After burning through $165 million in eight years in hot pursuit of a new diabetes drug, San Diego-based Phenomix is calling it quits, according to a report out this morning from Xconomy. A spokesperson for the company reports that most of Phenomix's staff, included the CEO, have dispersed in recent weeks as a skeleton crew looks for someone interested in taking over its lead program.
Phenomix, once an IPO candidate with bright prospects, lost its strategic partner when Forest Labs dumped their development pact last April and walked away from a $75 million upfront--even though the developer's lead drug dutogliptin had hit its primary endpoint in a pivotal trial.
The problem, explains Xconomy, is that the economics of diabetes drug development has changed radically in recent times as the FDA has significantly raised the bar on safety. The old budget of $150 million to $200 million in development costs no longer worked, with the FDA's stepped-up demands on safety data raising the cost needed to prepare for an NDA. Dutogliptin is also a DPP4 inhibitor, which would also face enormous competition from a set of established drugs in the same class.
"The U.S. market is crowded in the DPP4 space," says Canale's Pam Lord, who acted as spokesperson for the company. "Only a few pharmaceutical companies are candidates for licensing or acquiring dutogliptin, and they themselves have DPP4 programs and can really only develop one at a time."
- here's the story from Xconomy
Special Report: The 2010 Biotech Graveyard. Report