Top 10 Phase III disasters of 2014

Welcome to the hall of shame, where blockbuster drug projections go to die. Below you'll find some drugs that clearly should never have wound up in Phase III to begin with, a few that were actually steered back to the clinic in a doomed attempt to mine something positive after wasting millions on clinical trials and a couple of notable exceptions that may have helped advance the field by exploring the outer limits of new drug technology.

Some big trends emerge from the wreckage. Over the past year we've seen some conclusive evidence that cancer vaccines don't work very well--when used as a solo treatment. We have new evidence that cardio studies remain high cost and ultrahigh risk. And there are a couple of fresh examples of what happens to a biotech when you bet big on one Phase III--and fail.

Unlike past years, though, there's an important caveat to make. Eli Lilly ($LLY), one of the regulars on the list for the past few years, is back with a notable late-stage flop. But after some significant advances on the approval front, particularly regarding the new GLP-1 drug dulaglutide, a setback like this doesn't sting quite as much in 2014. GlaxoSmithKline ($GSK) had a slate of approvals before its two big Phase III failures, which helps. In general, you can make the case that Big Pharma pipelines have moved up a notch. And with more than $70 billion in R&D costs budgeted each year among the Big 10, that's an important sign.

But when a company like Merck KGaA has to throw in the towel a second time on a big program like tecemotide (Stimuvax), it has to make some analysts wonder if some of the larger companies still suffer from a deep-seated state of denial when it comes to pursuing false signals in the clinic. Combined with the cladrabine fiasco and a weak pipeline some years after the big Serono buyout, and you have to wonder whether all those billions were simply wasted.

-- John Carroll (email | Twitter)

1. Darapladib -- GlaxoSmithKline
2. Tecemotide (Stimuvax) -- Merck KGaA
3. MAGE-A3 -- GlaxoSmithKline
4. Cabozantinib -- Exelixis
5. Serelaxin -- Novartis
6. Tabalumab -- Eli Lilly
7. Bitopertin -- Roche
8. Dacomitinib -- Pfizer
9. Vintafolide -- Merck and Endocyte
10. Revolixys (REG1) -- Regado Biosciences

Darapladib -- GlaxoSmithKline
All drug failures in the clinic sting. This one hurt.

GlaxoSmithKline ($GSK) gambled big on darapladib, enrolling 30,000 cardio patients in two big Phase III studies and tracking them for more than two years. This atherosclerosis drug was one of the key attractions to the Human Genome Sciences buyout, and R&D chief Moncef Slaoui was convinced that this program--for an Lp-PLA2 inhibitor that promised to reduce arterial plaque in patients--represented a shot at a major innovation in medicine.

Investigators scrambled to save the drug after the first Phase III was written off as a loser in late 2013. The primary endpoint on the second Phase III study was changed to up the odds for success. And the study leaders remained convinced that they were on the right track. Harvey White looked over the data from the first trial and told Reuters, "I'm convinced there is a signal here of efficacy."

Analysts projected peak potential sales in the billions. But this drug also failed its midstage study, unable to demonstrate any ability to rehabilitate plaque-lined arteries. But investigators pointed to intriguing data indicating that it had a tonic effect on what is called the necrotic core. Patients with atherosclerosis were vulnerable to seeing the necrotic core rupture, causing possibly fatal blood clots. And darapladib kept the core stable, apparently, in the 330-patient study.

But the second Phase III this year was devoid of positive signals, performing virtually exactly as the placebo did. The only real difference was an unpleasant odor reported by patients in the drug arm and a higher rate of diarrhea. In the end, White and the others found that the siren call of a purported "signal" had simply led them straight to the rocks.

-- John Carroll (email | Twitter)

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Tecemotide (Stimuvax) -- Merck KGaA
An R&D fiasco raises some serious questions for a two-time loser.

One big question jumped out the minute Merck KGaA simply shut down its latest Phase III effort for tecemotide in lung cancer: What were they thinking?

This is a cancer vaccine that was in-licensed from Oncothyreon ($ONTY) which failed, badly, in its maiden Phase III journey. Merck KGaA did the logical thing, scrapping the development program and taking a charge for the failure. Then investigators followed up by compounding the initial mistake with a blunder, chasing signs in a subgroup analysis (there's one red flag) that patients receiving concurrent treatment with chemo plus radiation scored well in the study. But after a separate, early-stage study in Japan flunked out with woeful data, there was no reason to go on.

Merck KGaA's Serono division is not the kind of company that can pursue a lot in late-stage development. So by devoting time and money for tecemotide, the distraction cost them badly at a time when they should have been doing new deals for drugs with a much better shot at success. Now the Darmstadt-based biopharma company is left with an even weaker pipeline and fresh evidence after the cladribine fiasco in multiple sclerosis that its R&D division is in a quandary.

Merck KGaA may have provided a clear signal about its thoughts regarding drug development when it recently purchased Sigma-Aldrich, a research services group, for $17 billion while beefing up its budget for biosimilars. Follow-ons and services may provide a more stable path forward with more reliable margins than R&D.

-- John Carroll (email | Twitter)

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MAGE-A3 -- GlaxoSmithKline
A cancer vaccine failure that might help open up a new R&D approach.

Cancer vaccines once captured the industry's attention with the compelling notion that if you could rev up the immune system to send out its soldiers to attack cancer, you could change the course of the disease. That didn't really prove to be the case, though. Cancer cells are designed to avoid detection, and investigators found out in the MAGE A-3 studies--like in other cancer vaccines such as tecemotide (Stimuvax)--that just sending bigger attack waves wasn't enough if they largely missed their targets.

For R&D chief Moncef Slaoui, it meant going 0 for 2 on the most innovative drugs in the pipeline as another blockbuster vision faded.

But that doesn't mean that all the money was squandered. As investigators were throwing in the towel on this Phase III program, others at Merck ($MRK), Bristol-Myers Squibb ($BMY) and Roche ($RHHBY) have been making some real headway with checkpoint inhibitors for PD-1 and PD-L1--new therapies that cripple cancer cells' stealth design. And some of the investigators are now calling for a new round of studies to see what a combination of a cancer vaccine and a checkpoint inhibitor can do together. Those combos in turn can also be matched with targeted therapies for specific cancers. And the future of the cancer drug cocktail looks to have some big potential.

Actually, one company, Berkeley, CA-based Aduro, has been doing just that. The company is already moving ahead at Johns Hopkins with a combination trial that adds Bristol-Myers Squibb's checkpoint inhibitor nivolumab to a mix of GVAX--a once-failed cancer vaccine--and its CRS-207. Stay tuned for more; the cancer vaccine story isn't finished yet.

-- John Carroll (email | Twitter)

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Cabozantinib -- Exelixis
A big Phase III bet goes bad, forcing company-wide layoffs.

A few days ago, shares of Exelixis ($EXEL) got a nice bounce off the news that a Roche ($RHHBY) study had delivered some positive data for cobimetinib, a drug that the biotech had outlicensed back in 2006. But Exelixis couldn't hold on to the gain, watching the price sink back down to the $1.50 mark, a 57% drop over three months.

The problem with Exelixis, and it's a big one, is that its first Phase III trial of cabozantinib for prostate cancer had flunked out in a big Phase III study in September, hammering its share price and raising questions about the company's strategy. Faced with clear evidence of failure, investigators halted enrollment in COMET-2 but plan to examine top-line results at the end of the year. The failure cost the jobs of 70% of the biotech's staff.

Exelixis' zealous CEO, Mike Morrissey, bet the farm on the program after taking the helm following George Scangos' departure for Biogen Idec ($BIIB) in 2010. And he went on to win an approval for cabo as a treatment for a rare form of thyroid cancer. After reorganizing the company, though, he shelved some of Scangos' R&D initiatives to keep the spotlight on cabo for prostate cancer. And he tangled with regulators early on over the Phase III design, which raised eyebrows among some of the analysts covering the company.

In the meantime, leaders in the field like Medivation ($MDVN) and Johnson & Johnson ($JNJ) have changed the standard of care. A comeback for Exelixis won't be easy.

-- John Carroll (email | Twitter)

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Serelaxin -- Novartis
When breakthrough speeds up, then breaks down.

Breakthrough Therapy Designation is no golden ticket. Novartis ($NVS) found that out the hard way. The FDA wasn't alone--EU regulators also showed serelaxin the door. The synthetic version of the hormone relaxin that aids pregnant women works by relaxing the blood vessels. But serelaxin only met one primary endpoint and missed the other in a Phase III trial to treat acute heart failure.

Both primary endpoints were designed to measure breathlessness: one at day 5 and the other at 6, 12 and 24 hours. The latter did not reach significance. Novartis opted to proceed with the single Phase III trial data into a review, and regulators were displeased uniformly.

Both the FDA and EMA rejected it earlier this year, deciding to wait on the results of an ongoing 6,300-patient Phase III trial with outcomes data expected by 2016.

The FDA was unconcerned about the safety of the drug but skeptical of its efficacy. It noted that small increases in dosage of existing IV diuretics could easily be used rather than serelaxin to manage this patient population. And it noted that the reduction in diuretic use between the placebo and active groups was small, indicating a "small treatment effect."

-- Stacy Lawrence (email | Twitter)

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Tabalumab -- Eli Lilly
Throwing good money after bad, when pharma won't give up.

Eli Lilly's ($LLY) tabalumab failed in another Phase III trials for a second indication this year before the pharma finally pulled the plug on it. Last year, it failed in rheumatoid arthritis and then this October it failed in lupus. Lilly took a $50 million charge and a $75 million charge respectively for each of these pipeline failures.

Lilly ran two Phase III trials for tabalumab to treat lupus: ILLUMINATE I and II. In the first, it failed to meet the primary endpoint, while in the second only the high dose succeeded. Researchers scrapped it anyway, since it didn't measure up to existing therapies.

But the loss of tabalumab for lupus wasn't seen as a major setback by Wall Street, which had already low-balled potential earnings projections based on sales for lupus drug Benlysta that are under $200 million globally. GlaxoSmithKline ($GSK) acquired Benlysta when it bought Human Genome Sciences for $3 billion in 2012.

"Although we were pleased that tabalumab met the criteria for statistically significant improvement in the SRI-5 endpoint in one of our trials, we are nonetheless disappointed that the overall results did not meaningfully improve the condition of the patients in these studies," said Dr. J. Anthony Ware, SVP of product development at Lilly Bio-Medicines, in a release.

He added, "The ILLUMINATE trials are the largest Phase III clinical studies in lupus to date, and we are hopeful that our contribution of the extensive data from these studies will advance knowledge to enhance treatment in this devastating illness. Lilly remains committed to developing potential new medicines for the treatment of autoimmune conditions, including lupus." The pharma has an undisclosed Phase I candidate in lupus, according to its website.

-- Stacy Lawrence (email | Twitter)

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Bitopertin -- Roche
Schizophrenia failures prove neuroscience continues to be unyielding.

Roche ($RHHBY) has almost given up hope for Phase III schizophrenia drug bitopertin. Of its ambitious 6 Phase III trial programs, three did not meet their primary endpoints and were discontinued during the first quarter. Of the remaining three trials, two were discontinued in April with the third, focused on suboptimally controlled symptoms, continuing.

Despite these bitter disappointments, bitopertin remains officially in Roche's pipeline for this indication, as well as for Phase II testing in obsessive-compulsive disorder with a projected regulatory filing date of 2017 or later.

The glycine transporter-1 inhibitor had a difficult set of Phase III endpoints. The initial studies were designed to test the treatment's ability to control negative symptoms of the disease, leaving investigators with the difficult task of measuring patient improvement in areas like a lack of motivation and poor social skills. Roche has remained active in neurosciences even as competitors have exited after repeated failures.

The failures are a setback for Roche's Pharma Research and Early Development (pRED), the Basel-based R&D operation that has been aiming to improve research productivity under John Reed. Reed had called out bitopertin as one of Roche's top neuroscience prospects.

Roche has three Phase I candidates for schizophrenia: RG7203, a small-molecule inhibitor of phosphodiesterase 10A; RG7342, a selective small-molecule positive allosteric modulator targeting the glutamatergic system in the brain; and RG7410, which has an undisclosed mechanism.

-- Stacy Lawrence (email | Twitter)

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Dacomitinib -- Pfizer
A double dose of failure brightens the spotlight on a thin pipeline.

Years of sweeping budget cuts and R&D efficiencies have left Pfizer ($PFE) with a lean late-stage pipeline and, thus, little room for error in execution. So the failure of dacomitinib--a lung cancer treatment the company heralded as key to its future in oncology--in two Phase III trials was particularly painful.

The drug is an oral pan-HER inhibitor, designed to block protein modification and interrupt tumor signaling, thus killing cancerous tissues. In an ambitious late-stage program, Pfizer studied the drug against the EGFR-blocker Tarceva and against placebo in separate studies, finding that its compound failed to significantly prolong progression-free or overall survival versus its comparators.

Dacomitinib isn't quite at the end of the road, though. A third Phase III trial, evaluating progression-free survival in lung cancer compared to Iressa, is still underway with results due next year, and Pfizer is conducting the de rigueur subpopulation analysis of its other studies to see whether the drug was particularly effective among certain patients.

But the dacomitinib setback is a bitter blow for Pfizer's hopes in oncology. The company's protracted quest to buy AstraZeneca ($AZN) for nearly $120 billion was in part an admission that it has fallen well behind in the race to commercialize next-generation cancer therapies. With that deal on ice, at least for now, Pfizer's late-stage oncology hopes rest largely on palbociclib, a breast cancer treatment so promising that the company has submitted it for FDA approval based on Phase II data alone. The treatment, a CDK 4/6 inhibitor, could bring in peak sales of $3 billion, but competition is on the way from Novartis' ($NVS) LEE011, Eli Lilly's ($LLY) bemaciclib and others.

-- Damian Garde (email | Twitter)

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Vintafolide -- Merck and Endocyte
A billion-dollar cancer prospect comes up short.

Back in March, things were looking swell for Merck ($MRK) and partner Endocyte ($ECYT). Their drug, which Merck adopted in a deal worth up to $1 billion, had just won a recommendation for conditional European approval to treat ovarian cancer based on Phase II data, and the pair had recently unveiled positive results from a midstage trial in non-small cell lung cancer. With Phase III ovarian cancer results on the way, vintafolide seemed to be building a strong case as a pan-cancer contender.

And then everything came apart. Two months later, the partners got word from their data and safety monitoring board that, in an interim analysis, investigators determined that vintafolide had essentially no chance of meeting its primary endpoint of extending progression-free survival in the late-stage ovarian cancer study. Following the board's advice, Merck and Endocyte halted enrollment in the study, and, upon further review of the data, the two pulled their European marketing application.

The news sent Endocyte's shares down more than 60% in a single day. And while the company hasn't given up on vintafolide, investors took little interest in Phase IIb lung cancer results in which the drug improved progression-free survival but didn't achieve statistical significance.

For Merck, the drug's failure leveled a pillar of the company's oncology ambitions, but vintafolide had always come in a distant second behind pembrolizumab. That drug, a member of a new class of cancer treatments that spur an immune system attack on tumors by blocking a pathway called PD-1, won FDA approval to treat melanoma last month, making it the first such immunotherapy to reach the U.S. market and putting Merck in line to reap as much as $3.5 billion a year if it can come through on its plan to string together a slew of indications.

-- Damian Garde (email | Twitter)

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Revolixys (REG1) -- Regado Biosciences
A risky cardio dice roll craps out.

Last year, as it mounted the requisite road show in hopes of joining the scores of biotechs pulling off Wall Street debuts, Regado ($RGDO) made a simple case for itself: The company had a promising anticoagulant ready for Phase III, and, with a $75 million IPO and $51 million in venture cash in the bank, it was going to pay for a 13,200-patient study on its own.

That pitch didn't quite resonate with investors, and Regado limped onto the public markets last fall with a severely discounted raise that brought in just $47 million. But that was enough to at least begin the Phase III process for Revolixys, a two-component anticoagulant designed to control bleeding during coronary interventions and open-heart surgeries.

Roughly 9 months into the process, however, investors' wariness began to look prescient. In July, the company paused its trial to allow a safety monitoring committee to investigate some potentially dangerous allergic reactions among subjects. A week later, the FDA stepped in and placed a full clinical hold on the Revolixys study, and, in August, the biotech confirmed what investors feared: Serious allergic reactions made it impossible to continue the trial.

Now the company is working to save as much money as it can, last month laying off 60% of its staff and regrouping to figure out its next move. This month, CEO David Mazzo resigned from the top spot, but the company hasn't resigned to calling it quits, planning to look into "strategic alternatives to optimize value for shareholders," as Chairman Dennis Podlesak put it. The biotech's remaining assets are the Phase I REG2, a subcutaneous treatment using the same active ingredients as Revolixys, and the preclinical antiplatelet therapy REG3.

-- Damian Garde (email | Twitter)

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