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Ophthotech Eye Drug Fails Badly in Pivotal Test, Shares Crumble

Xconomy New York — 

Ophthalmologists were keeping a close eye on an experimental drug from Ophthotech called pegpleranib (Fovista). Succeed, and the drug might change how a common form of vision loss, age related macular degeneration (AMD), is treated—and shine an even brighter spotlight on ophthalmologists already in the crosshairs of insurers and the federal government. That won’t happen, however: Ophthotech reported the drug failed badly this morning, sending the New York company’s shares spiraling downward.

Ophthotech (NASDAQ: OPHT) said this morning that pegpleranib failed two Phase 3 trials in patients with the “wet” or more damaging and fast-moving form of AMD. The drug, when given in combination with another wet AMD drug, ranibizumab (Lucentis), didn’t lead to any benefit on patients’ vision compared to ranibizumab alone after a year of treatment.

Ophthotech’s shares fell more than 80 percent, to $7.58 apiece, in pre-market trading. Ophthotech has rarely closed below $30 since going public at $22 a share in September 2013.

The news is a crushing result for Ophthotech, which had a chance to push its way into a large and growing market. AMD affects more that 2 million Americans, a number expected to grow to nearly 5.5 million by 2050 as the population ages, according to the National Eye Institute. About 10 to 15 percent of those patients have the wet form, when abnormal blood vessels form in the eye and leak fluid, ultimately causing potentially significant vision loss. The market for AMD treatments has exploded the past several years. Until recently, the standard of care was laser therapies that didn’t actually improve patients’ vision. That method has been replaced by injectable pharmaceuticals. Two drugs, aflibercept (Eylea, from Regeneron Pharmaceutials ) and ranibizumab (from Genentech/Novartis), are specifically approved for the condition. The most widely used drug for wet AMD, bevacizumab (Avastin), is prescribed off label. These drugs are given frequently, as often as every month.

These wet AMD drugs—which block a protein called VEGF and stop abnormal blood vessels from forming—can restore some vision, prevent further damage to the eyes, and stop people from going blind. But they aren’t cures, and there is room for improvement. Ophthotech was trying to show that adding another drug, pegpleranib, that worked by a different, potentially complementary mechanism (it blocks a different protein, PDGF), might restore even more vision for patients. Perhaps the drug could be used just a few times when a patient is first diagnosed for wet AMD; or perhaps pegpleranib could be useful for people who don’t respond to other treatments.

Either would’ve been a huge opportunity. Aflibercept and ranibizumab generate more than $7 billion in worldwide sales combined. They also cost about $2,000 a dose and are a big strain on Medicare, which spent about $2.63 billion combined on aflibercept ($1.3 billion) and ranibizumab ($1.33 billion) in 2014, or roughly 12 percent of the $21.5 billion it spent on its so-called Part B program, which governs drugs administered in hospitals and clinics. That’s one of the reasons several ophthalmologists voiced concern to Xconomy about the potential effect on costs of a second, likely expensive pegpleranib injection. In a recent research note, Leerink Partners analyst Joseph Schwartz estimated as much as $1.26 billion in peak U.S. sales if pegpleranib came through.

Pegpleranib, however, failed to produce. Ophthotech said that in a combined analysis of both trials—which enrolled a total of 1,248 patients—patients on combination therapy could read an average of 10.24 more letters on a standard visual acuity chart after a year of treatment than they could at the start of the study. Patients on ranibizumab alone could read 10.01 letters, meaning the drug led to an average gain of just 0.23 letters. In previous testing, pegpleranib had a 4.1 letter benefit over ranibizumab after 24 weeks of treatment.

A pegpleranib-ranibizumab combination also failed to significantly separate from ranibizumab alone on a variety of other secondary measures, like showing it could do a better job than monotherapy at leading to a more than 20 letter benefit after a year. In some cases, the combination performed worse than ranibizumab. Leerink’s Schwartz called the results “surprising and disappointing” in a note to investors this morning, given pegpleranib’s results in previous studies.

The company will hold a conference call this morning to discuss the results and its next steps. Ophthotech still has a third Phase 3 trial underway in which pegpleranib is being tested in combination with either aflibercept or bevacizumab. That study should produce data later this year.

Shares of Regeneron (NASDAQ: REGN), meanwhile, climbed more than 5 percent in pre-market trading on Monday. Pegpleranib could have cut into aflibercept’s market share.