On May 13, 2008, I wrote about the likelihood of Myriad Genetics’ (MYGN) Flurizan failing its phase III clinical studies for Alzheimer's disease. I don’t want to revisit the rationale for my skepticism again, but those interested can view the article and comments that describe it in some detail.
Well, Myriad released the results yesterday (June 30, 2008) and as I predicted, the trials were negative. The drug failed its primary endpoint and the company announced it was discontinuing further development. The stock is down modestly (around 6% as I write) on heavy volume. There is some relief that since the burn rate due to clinical trials will go down, the company will become profitable earlier.
I am skeptical of that rationale – most of the costs of developing Flurizan have already occurred (more than $60 million in 2008, with about $8 million per quarter over the next two quarters). And Myriad still has drugs in the pipeline that will continue to drain resources. However, the diagnostic business is rather solid, and the company is now predicting profitability in 2009.
Lundbeck, who had just paid Myriad $100 million for Flurizan looks very foolish. Its stock was down 11%.