Wyeth and Elan Take Hits on Bad Trials

A little over a month ago, I wrote a post detailing how I thought the Bapineuzumab trial (which had just released phase 2 results) was a total loser.

It was, and still is, my contention that mAbs targeting APP, Tau, gamma secretase or the protein du jour in brain soup will not be effective or have an unacceptable risk/reward profile.

So it was of no surprise to me that the street, upon seeing the full results, was less than impressed and Wyeth (WYE) and Elan (ELN) took major hits in after hours trading.

The math is simple on this.

When a drug fails the primary endpoint, has tox/adverse event issues and the company begins data mining to find statistical significance…. SELL (or short, if that’s your game)!!!!

It couldn’t be simpler. Granted, trials like this don’t come along often. Especially ones with so much hype but when they do… there is a killing to be made. You don’t need an MD, MBA or PhD, just a little sense.

Personal investing aside, what does it say about Wyeth and Elan that they are totally comfortable continuing a few phase 3 trials after this result?

Wonder why drugs cost so much?

One reason: Big pharma has a gambling problem; they throw good money after bad and forget that the house always wins.

Comments

[Lucius Quintus:]

good call from months ago, I lost a few $ on the hype ,more from hope not prediction,many of us hope something will help us before we get too far gone.

2008 Jul 30 11:00 AM

[bozak:]

Eben, nice call. Do you happen to know what the realationship is between Tysabri and Bapineuzumab? Seems like more than a coincidence that they both cause problems in the brain.

2008 Jul 30 11:47 AM

[Eben Tessari:]

Bozak,
Thanks for reading. There is absolutely no connection between any adverse events seen with Tysabri vs Bapineuzumab. Two completely different mechanisms.

Tysabri got in trouble because it does it's job too well. It suppresses the immune system by inhibiting a molecule (a4B1 integrin) used by immune cells to get into the brain. Exactly what you want if you have MS. Unfortunately, it did this job so well that an opportunistic virus, PML for short, showed up in a few patients (though none since the initial scare).

So far, the most important adverse event for bapineuzumab has been vasogenic edema, or fluid buildup in the brain. This is really really not good, especially because the amount of fluid was dose dependently related to the amount of drug given.

Anyway, two completely different problems. Hope that helps. I added some links if you want to know more.

en.wikipedia.org/wiki/...
en.wikipedia.org/wiki/...
en.wikipedia.org/wiki/...

2008 Jul 30 01:03 PM

[bozak:]

Eben, thanks for the info about the connection (or lack of) and the links.

2008 Jul 30 01:31 PM

[ceekay:]

Thanks for your call. I wonder if you are too negative on the treatment for a complex disease. Is not identifying a sub-population that can benefit from a treatment for a horrible disease the promise from genetic medicine that we have been awaiting.

2008 Jul 30 02:45 PM

[Tesa:]

Alzheimer is obviously not a single disease given that only one variation can be detected genetically while others have yet to be. Unfortunately during the drug trials of various compounds together can not be combined. Perhaps the combination of two drugs or multiple drugs will work as they did with Aids. But for that to happen, there is a need for multiple approved drugs so a cocktails can be brewed. So even if a fraction of Alzheimer population responds to a single compound, such a drug needs approval.

I pretty much doubt that a single compound can target both amyloids and tau..

2008 Jul 30 05:28 PM

[frankie cooper:]

i must admit that i am mighty impressed that you called the failure of the alzheimers drug trials (u must have made a BUNDLE on your short!!!), but i am confused. what EXACTLY about the trials was a failure and if it was worth the stock dropping 40%, why would ELN proceed to phase III?
i tried reading your previous post about it, but the link is broken. i went to your blog, but i get the 404 msg....

2008 Jul 30 10:03 PM

[BiotechBull:]

I am not impressed that you "called" the negatively perceived data based on top-line resutls that essetially gave you a good picture of yesterday's data 2 weeks ago.

What is striking is that you lack a fundamental understanding of drug development--all pipeline programs are evaluated by drug companies based on their NPV. That said, bapineuzumab addresses a market with an enormously high unmet need and prevalence--and inherently has an attractive NPV--so would you "gamble" $100-$200mm on a phase 3 with the potential (>67% probability of success based on industry standards) of generating revenue >=$1B?

All this drug has to do is show that it won't kill anybody (deaths in study were not treatment related) and demonstrate some efficacy in ApoE4 non-carriers and it will sail through FDA approval and see rapid uptake in the AD market as either a monotherapy or combination with current drugs (that produce minimal benefits for patients).

The bottom line--is that the data didn't impress the investment community (and yourself)--because so many forecasts out there were >$10B.

Bapineuzumab still has a much better than average chance of becoming a blockbuster drug and Wye/Eln will be laughing in a few years when this thing is launched.................

2008 Jul 30 10:32 PM

[Eben Tessari:]

Biotechbull,
I don't totally disagree with your statement about evaluating programs based on NPV but you made one crucial error... why do you assume that all programs have a 67% success rate in phase III?

Just because that is the industry average doesn't mean that it is the
best number to use for bapineuzumab. You have to take other things into account: novel therapeutic target, missing phase II endpoints etc...

Using 67% is mathematically lazy.

Furthermore, your assumption that "all this drug has to do is not kill anyone" is completely off base. The FDA has been tighting like crazy, this is not the agency of four years ago when your comment would have made sense.

Finally, given that:
1.) the drug failed multiple endpoints (and no drug targeting any tau related protein has ever worked in the clinic)
2.) has a pretty nasty dose-dependent AE of vasogenic edema
3.) at best works in 30% of AD patients

I'm all about disagreement but to hand wave using "average" statistics and make wildly off base judgment calls about the FDA approving anything that doesn't kill AD patients is not an argument that impresses me. Especially in the face of the three critical issues laid out above.

Tesa,
I'd totally agree that combination therapy holds the greatest promise.


FrankieCooper
For the record... I have never had a position in Wyeth or Elan. Though I now wish I had pulled the trigger on those shorts.

Also, i fucked up the link in my blog... it's been fixed there and the link here:
www.pharmababble.com/b.../

2008 Jul 31 07:20 AM

[bozak:]

Biotech bull, if all Bapineuzumab needs to do is "not kill anyone" to get approved for an unmet need, why didn't DNDN's drug get approved? They had a huge unmet need, a great safety profile and better efficacy than Bapineuzumab (primary goal met), yet they didn't get approved.

2008 Jul 31 09:22 AM