AbbVie Shares Plummet as $5.8B Bet on Stemcentrx Takes a Hit

Xconomy National — 

There is still a chance that AbbVie’s $5.8 billion gamble on acquiring Stemcentrx, a privately held developer of cancer stem cell drugs, could pay off. But the deal’s prospects dimmed this morning with news that Stemcentrx’s lead drug disappointed in clinical testing, sending shares of Chicago-based AbbVie down.

AbbVie (NYSE: ABBV) said that it won’t seek accelerated approval of a drug known as rovalpituzumab tesirine, or Rova-T. AbbVie had been hoping to speed Rova-T to market off of a small, mid-stage trial in patients with small cell lung cancer (SCLC) who hadn’t responded to at least two other treatments. It’s abandoning that plan, however, because the “magnitude of effect across multiple parameters” wasn’t good enough.

Specifically, in a single-arm study called Trinity, 16 percent of the 177 patients on Rova-T responded to treatment. Those responses lasted a median of 4.1 months. Patients on Rova-T lived a median of 5.6 months. Earlier this month, Leerink Partners analyst Geoffrey Porges estimated that the “hurdle rate for commercial viability” for Rova-T was a 30 percent overall response rate and a median overall survival rate of over 5 months.

The Trinity data weren’t as good as the 39 percent overall response rate and 5.8 month median overall survival rate Rova-T posted in Phase 1, wrote Jefferies analyst Ian Hilliker in a note to investors. The drug also didn’t separate itself from standard of care chemotherapy or emerging immunotherapies. The numbers “have fallen short of what would be required by the FDA for accelerated approval,” he wrote.

AbbVie also reported a variety of side effects associated with treatment, from nausea, vomiting, and anemia to a dangerous buildup of fluid around the lungs. The safety profile “we frankly regard as unacceptable for virtually any cancer drug, but particularly for one with a [4.1] month median duration of response,” Porges wrote on Thursday.

In a statement, AbbVie chief scientific officer and executive vice president Mike Severino said the data “were not what we hoped for,” but noted that two other larger tests of Rova-T in SCLC are still underway and the company “remains committed” to developing it for these patients. The two other trials are Phase 3 studies testing Rova-T in newly diagnosed SCLC patients and those who have failed one line of treatment.

Still, the news sent AbbVie shares plummeting more than 11 percent in early trading. AbbVie paid $5.8 billion up front 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. 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. The Trinity study was an important proof point for that approach. It was “likely to be a key determinant of investor confidence in the company’s business development acumen,” Leerink’s Porges wrote recently.