Roche Said to Return Diabetes Drug Rights to Ipsen

Roche Holding AG (ROG) returned rights to the experimental diabetes drug taspoglutide to developer Ipsen SA (IPN) after patients dropped out of trials because of side effects, according to two people with knowledge of the matter.

Roche told Ipsen of the decision this week, and plans to announce it tomorrow with 2010 earnings, according to one of the people, who declined to be identified because the information is confidential. Claudia Schmitt, a spokeswoman for Roche in Basel, Switzerland, and Didier Veron, an Ipsen spokesman in Boulogne-Billancourt, France, declined to comment.

The decision may mean the end of development for a drug that some analysts once predicted would have annual sales of more than 1 billion euros ($1.38 billion). Ipsen may choose to pursue late-stage clinical trials on its own, though they probably would cost more than 500 million euros, which would be “highly value destructive,” according to Luisa Hector, an analyst at Credit Suisse Group AG in London.

“The key is whether Ipsen will pursue development alone,” Hector wrote in a report to clients today. “The most likely scenario is that they don’t but we see little value in the shares if they do.” She has a “neutral” rating on Ipsen’s stock.

Roche said in June it would delay seeking regulatory approval for taspoglutide by at least 12 to 18 months because of the side effects, and in September it halted clinical trials. While research presented in June at an American Diabetes Association meeting showed the medicine kept diabetes in check, patients were more likely to report nausea and vomiting.

Share Slump

Ipsen dropped less than 1 percent to 25.55 euros in Paris trading after declining as much as 1.9 percent.

Before today, the shares had fallen 20 percent since Roche announced the delay in development on June 18, compared with a 0.1 percent increase for the Bloomberg Europe Pharmaceutical Index. Roche has dropped 9.6 percent.

Ipsen will comment on taspoglutide when it announces fourth-quarter sales tomorrow, Veron said in a telephone interview. He wouldn’t elaborate.

“It will be hard for them to find another partner,” Guillaume Cuvillier, an analyst at Gilbert Dupont in Paris, said in a telephone interview. “If Roche dropped the treatment, it means there isn’t much hope for taspoglutide. It wouldn’t make sense to embark themselves alone in this perilous adventure.”

Competing Products

Taspoglutide is a GLP-1 analogue, a newer class of diabetes medicine that boosts insulin production after meals. A failure of the drug would benefit competing products, including Byetta from Eli Lilly & Co. (LLY) and Amylin Pharmaceuticals Inc., a weekly version of Byetta called Bydureon, and Novo Nordisk A/S (NOVOB)’s Victoza.

In one study, between 40 percent and 47 percent of diabetes patients given taspoglutide reported nausea as a side effect, compared with about 30 percent of people given Byetta. Rates of vomiting and injection site reactions were also higher.

GLP-1 analogues mimic a hormone called incretin, which stimulates the pancreas to produce insulin when blood sugar levels rise too much. Diabetics can’t produce enough insulin to absorb sugar, which collects in the blood rather than being absorbed by muscle and fat cells. This accumulation can lead to kidney failure, blindness and heart disease.

Leadership Change

Jean-Luc Belingard, the former CEO of Ipsen, said in an August interview the company still considered taspoglutide “an exceptional product,” whose efficacy “has never been called into question.” Belingard was replaced by Marc de Garidel, a former Amgen Inc. executive, in November following differences with the board of directors over expansion.

Ipsen, best known in France for the Smecta diarrhea remedy, in December also said it was dropping development of an experimental medicine to treat two hormone-related illnesses after it failed to meet targets in mid-stage patient tests.

The future of the family-controlled drugmaker isn’t at risk though, according to Gilbert Dupont’s Cuvillier.

Ipsen “won’t have, in the short term, the kind of growth rates we were hoping for, but it still has some products it can count on for growth,” Cuvillier said, citing prospects for the company’s anti-wrinkle treatment, which is already sold in countries such as the U.S. and rivals Allergan Inc. (AGN)’s Botox. Cuvillier has a “buy” recommendation on Ipsen shares.

To contact the reporter on this story: Albertina Torsoli in Paris at atorsoli@bloomberg.net

To contact the editor responsible for this story: Phil Serafino at pserafino@bloomberg.net

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