More Bad News For Genzyme: This Time, A Phase II/III Phosphate Binder Disappoints

Genzyme is scrapping development of a Renvela/Renagel follow-on after it failed to show a significant advantage.

The negative news for Genzyme keeps coming. The company, already facing costly setbacks related to manufacturing of its enzyme replacement therapies and a "complete response" from FDA for its Pompe disease enzyme replacement therapy, Lumizyme , announced Nov. 18 that it is scrapping development of a Phase II/III drug intended to extend the marketing life of its important renal franchise.

The drug in question is Genz-644470, a next-generation phosphate binder that was in development as a follow on to Genzyme's currently marketed drugs, Renagel (sevelamer) and Renvela (sevelamer carbonate), approved to control serum phosphorus levels in patients with chronic kidney disease on dialysis. Those drugs - which generated $678 million in sales in 2008 - are expected to face patent challenges that could open the door to generic competition in the 2014 timeframe.

Genz-644470, ostensibly a more selective phosphate binder, was expected to be more potent than current therapies, and thus have the potential to continue generating revenues beyond 2014. But in a Phase II/III clinical trial, the drug did not demonstrate a significant improvement in phosphate lowering compared to Renvela, although the drug did meet the primary endpoint of the trial, effectively lowering phosphate levels compared to placebo. The randomized, double-blind trial enrolled 349 adult hemodialysis patients with hyperphosphatemia.

Pale In Comparison To Manufacturing Woes, But Still Significant

News of a Phase II/III failure seems like a minor setback compared to the woes Genzyme is currently facing with manufacturing of its five marketed biologics for treating rare genetic diseases - Cerezyme , Fabrazyme , Myozyme , Aldurazyme and Thyrogen . The biotech announced Nov. 16 plans to close down its Allston Landing, Mass. manufacturing plant for the second time this year after particles of stainless steel and non-latex rubber were found in vials of the drugs (Also see "Continuing Allston Troubles Mean Another Brief Shutdown, Delay For Lumizyme Approval" - Pink Sheet, 16 Nov, 2009.).

Though overshadowed by the manufacturing challenges, the loss of the next generation phosphate binder is still significant, given the importance of the renal franchise to Genzyme's top and bottom lines.

"This development in our view is a game changer," Robert W. Baird analyst Christopher Raymond said in a same-day research report.

JP Morgan analyst Geoff Meacham said in a note, "We view the failure to extend the sevelamer product line as an incremental negative, where we believe nearly $1 billion in renal sales could be at risk by 2014." He added, "We also note that Genzyme segment breakouts suggest the renal business is second only to the therapeutic business (i.e., rare diseases) in terms of contribution to Genzyme profitability."

Amgen also hit a stumbling block in its plan to develop a next generation phosphate binder as an improvement over Renvela. The biotech had been developing AMG 223 - a drug it acquired with the purchase of Ilypsa in 2007 - for treatment of hyperphosphatemia in CKD, but announced in January that it was looking "at a range of options" for the drug after it failed to show superiority over existing treatments in a Phase II dose-ranging study (Also see "Amgen’s Phosphate Binder Loss May Be Genzyme’s Gain" - Pink Sheet, 28 Jan, 2009.).

During a presentation at the Lazard Capital Markets healthcare conference in New York Nov. 18, Exec VP-Legal and Corporate Development Peter Wirth briefly acknowledged the pipeline setback amidst a discussion primarily focused on the manufacturing issues.

The renal business "is a very valuable franchise for us, and I'm sure we'll be looking at other things to keep it growing in the future," he said.

The loss of the key mid-stage candidate puts more pressure on Genzyme's other pipeline assets, particularly the Phase III drugs Campath (alemtuzumab) for multiple sclerosis and mipomersen for homozygous familial hypercholesterolemia (hoFH). Data from a Phase III study of mipomersen released at the 2009 American Heart Association Meeting in Orlando, Fla. on Nov. 17 offered a welcome bit of good news for the biotech: patients with hoFH taking the drug showed a 25 percent reduction in LDL-cholesterol after 26 weeks of treatment, meeting the study's primary and secondary endpoints.

Even as Genzyme celebrates the mipomersen data, the item first and foremost on its to do list remains the speedy resolution of its manufacturing issues. Regulators have been monitoring the situation at Allston Landing for over a year, starting with warning letters regarding microbial monitoring, equipment maintenance and process controls at the plant. Over the summer, the company halted production at the plant for six weeks to sterilize it after several bioreactors were contaminated. Now, there's the latest contamination to contend with.

Genzyme needs to fix the problems for good - and quickly - to protect the supply of its core drugs, or management could be facing a different problem: looking for new jobs. Indeed, on the evening of Nov. 16, in documents filed with the Securities and Exchange Commission, activist shareholder Carl Icahn revealed he'd purchased 1.45 million shares of Genzyme stock. Icahn has a reputation for upping his ownership in troubled biotechs in order to enforce management changes prior to the sale of the company ('The IN VIVO Blog, Nov. 18, 2009).

-Jessica Merrill ([email protected])