Synairgen insists lead drug has potential despite AZ pulling the plug

The decision comes after two phase 2 trials failed to hit the mark.

Shares in U.K. biotech Synairgen are in steep decline today as partner AstraZeneca revealed it was stopping development of its inhaled interferon beta therapy AZD9412.

AZ revealed its decision as it reported first-quarter results this morning, leading to a run on Synairgen with the stock down almost 50% at the time of writing—and despite a statement from chief executive Richard Marsden saying that the program is still active.

The decision does not come out of left field, as Synairgen was forced to abandon a midstage trial of AZD9412 in asthma patients last October after its primary endpoint was compromised by a low rate of severe viral exacerbations that made it impossible to draw any conclusions about efficacy. Further, an earlier phase 2a trial conducted by Synairgen on its own also failed to show an impact on asthma symptoms.

The biotech insists there were encouraging signs that giving the nebulized formulation of interferon beta had "switched on the lungs' antiviral defenses" in the AZ trial—measured using the biomarker CXCL10—and also improved lung function in asthmatics who went on to develop cold or flu infections.

At the time the results were first announced, AZ said it would sift through the secondary endpoint data to see if there was a path forward for the program, but confirmed in a pipeline update today that AZD9412 was one of three candidates removed from phase 2/3 trials.

While the asthma trial data was a bust, Marsden is still hopeful that the drug could show a benefit in patients with chronic obstructive pulmonary disease who often suffer due to respiratory viruses.

"Once we have completed the data analysis, we will provide an update on the program and our plans for future development," he said.

Despite the brave face, it is impossible to underestimate the impact of AZ's decision on Synairgen, which is backed by the investment fund run by U.K. fund manager and biopharma guru Neil Woodford.

Synairgen pocketed $7.5 million upfront when AZ licensed the drug but will now have to forgo up to $225 million in milestones pledged when that deal was first struck in 2014 and look for another partner.

Synairgen's next most advanced project after the inhaled interferon beta candidate is a LOXL2 inhibitor in preclinical development as a possible therapy for idiopathic pulmonary fibrosis, partnered with Pharmaxis.