Cerulean’s Shares Routed as Cancer Drug Comes up Short Again

Xconomy Boston — 

Cerulean Pharma survived a near-death experience once before. But the Waltham, MA-based company now has another crisis on its hands.

Cerulean (NASDAQ: CERU) said that its lead drug, CRLX101, failed its primary goal in a Phase 2 trial of 115 patients with renal cell carcinoma, a type of kidney cancer. The drug, when combined with mainstay cancer drug bevacizumab (Avastin), didn’t do a better job of keeping patients’ cancer from spreading—what’s known as progression-free survival—than a standard of care therapies such as axitinib (Inlyta) or everolimus (Afinitor).

CRLX101 and bevacizumab, in fact, performed worse than those drugs: Patients on Cerulean’s drug went a median of 3.7 months before their cancer progressed, whereas those on standard of care drugs lasted 3.9 months before their cancer spread.

The results added up to a big stock sell-off Wednesday afternoon by investors. Shares had closed at $2.74 Wednesday and then plummeted more than 61 percent in after-hours trading, to $1.05 apiece, after Cerulean released the results. Cerulean had $47.2 million in cash on hand at the end of June, which it said recently would be enough to fund operations through the middle of next year.

“We are disappointed with this outcome and will undertake a thorough analysis of the data to understand why CRLX101 plus [bevacizumab] underperformed compared to the results we saw in an earlier investigator-sponsored trial,” CEO Christopher Guiffre said in a statement.

Cerulean has suffered through a failed clinical trial before. When Cerulean was still a privately held company in 2013, CRLX101 came up short a mid-stage study in lung cancer. Cerulean pinned the results on a massive error in trial design, as Guiffre explained to Xconomy last year, and managed to survive only by the skin of its teeth. It trimmed more than half its workforce, came up with a new strategic plan, and won board support for about $15 million in two bridge loans to carry out that plan.

The financial lifeline and a strategic shift—to start combining CRLX101 with other agents, such as bevacizumab—gave Cerulean just enough leeway to pull off an IPO. It raised $60 million in the offering in April 2014, albeit on vastly lower terms than it had hoped for. Shares haven’t traded above the company’s $7 per share IPO price since March 2015.

Cerulean has been testing CRLX101 in combination with other drugs in patients with ovarian, rectal, and other cancers, and several of those trials are still ongoing. Today’s study, however, was the company’s biggest test to date. CRLX101—a nanoparticle drug meant to make the highly toxic chemotherapy agent camptothecin safer and more effective—is Cerulean’s only drug in clinical trials.

In a note to investors Thursday morning, Leerink Partners analyst Michael Schmidt called the kidney cancer study results “surprising”and added that he now has “less conviction” on the potential of CRLX-101, which has shown “modest” effectiveness when administered to cancer patients as a monotherapy.

Polaris Partners was Cerulean’s largest shareholder as of an April proxy filing, holding a 17.2 percent stake. Next were FMR LLC (14.4 percent), Venrock (11.1 percent), Crown Ventures (9.5 percent), and Lilly Ventures (8.6 percent). The company was formed in 2005 based on a nanoparticle drug delivery technology developed at MIT and Caltech.