Abbott’s Partner Ends Trial of Kidney Failure Drug
Abbott Laboratories (ABT) and its development partner ended a trial of one of their top drug candidates, citing complications and death. Abbott fell as analysts said the setback was a blow to the company’s growth prospects.
Abbott and partner Reata Pharmaceuticals Inc. were testing the drug, bardoxolone methyl, for use in chronic kidney disease. The study was in the third of three stages of clinical tests usually required before U.S. marketing clearance.
Patients in the trial had “excess serious adverse events and mortality in the bardoxolone methyl arm,” the Abbott Park, Illinois-based company said in a regulatory filing today announcing the end of the trial. Combined with an earnings release that led the shares to fall yesterday, Abbott’s market value has dropped about $8.6 billion in the last two days.
“This is certainly a negative for Abbott, as this development program was, along with Hep-C, one of two potential multi-billion dollar pipeline opportunities for Abbott,” said Michael Weinstein, an analyst with JPMorgan Chase & Co. The announcement “calls into question the path forward for the compound,” he said in a note to clients today.
Abbott declined 3.5 percent to $66.64 at 4 p.m. New York time, after losing 4.3 percent yesterday when the company released third-quarter earnings and provided details of its plans to split in two.
“It doesn’t impact our 2013 financial profile information,” Scott Davies, an Abbott spokesman, said in a telephone interview. David Sherzer, a spokesman for Reata, declined to comment beyond a statement the company posted on its website that announced the end of the trial.
Richard Gonzalez, who will be chief executive officer of the prescription drug company AbbVie that Abbott is spinning off, said last year that bardoxolone might generate $1 billion in sales and be on the market by 2014.
The trial failure likely takes down a key pipeline product that would have helped Abbott’s soon-to-be-independent drug company, AbbVie, grow after the companies split in two on Jan. 1. It could also have helped replace sales of Humira, Abbott’s top drug for rheumatoid arthritis, which loses patent protection in 2016.
“This is obviously disappointing news for Abbott as investor excitement around Abbott’s late stage pipeline had been growing in anticipation of the split off of the AbbVie branded pharmaceuticals business,” said Derrick Sung, an analyst at Sanford C. Bernstein & Co. in New York. “With the termination of bardoxolone, Abbott’s late stage pipeline prospects are pinned squarely onto the success of Abbott’s” hepatitis C drugs, he said in a note to clients today.
Abbott announced yesterday that the tax rate for AbbVie would double to 22 percent from what it had been paying this year. The company will pay the higher rate to bring profits earned abroad back to the U.S. and fund a dividend to shareholders after the companies split.
Patients with chronic kidney disease lose their ability to filter blood, letting waste build up in the body. About 50 million people worldwide have some form of it, according to Abbott. People with advanced disease may need dialysis. Bardoxolone is meant to improve the functioning of damaged kidneys.
To contact the reporter on this story: Drew Armstrong in New York at firstname.lastname@example.org;
To contact the editor responsible for this story: Reg Gale at email@example.com