More bad news out of ZymoGenetics (NASDAQ: ZGEN) this morning. The Seattle-based biotech company disclosed in a regulatory filing today that its partner, Germany-based pharmaceutical giant Merck KGaA, has halted studies of their atacicept drug candidate for multiple sclerosis after concluding the drug’s benefit wasn’t worth the risk.
One trial showed that multiple sclerosis patients actually had more flare-ups and brain lesions when they were given atacicept, compared with a placebo. Two studies are still ongoing of atacicept, one for rheumatoid arthritis and one for lupus, and no comparable issues have been seen in those studies, ZymoGenetics said.
The multiple sclerosis failure is the third big flop of the past year for the atacicept (pronounced Uh-TACK-ee-sept) program, once one of the shining stars in ZymoGenetics’ pipeline. The drug failed to control rheumatoid arthritis in a pair of mid-stage clinical trials last month. Last October, ZymoGenetics said a trial of the drug for patients with lupus of the kidneys was halted after it appeared to raise the risk of severe infections.
ZymoGenetics had been developing the product jointly with Merck KGaA until a year ago, when it decided to conserve cash by handing over full responsibility for development costs, and settled for a smaller share of future royalties from the product. That move was designed to save ZymoGenetics $200 million in development costs as atacicept was scheduled to move into the final, most expensive phases of clinical trials.
The ZymoGenetics drug was largely forgotten by many analysts at that point, but it got some renewed attention in July, when Rockville, MD-based Human Genome Sciences (NASDAQ: HGSI) delivered the first convincing proof that doctors can successfully treat lupus by blocking a specific inflammatory protein known as BLyS (pronounced bliss). This caused Human Genome Sciences’ stock to quadruple, and gave ZymoGenetics a smaller boost, because its drug is made to block not just BLyS, but another inflammatory protein called APRIL, that the Human Genome Sciences drug doesn’t hit. Since multiple sclerosis is an autoimmune disease, in which the immune system goes haywire and starts attacking the normal fatty coating around nerve cells, researchers hoped that atacicept’s ability to dampen the inflammation would help patients with that condition like with other autoimmune diseases.
Since last September, when ZymoGenetics handed over atacicpet rights to Merck KGaA, it has concentrated more of its efforts on a new pipeline project, pegylated interferon lambda for hepatitis C, which is the subject of a new partnership with Bristol-Myers Squibb that’s potentially worth more than $1 billion.
ZymoGenetics stock fell 8 cents to $6.07 after the opening bell on the news.
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