Biotech Values

[DewDiligence]

Cerovive R.I.P.

[This is shaping up as a bad week for stroke drugs. RNVS, from whom AZN licensed NXY-059/Cerovive, will presumably get hammered today. AZN now says that neuroprotectant drugs for stroke, as a class, do not work, but some analysts were on the hook for making outsized sales projections (e.g. #msg-5920856). Cerovive had mixed results in its first phase-3 trial (#msg-6231700).]

http://yahoo.reuters.com/news/articlehybrid.aspx?storyID=urn:newsml:reuters.com:20061026:MTFH10373_2...

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AstraZeneca stroke drug fails in pivotal trial

Thu Oct 26, 2006 4:17 AM ET
By Ben Hirschler, European Pharmaceuticals Correspondent

LONDON, Oct 26 (Reuters) - AstraZeneca Plc's <AZN> experimental stroke drug NXY-059 failed to meet its goal in a pivotal Phase III clinical trial, dealing a fresh blow to the group's already depleted new product pipeline.

The medicine will now be dropped from development, the company said on Thursday, overshadowing what analysts expect to be a strong set of third-quarter results due at 1000 GMT and sending its shares down around 3.5 percent in early trade.

The so-called SAINT II study was designed to show a reduction in disability in patients following an acute ischemic stroke. In the event, there was no statistically significant difference among patients given either NXY-059 or placebo.

Ischemic stroke is the most common kind -- accounting for around 85 percent of cases -- and is caused by a clot or other blockage disrupting the flow of blood to the brain.

Previously known as Cerovive, NXY-059 was licensed by AstraZeneca from U.S. biotech firm Renovis Inc < RNVS >. It was always viewed by analysts as a high-risk project, since the pharmaceutical industry is littered with past examples of neuroprotectant drugs -- designed to protect patients from permanent damage after a stroke -- that have failed to work.

Development head John Patterson said the trial outcome suggested the class of drugs did not work and AstraZeneca would not seek to acquire or develop any other neuroprotectants for stroke.

The product was one of two late-stage experimental drugs from AstraZeneca's pipeline that the company had hoped could reach the market by the first half of 2008.

The second is another licensed-in drug -- AtheroGenics Inc's <AGIX> atherosclerosis treatment AGI-1067 -- for which key clinical trial results are due in early 2007.

BLOW TO CONFIDENCE

Some industry analysts had viewed NXY-059 as a possible $3 billion-a-year seller. It would have been the company's first new compound to win regulatory approval since cholesterol fighter Crestor in 2003. Its failure will add to concerns that AstraZeneca cannot get products to market following past late-stage setbacks with anticoagulant Exanta, lung cancer pill Iressa and Galida for diabetes.

Deutsche Bank, AstraZeneca's house broker, said removing NXY-059 from forecasts would lower its 2010 earnings forecasts by 3 percent, but the shares could fall more than this given the blow to sentiment and confidence in the group's strategy.

AstraZeneca's Patterson acknowledged the news was a blow to the group's goal of restocking its pipeline.

"These clinical trial results, while not without precedent given the challenging nature of the science, are disappointing for patients looking for new treatments for stroke and for AstraZeneca as we seek to build our research and development pipeline," he said.

An earlier Phase III trial, known as SAINT I, had found NXY-059 produced a statistically significant benefit in reducing disability on one key measure but not on a second [#msg-6231700].

NXY-059 was licensed in under a 15-percent royalty deal from Renovis, whose stock analysts expect to take a tumble on Nasdaq
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