Osiris left clinging to a niche after Prochymal failure

Osiris Therapeutics’ dreams to develop the world’s first FDA approved stem cell therapy looked to be in tatters yesterday after the failure of its lead candidate Prochymal in not one but two phase III trials for graft versus host disease (GvHD), an event that caused shares in the group to plummet 34%, touching a record low of $7.73 this morning.

Prochymal was designed to prevent immune cells from donor transplants attacking the transplant patients' organs. In two sets of trials, in acute GvHD for newly diagnosed patients and also for those who had failed on steroid treatments, the drug failed to show any effectiveness above placebo.

In the steroid refractory group 35% of patients in the Prochymal arm responded, compared with 30% of those given a placebo, and the drug fared even worse in the first line group, with a response rate of 45% versus placebo at 46%.

Shares in the group had been creeping up prior to the results as some had predicted success based on earlier paediatric data (Event - Osiris shares rise ahead of pivotal data, August 25, 2009). However, there had always been a risk, given the drug’s failure in an earlier trial for Crohn’s disease and the nagging worries over the small size of the preceeding phase II trials, which should have served as a warning as to the potential outcome of the wider study.

Future steps

As to where this leaves Osiris, which sold its only other marketed product to focus on Prochymal and only has a phase II treatment for arthritis of the knee in the clinic, is a thorny question (Osiris takes a gamble on Prochymal success, May 12, 2008).

Yesterday, Randal Mills, Osiris’ chief executive, was keen to point out that the drug had shown efficacy in a subset of patients, those suffering from steroid refractory liver GvHD, where there was a significant difference over placebo.

In patients with steroid refractory liver GvHD, Prochymal’s response rate was 76% against 47% in the placebo group. The durable complete response was also highly significant at 29%, against 5% for placebo.

Unsurprisingly, given these results Mr Mills said yesterday on a conference call that the group would be talking to the FDA about Prochymal in liver, where the need was greatest.

A question of trials

While cynics may see this as grasping at straws, focusing on the liver indication might enable the group to wring some sort of victory out of the disaster of the wider trials. This efficacy in liver GvHD should also be put into the very stark context that the median survival for patients with refractory liver GvHD is just 30 to 40 days, demonstrating that there is desperate need for some form of treatment.

As such the next steps for Osiris include filing an amendment with the FDA to the existing expanded access programme to broaden the entry criteria to include GvHD of the liver. But it is hard to know whether the regulator will approve a drug based on a subset of patients from a clinical trial. What seems more likely is that the FDA will request the group to do a separate set of trials in this population.

While this could delay the drug by anything up to two years, what Osiris does have on its side is money. At the end of the last quarter Osiris had about $120m in cash and no debt, mostly thanks to the licensing deal it struck with Genzyme in November 2008 over Prochymal, which gave it a chunky upfront fee of $130m, as part of a potential $1.4bn commercialisation agreement, a deal that is not looking quite so attractive for Genzyme now, given the drug’s failure in Crohn’s and now wider GvHD.

But if Osiris is to make a go of GvHD of the liver, the group will have to significantly slow its historical quarterly burn rate of about $20m-$25m, something that is possible now that late-stage trials have finished. This might, however, be the very last roll of the dice for Osiris, given the number of disappointments that the group has served up in the last two years.

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