Isis’ Drug for Crohn’s Disease Fails

In a stunning setback, Isis Pharmaceuticals said Wednesday that its leading new drug candidate--a novel medication for treating Crohn’s disease--proved ineffective in a just-completed trial in 300 patients.

The Carlsbad biotechnology firm is now planning a major restructuring of its operations, including an undetermined number of layoffs among its 400 employees, with the goal of cutting its expenses in half.

Company officials say they were totally surprised by the results when they were analyzed a few days ago because earlier trials seemed to show that patients with the disease were twice as likely to have relief from their symptoms as those given a placebo. Crohn’s disease, which affects more than 800,000 individuals worldwide, is a debilitating disorder that attacks the intestines.

“Unless we find out why [the drug] failed, we are not inclined to proceed,” said Debby Jo Blank, Isis executive vice president.

Because the drug was the most advanced in the company’s pipeline, the market reacted strongly to the news, with share prices dropping by almost two-thirds to close at $5.59 Wednesday, down $9.91.

Blank said she did not believe that the market had overreacted.

“In this environment, everybody’s tired of biotech companies that have interesting science” but fail to show a profit, she said. Isis, founded in 1989, has never been profitable.

Despite the gloom, Isis officials are optimistic that they can survive the setback. The company expects to have about $53 million in cash on hand at the end of the year--enough to keep a more narrowly focused drug development program in place for about two years, Blank said.

And analysts, while disappointed by the announcement, continue to be upbeat about the company’s long-term prospects.

“The market overreacted,” said James McCamant, editor of the Medical Technology Stock Letter, which has long been bullish on Isis. “For those of us who owned the stock, it was a big shock.”

But McCamant said Isis is a leader in its field, with a deep portfolio of new drugs in development. The same drug that failed in the Crohn’s trial is now being tested on two other inflammatory diseases--psoriasis, a chronic skin disorder, and ulcerative colitis, a disease of the large intestines.

Both diseases are very difficult to treat, and success would open up a large market for Isis’ drug candidate, said Sushant Kumar, an analyst with Mehta Partners.

The company has other drugs for cancer that also show promise, Kumar said, including one being tested for lung cancer.

Isis has built its drug pipeline with a difficult but exciting technology called “antisense,” which uses molecules designed to specifically block the expression of a single gene.

The company already has one antisense product on the market, a drug called Vitravene, for treating cytomegalovirus eye infections once common in AIDS patients. But the drug has only had modest sales, largely because improved therapy for AIDS has sharply reduced the occurrence of the eye infections.

Analysts and company officials agree that the failure of Isis 2302 in Crohn’s disease is only a temporary setback for antisense technology.

“This was a failed trial, not a death knell for antisense in any form,” Isis’ Blank said.

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Isis Crisis

Isis Pharmaceuticals’ stock fell as low as $3.88 in intraday trading after the biotechnology company called off plans to pursue government approval of a drug to treat Crohn’s disease. So far this year the company’s shares have lost 57% of their value. Monthly closes and latest:

Wednesday: $5.59, down $9.91

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Source: Bridge News