stage clinical trial of the drug for 200 patients with lupus of the kidneys because it posed a high risk of severe infections.

ZymoGenetics (NASDAQ: ZGEN) made the disclosure this morning in a filing with the Securities and Exchange Commission. The higher risk of infections was caused, in part, by a combination of immune-suppressing drugs used to control excess inflammation, the company said in the filing. The atacicept program will continue enrolling patients with other diseases, like lupus that has spread throughout the body, multiple sclerosis, rheumatoid arthritis, and blood cancers, the company said.

This news drove down ZymoGenetics stock 6 percent to $4.67 at 9:56 am Eastern time. It should have a greater effect on Merck KGaA, though, since ZymoGenetics agreed to hand over most of its responsibility for the program last month to its partner. The move was designed to save cash for ZymoGenetics, which is struggling with a slower-than-expected introduction of its first marketed product, recombinant thrombin for surgical bleeding.

Atacicept (pronounced uh-tack-EE-sept) is meant to work unlike any other marketed drug. It is a genetically engineered protein that’s designed to block BLyS and April, a pair of proteins that stimulate the growth of B cells, which can create antibodies that go awry and attack healthy tissue. The halting of the trial could mean that atacicept won’t reach the market for one of its other uses until 2014, says Kevin DeGeeter, an analyst with Oppenheimer & Co., in a note to clients this morning.

“An important commercial rationale for atacicept is the expected safely benefits compared to anti-CD20 drugs such as Rituxan,” DeGeeter said. “In our view, the safety signal may limit the commercial appeal for rheumatoid arthritis and multiple sclerosis.”

The trial of atacicept in lupus of the kidneys, which opened in December, was designed to enroll 200 patients around the world, with a goal of improving their kidney function after a year. The kidneys are affected in an estimated 30 percent of the 1.5 million people worldwide who have lupus that’s spread throughout the body.

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