Actelion pipeline gets smaller with olesoxime failure

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Rather than a positive note to end 2011, Actelion has received bad news that only increases the pressure on the rest of its pipeline to perform. The amyotrophic lateral sclerosis (ALS) candidate olesoxime failed to extend survival when added to the standard drug Rilutek, a setback that provides another knock to investor sentiment.

Whilst the ALS treatment was projected to be a small contributor to the company’s sales in 2016, its failure shows the risk involved in Actelion shareholders' decision to reject activists’ demands to seek a buyer and instead chose to back a management strategy of investing in its own pipeline and remaining independent (Actelion wins shareholder support as crucial data approaches, May 6, 2011). With pivotal data for pulmonary arterial hypertension (PAH) drug, macintentan, due out in the first half of 2012, time is growing short for the Swiss group to prove its worth.

Neurodegeneration too fast

Optioned from private French group Trophos, olesoxime targets dysfunctional mitochondria to aid in neuronal survival. The hope was that when paired with Rilutek, the only approved drug to treat the degenerative and fatal condition, it would significantly extend lifespan (Event - Actelion hoping for Trophos ALS success, September 23, 2011). However, the combination therapy showed no significant effect when compared with Rilutek alone in the 512 patient, 18-month trial.

Trophos blamed the speed of degeneration in ALS for the failure, saying that a typical patient has lost more than half of motor neurons and neuromuscular connections by the time they are diagnosed. The risk of failure was always high, but the company decided it was worth it, Damian Marron, chief executive said. The company received a €6m European Union grant to support the trial.

“It was always a fear,” Mr Marron said of the risk of failure in an interview with EP Vantage.

“We believe this is a very robust approach to neuroprotection. It’s going to be very difficult to stop something that’s so severe," he added.

Challenging year

Actelion investors were rather nonplussed by the failure. Shares were essentially flat at SFr32.44 in afternoon trading today, reflecting low expectations for success.

Given its 38% market slide this year amid the upheaval of activism by hedge fund Elliott Advisors and turbulent markets, only surprisingly good news would have moved Actelion shares today.

Sales forecasts for olesoxime were rather modest - $54m in 2016, equating to a net present value of $124m, according to consensus forecasts from EvaluatePharma.But the group would still have welcomed the lift in sentiment.

The upcoming data on macintentan is a much bigger event for the group. It is a follow-up to Tracleer, the blockbuster PAH drug that loses market exclusivity in 2015. Success in the phase III Seraphin trial will give investors more security that macintentan can protect the cardiovascular franchise; with a forecast $332m in sales in 2016, macintentan is potentially worth $1.25bn to Actelion.

Thus announcement of the Seraphin trials results will likely trigger much bigger share movement, either way.

One European analyst noted that in spite of the go-it-alone strategy laid out last May, the Seraphin results will dictate the company’s strategy and the nature of a potential trade sale – should macintentan fail, suitors may still be interested in three years of $1.7bn annual sales from Tracleer, but in that event the buyer would probably be quite different than if macintentan succeeds.

 "

In December 2012 there's a good chance Actelion will have been bought, but by very different companies for totally different reasons," he said.

No option

For Trophos, the impact was immediate. Rather than Actelion executing an acquisition as allowed for in the €10m option deal signed last year, the company now will be flying solo (Therapeutic focus – ALS field entering pivotal stage, August 2, 2010). Mr Marron said the company is funded through 2014 to complete phase II trials of olesoxime in spinal muscular atrophy (SMA), and TRO40303, another mitochondria targeting compound, in cardiac ischemia-reperfusion injury.

Both of those trials are backed by non-dilutive funding, with the EU providing an additional €6m in support for the TRO40303 trial and Association Francaise contre les Myopathies backing the olesoxime SMA trial with €6.7m (Therapeutic Focus - Roche ups big pharma stakes in spinal muscular atrophy, November 30, 2011).

The group is also interested in advancing olesoxime in progressive MS, Mr Marron said, and he is trying to pull together financing, preferably from patient groups or the EU, as with the other trials. But Trophos is not ruling out another venture capital round. The company’s last VC round was in 2007, a series C round that raised €8.5m.

Olexosime’s failure in ALS is a mild knockback for both partners, but that is where the similarity ends. Trophos still has several opportunities remaining. Actelion is running out of shots on goal, and it needs the next one to hit the back of the net.

Trial ID NCT00868166

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