(Updates with Myriad stock price, further analyst comment)
By Gelu Sulugiuc
COPENHAGEN, June 30 Flurizan, an experimental
drug for Alzheimer's disease, failed to help patients in a
pivotal clinical test, dealing a blow to its backers Myriad
Genetics (MYGN.O) and Lundbeck (LUN.CO).
Danish pharmaceutical group Lundbeck said on Monday it would
take a $100 million writedown in the second quarter following
the Phase III test setback, as its shares fell 11 percent.
U.S.-based Myriad said in a separate statement that it would
discontinue development of the drug.
Myriad stock lost a more modest 6 percent in pre-market
dealings, as investors took comfort from the fact that reduced
spending would make the firm profitable earlier than expected.
Flurizan's failure to improve cognition or help patients
with day-to-day activities contrasts with recent encouraging
results with a rival treatment from Wyeth WYE.N and Elan
ELN.I, which proved effective for some people [ID:nL17692292].
"The data is disappointing and it means that Lundbeck has
wasted half a billion Danish crowns on this project," said Jyske
Bank analyst Frank Andersen.
Lundbeck bought the European rights for the Myriad drug last
month for $100 million, hoping it would replace some of the
revenue shortfall when blockbuster antidepressant
Cipralex/Lexapro loses its patent in major markets in 2012-2014.
LUNDBECK SEEKS OTHER DEALS
Lundbeck Chief Executive Ulf Wiinberg said he would continue
to search for other licensing deals within the central nervous
"Our pipeline is not enough to offset the 2012-2014
challenge," he told reporters. "We are looking at any deal that
has scientific merit to meet patients' needs in the market."
The company's chief financial officer, Anders Gotzsche, said
Lundbeck would have 4 billion Danish crowns ($847 million) of
cash in hand by the end of the year, giving it considerable
firepower for doing deals.
"We have enough resources to back up potential in-licensing
or acquisitions we are looking into," he said.
Myriad said it would spend $8 million in the next two
quarters to wrap up its Flurizan programme, but added reduced
spending would make it profitable next year.
"We are disappointed that Flurizan failed to achieve
significance in this study, and we will now discontinue
development of this compound," Myriad President and CEO Peter
Meldrum said in a statement.
"The discontinuation of Flurizan will reduce our
pharmaceutical development spend substantially and should enable
Myriad to achieve profitability next year, ending June 30,
During fiscal 2008, Myriad spent some $60 million on
MYRIAD DIAGNOSTIC PLAY
Geoffrey Meacham, an analyst with JP Morgan, said failure
had been the most likely scenario for Flurizan and he argued
investors were now likely to focus on Myriad's potential in
"We would expect to see significant support for the stock
due to investor interest in the predictive medicines diagnostic
business, which is growing revenues at 51 percent," he said in a
note, reiterating an "overweight" stance on the stock.
Many drugmakers are currently working on new approaches to
tackling Alzheimer's, the most common cause of dementia, that
can modify the disease rather than just relieving its symptoms.
Analysts believe any successful product would be a major
seller with annual revenues of more than $5 billion and possibly
well above $10 billion.
Existing acetylcholinesterase inhibitor drugs, like Eisai
(4523.T) and Pfizer's (PFE.N) market-leader Aricept, can reduce
symptoms but do not modify the course of the disease.
By 1215 GMT, Lundbeck shares were down 11 percent at 106.75
crowns, while the DJ Stoxx European drugs index .SXDP was up 1
percent. Myriad traded at $45 on the pre-market, down 6 percent
from Friday's close.
(Additional reporting by Ben Hirschler in London; Editing by
Louise Ireland, Paul Bolding)