$5.8B for Nothing: AbbVie Shelves Stemcentrx Drug After Latest Flop

$5.8B for Nothing: AbbVie Shelves Stemcentrx Drug After Latest Flop

AbbVie has officially waved the white flag on the cancer drug that triggered its $5.8 billion buyout of Stemcentrx a few years ago.

North Chicago, IL-based AbbVie (NYSE: ABBV) said that rovalpituzumab tesirine, or Rova-T, failed another clinical trial—this time a Phase 3 study, MERU, testing the drug as a maintenance therapy in patients with newly diagnosed small cell lung cancer (SCLC). At an interim look at the data, the drug didn’t help patients live longer than a placebo.

AbbVie will close the MERU study and shelve Rova-T, “prioritizing other development programs within its oncology pipeline,” the company said in a statement.

AbbVie paid $5.8 billion in cash and stock up front—and promised another $620 million in potential downstream payments—for South San Francisco-based Stemcentrx in April 2016 to get its hands on Rova-T and some other preclinical prospects. Rova-T is a type of antibody-drug conjugate, which combines the targeting power of an antibody with the tumor-killing punch of a toxin. The drug is derived from cancer stem cells and homes in on delta-like protein 3—a molecular target expressed on the surface of a majority of SCLC tumors—and delivers a DNA-damaging agent called pyrrolobenzodiazepine.

The deal was a massive gamble on a field—aiming drugs at cancer stem cells—that has seen several failures. AbbVie made that bet as part of a long-running plan to diversify beyond adalimumab (Humira), which accounts for more than 60 percent of the company’s sales. AbbVie has struggled to lessen its reliance on Humira, which could lose patent protection in 2023. In June it cut a $63 billion deal to merge with Allergan (NYSE: AGN) to soften the blow of Humira’s looming patent loss.

Stemcentrx had generated plenty of hype when the startup, backed by Peter Thiel’s Founders Fund and others, raised an eye-popping $250 million venture round and was reportedly valued at over $5 billion. When AbbVie acquired Stemcentrx, it aimed to start out by winning approval of Rova-T as a third-line treatment for SCLC but backed the drug’s potential for a number of other cancers in which DLL3 expression is a factor as well.

But instead, the drug’s failures have piled up. A Phase 2 study, Trinity, in third-line SCLC, disappointed in March 2018. Then in December, a Phase 3 study, Tahoe, in second-line SCLC, stopped early because patients on chemotherapy were living longer than those on Rova-T. AbbVie subsequently took a $5.1 billion write-off for Rova-T in 2018 and then axed 178 Stemcentrx employees in March, though the MERU study continued. In its latest quarterly filing with the SEC in August, AbbVie said it “continues to evaluate information” regarding Stemcentrx and would “monitor the remaining $1 billion” for a further write-off.

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