Be­lea­guered Zaf­gen crushed af­ter FDA de­mands force it to dump lead drug

Stymied at the FDA with a lin­ger­ing clin­i­cal hold on its lead obe­si­ty drug, Zaf­gen is dump­ing the ther­a­py and re­treat­ing to a pre­clin­i­cal pro­gram in the pipeline.

The biotech an­nounced af­ter the mar­ket closed on Tues­day that it will now cir­cle the wag­ons around ZGN-1061 af­ter be­lo­ranib was linked with the death of two pa­tients in a piv­otal study. Zaf­gen al­so says it will once again re­duce its ranks, chop­ping 34% of the sur­vivors and cut­ting the pay­roll to 31. The re­or­ga­ni­za­tion is claim­ing the jobs of Patrick Lous­tau, pres­i­dent, and Ali­cia Sec­or, chief com­mer­cial of­fi­cer.

Zaf­gen’s al­ready bat­tered shares plunged 50% by mid-morn­ing Wednes­day. Its shares have shed close to 90% of their 52-week high price, leav­ing the mar­ket cap at $93 mil­lion; less than the cash it has on hand.

Zaf­gen strug­gled might­i­ly for months to over­come its prob­lems, but ul­ti­mate­ly the biotech was over­whelmed af­ter a pa­tient died in their Phase III study for Prad­er-Willi syn­drome, which they de­ter­mined was caused by a pul­monary em­bolism. Sub­se­quent­ly an­oth­er pa­tient tak­ing the drug died, al­so from a pul­monary em­bolism, forc­ing the FDA to or­der a com­plete stop to any fur­ther dos­ing.

Zaf­gen cut its near-com­plete stud­ies short, rolling out pos­i­tive da­ta on weight loss and re­fo­cus­ing on rare dis­eases, but it was all for naught. Reg­u­la­tors weren’t in a for­giv­ing mood, or ready to let the de­vel­op­ment pro­gram con­tin­ue the way the biotech had pro­posed. The FDA didn’t fall­en in line with Zaf­gen’s plan to blaze a path for­ward with a new Phase III study tied to a risk mit­i­ga­tion strat­e­gy. In a call with an­a­lysts on Tues­day evening, CEO Tom Hugh­es said that while the agency ap­peared re­cep­tive to its risk mit­i­ga­tion strat­e­gy, reg­u­la­tors de­mand­ed more time for dis­cus­sion and looked for a longer Phase III that would “great­ly ex­tend” the time­line and cost need­ed to be­gin com­mer­cial­iza­tion work.

As is of­ten the case with Zaf­gen, ex­ecs spun the news hard, with Hugh­es dogged­ly in­sist­ing on the pos­i­tive as­pects of start­ing with a clean slate and a new drug. But Zaf­gen is mov­ing from a piv­otal stage back to a pre­clin­i­cal drug that has yet to be test­ed in hu­mans. Hugh­es in­sist­ed that 1061, which has on­ly been test­ed in an­i­mals, is sig­nif­i­cant­ly de-risked, a po­si­tion few ex­pe­ri­enced drug de­vel­op­ers would con­sid­er plau­si­ble, giv­en the ex­tra­or­di­nar­i­ly high rate of fail­ure for all pre­clin­i­cal pro­grams, let alone the spe­cial de­mands placed on any obe­si­ty drug.

Zaf­gen will still have to con­tend with an­gry in­vestors who watched the share price for the biotech plunge last year as com­pa­ny ex­ec­u­tives re­fused for sev­er­al days to say just why they had can­celled a planned road show. On­ly af­ter a pro­longed pause did the com­pa­ny re­veal that first death, still try­ing to de­ter­mine whether he was in the drug arm or the place­bo group. Sahm Ad­ran­gi’s Ker­ris­dale Cap­i­tal lat­er mount­ed a short at­tack on the wound­ed com­pa­ny, say­ing that be­lo­ranib had ze­ro chance of ever get­ting an ap­proval and was worth noth­ing more than what the com­pa­ny had in the bank, which they would prob­a­bly squan­der any­way.

An­a­lysts were left to sort through the wreck­age Wednes­day morn­ing. RBC’s Simos Sime­oni­dis de­cid­ed to dis­con­tin­ue cov­er­age of Zaf­gen and oth­er obe­si­ty-re­lat­ed biotechs — which have seen lit­tle that could be con­sid­ered pos­i­tive news in some time — and some oth­er skep­tics ad­just­ed their fore­casts for Zaf­gen’s shares to match the amount of cash the com­pa­ny still has in hand.

CEO Tom Hugh­es’ state­ment:

“Giv­en the height­ened com­plex­i­ty and fu­ture cost of be­lo­ranib de­vel­op­ment, bal­anced against the emerg­ing prod­uct pro­file of ZGN-1061, we be­lieve that the long-term op­por­tu­ni­ty for ZGN-1061 is more ro­bust than for be­lo­ranib. Giv­en our deep knowl­edge of this new and ex­cit­ing drug class, and our strong cash po­si­tion, we be­lieve we are well-po­si­tioned to ad­vance ZGN-1061 as a po­ten­tial new treat­ment for preva­lent obe­si­ty-re­lat­ed in­di­ca­tions.”

Hal Barron, GSK

Break­ing the death spi­ral: Hal Bar­ron talks about trans­form­ing the mori­bund R&D cul­ture at GSK in a crit­i­cal year for the late-stage pipeline

Just ahead of GlaxoSmithKline’s Q2 update on Wednesday, science chief Hal Barron is making the rounds to talk up the pharma giant’s late-stage strategy as the top execs continue to woo back a deeply skeptical investor group while pushing through a whole new R&D culture.

And that’s not easy, Barron is quick to note. He told the Financial Times:

I think that culture, to some extent, is as hard, in fact even harder, than doing the science.

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UP­DAT­ED: Stay tuned: Bio­gen’s num­bers are great — it’s their wor­ri­some fu­ture that leaves an­a­lysts skit­tish

Biogen came out with an upbeat assessment of their Q2 numbers today, discounting the arrival of a key rival for its blockbuster Spinraza franchise. But the top execs remain grimly determined to not say much anything new about the sore points that have dragged down its stock, including the future of its big investment in Alzheimer’s or how it plans to invest the considerable cash that the big biotech continues to reap.

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PACT Phar­ma says it's per­fect­ed the tech to se­lect neoanti­gens for per­son­al­ized ther­a­py — now on­to the clin­ic

At PACT Pharma, the lofty goal to unleash a “tsunami” of T cells personalized for each patient has hinged on the ability to correctly identify the neoantigens that form something of a fingerprint for each tumor, and extract the small group of T cells primed to attack the cancer. It still has a long way to go testing a treatment in humans, but the biotech says it has nailed that highly technical piece of the process.

UP­DAT­ED: My­ovan­t's uter­ine fi­broid drug looks com­pet­i­tive in PhI­II — but can they van­quish mighty Ab­b­Vie?

Vivek Ramaswamy’s Myovant $MYOV has closely matched its positive first round of Phase III data for their uterine fibroid drug relugolix, setting up a head-to-head rivalry with pharma giant AbbVie as the little biotech steers to the market with a planned filing in Q4.

Here’s how Myovant plans to prevail over the AbbVie $ABBV empire.

In the study, 71.2% of women receiving once-daily relugolix combination therapy achieved the clinical response they were looking for, compared to only 14.7% in the control arm. The data comfortably reflected the same outcomes in the first Phase III — 73.4% of women receiving once-daily oral relugolix combination therapy achieved the responder criteria compared with 18.9% of women receiving placebo — which will reassure regulators that they are getting the carefully randomized data that qualifies for the FDA’s gold standard for success.

Lit­tle Mar­i­nus sees its shares eclipsed as the Sage ri­val fails to com­pare on PPD in PhII

The executive team at Sage $SAGE have skirted another potential pitfall on its way to racking up a big future for its depression drug Zulresso.

Little Marinus Pharmaceuticals $MRNS had sought to challenge the Sage drug with an IV formulation — followed by an oral version — of ganaxolone for postpartum depression. But researchers say their Phase II study failed to positively differentiate itself from a placebo at 28 days — leaving them to hold up “clinically meaningful” data within the first day of administration compared to the control arm.

Roche cuts loose Tam­i­flu OTC rights, hand­ing Sanofi the keys as the phar­ma gi­ant dou­bles down on Xofluza

Roche set out to make a better flu medicine than Tamiflu as that franchise was headed to a generic showdown. Now they’ll see just how well Xofluza stacks up against the mainstay drug after handing off over-the-counter rights in the US to Sanofi.

Sanofi $SNY says it will now step in to negotiate a deal with the FDA to steer Tamiflu into the OTC market, a role that could well involve new studies to ease passage of the drug out of doctor’s hands and into the consumer end of the market. And the French pharma giant will have first dibs over “selected” OTC markets around the world as they push ahead.

Aca­dia is mak­ing the best of it, but their lat­est PhI­II Nu­plazid study is a bust

Acadia’s late-stage program to widen the commercial prospects for Nuplazid has hit a wall. The biotech reported that their Phase III ENHANCE trial flat failed. And while they $ACAD did their best to cherry pick positive data wherever they can be found, this is a clear setback for the biotech.

With close to 400 patients enrolled, researchers said the drug flunked the primary endpoint as an adjunctive therapy for patients with an inadequate response to antipsychotic therapy. The p-value was an ugly 0.0940 on the Positive and Negative Syndrome Scale, which the company called out as a positive trend.

Their shares slid 12% on the news, good for a $426 million hit on a $3.7 billion market cap at close.

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Some Big Phar­mas stepped up their game on da­ta trans­paren­cy — but which flunked the test?

The nonprofit Bioethics International has come out with their latest scorecard on data transparency among the big biopharmas in the industry — flagging a few standouts while spotlighting some laggards who are continuing to underperform.

Now in its third year, the nonprofit created a new set of standards with Yale School of Medicine and Stanford Law School to evaluate the track record on trial registration, results reporting, publication and data-sharing practice.

Busy Gilead crew throws strug­gling biotech a life­line, with some cash up­front and hun­dreds of mil­lions in biobucks for HIV deal

Durect $DRRX got a badly needed shot in the arm Monday morning as Gilead’s busy BD team lined up access to its extended-release platform tech for HIV and hepatitis B.

Gilead, a leader in the HIV sector, is paying a modest $25 million in cash for the right to jump on the platform at Durect, which has been using its technology to come up with an extended-release version of bupivacaine. The FDA rejected that in 2014, but Durect has been working on a comeback.