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ALDR, BMY > Bristol-Myers Kicks Arthritis Drug Back to Alder, Shares Tumble

http://www.xconomy.com/seattle/2014/09/02/bristol-myers-kicks-arthritis-drug-back-to-alder-shares-tumble/

Alder Biopharmaceuticals rode a big deal with Bristol-Myers Squibb to the public markets earlier this year, where it’s seen its value climb by more than 30 percent. Starting today, however, the Bothell, WA-based company is going to move forward without that safety net.

Alder (NASDAQ: ALDR) said today that following a portfolio review, the big New York drugmaker has decided to end the deal it has in place with Alder for the rheumatoid arthritis drug prospect clazakizumab. On one hand, Alder will now own all of the rights to clazakizumab and its migraine drug, ALD-403, and the potential profits that could go with them—something executives tried to stress on a conference call with analysts this morning.

“We’re excited about this development and think it represents a significant opportunity for Alder,” president and CEO Randall Schatzman said on the call.

On the other hand, however, Alder, a roughly 80-employee company, now may have to foot the bill for a big, costly Phase 3 study, or find a new partner to take on those costs. What’s more, Alder will now lose out on the $1 billion-plus in milestone payments it had been eligible to receive under the deal it cut with Bristol in 2009 (the company had brought in $103.5 million in payments from that deal as of March). And, deserved or not, there is always a stigma attached to a drug that Big Pharma gives up on.

Alder didn’t give much insight as to why Bristol changed its tune on clazakizumab, only noting that it was because of a “portfolio prioritization.” Schatzman said it wasn’t as if Bristol saw any new safety or efficacy data, or technical issues and balked, however. Alder presented positive Phase 2 data for the drug last year.

“All the data that is out there in the public space that we believe is very favorable and we believe shows a very beneficial risk/benefit profile for this molecule are still on the table,” Schatzman said. “I think that it’s clear that Big Pharma has a routine, evaluates their pipeline and where they want to spend their hard-earned dollars, and in this case they set a different priority for where to spend those dollars.”

[Updated with comments from Bristol-Myers] A Bristol spokesperson told Xconomy that despite the efficacy clazakizumab showed in Phase 2, “the projected profile” of the drug “did not meet [Bristol's] criteria” to start a Phase 3 trial.