Need a Winner, Just Not at All Costs


Usually biotechs try to latch on to anything remotely interesting that comes out of a clinical trial to justify pushing it forward. Some go so far as to mine the data for interesting tidbits. Management desperate to justify their existence is usually to blame. When was the last time you saw a public biotech shut down and hand back the remaining cash to shareholders?

So it was utterly refreshing to see Alkermes (NAS: ALKS) say that it had pre-specified criteria to decide whether to advance its opioid-induced constipation drug, ALKS 37, based on the results of the phase 2b trial.

Unfortunately, the drug didn't hit the criteria. Opioid pain killers induce constipation in many patients, which ALKS 37 was supposed to relieve. The drug did increase bowel movements compared to baseline, but apparently not by enough to justify sending it into phase 3 trials.

Interestingly, ALKS 37 is being tested in an additional phase 2b trial in opioid-induced constipation, but Alkermes didn't even bother to wait for that data before calling it quits. You'd think that was a sign that the data in the first trial was really bad -- the company didn't release any numbers -- but the press release also mentioned the possibility of out-licensing the drug to another company, so perhaps the data was OK but not stellar.

Part of the reasoning for a high bar might be because the opioid-induced constipation market looks to be getting crowded. In addition to the standard laxatives, there's Salix Pharmaceuticals (NAS: SLXP) and Progenics Pharmaceuticals' Relistor, which is approved for the palliative care setting, but is being expanded into patients taking opioids for chronic, non-cancer pain. In the pipeline, there's Cubist Pharmaceuticals' (NAS: CBST) CB-5945, Nektar Therapeutics (NAS: NKTR) and AstraZeneca's (NYS: AZN) naloxegol, and Sucampo Pharmaceuticals' Amitiza.

I like the idea of Alkermes not wasting money chasing a drug that won't work. But drug companies do have to take some risks; there's a lot of gray area between "clearly going to pass a phase 3 trial" and "utter failure." It is possible to become too conservative with R&D dollars.

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At the time thisarticle was published Fool contributor Brian Orelli holds no position in any company mentioned. Click here to see his holdings and a short bio. The Motley Fool has a disclosure policy. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. Try any of our Foolish newsletter services free for 30 days.

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