J&J dumps $625M diabetes drug pact with Diamyd

Just weeks after reporting the failure of its late-stage study of a Type 1 diabetes treatment, Diamyd Medical has announced that J&J's Ortho-McNeil has handed back the rights to the drug. And the Swedish biotech--which pocketed a $45 million upfront from J&J's $625 million licensing deal last year--says that it is abandoning plans to follow up on patients enrolled in the study.

"We have thoroughly enjoyed working with Ortho-McNeil-Janssen Pharmaceuticals, and we hope to have more opportunities for cooperation in the future," says Peter Zerhouni, acting president and CEO of Diamyd Medical. "With all the rights to returned to us we are free to decide on how to extract the most value from GAD65 going forward."

The late-stage failure marks a setback for J&J, which has been an avid deal-maker in the biotech arena, snapping up new drugs and winning kudos from analysts for its successes. Diamyd, though, still has hopes for the antigen-based therapy. It has a parallel U.S. Phase III trial, DiaPrevent, underway and the biotech says that it's possible the data will point to a success.

DiaPrevent was fully enrolled in December 2010 and results are expected in the summer of 2012. In addition, the research consortium Type 1 Diabetes TrialNet is conducting a Phase II trial with Diamyd in the US and Canada with a similar design. Another Phase II study with Diamyd is in progress aiming to prevent type 1 diabetes from developing in high risk subjects.

- read the release on J&J's exit
- here's the release on Diamyd's late-stage plans