Failed drug trial hits Pharmaxis
Shares in Pharmaxis plunged 52.4 per cent to 15¢ on Wednesday after it said its year-long phase three study of 485 patients with bronchiectasis, a lung disease, recorded a statistically insignificant fall in exacerbation rates.
Two months ago the same drug was rejected by the main US regulatory body, the Food and Drug Administration, for marketing to cystic fibrosis patients.
Pharmaxis stocks are now down 87.9 per cent in 2013, after a 45.6 per cent fall in trading on January 31 when advisers to the FDA negatively reviewed the drug.
“There’s a lot of uncertainty,” BBY healthcare and life sciences analyst Dennis Hulme said.
“Now that the [bronchiectasis] potential is off the table, it looks like Pharmaxis will only have its modest sales in Europe and Australia for the next three years. So they would need to slash their costs substantially to survive in that model.”
Pharmaxis chief executive Gary Phillips said the results of the trial were disappointing but added clinicians involved in the trial felt the results were ‘‘highly clinically relevant’’. ‘‘Clearly there’s a disconnect here in what would satisfy a regulator in terms of going for an approval for the drug, and what clinicians would take as convincing evidence to want to use it in their patients,’’ he said.
Mr Phillips said Pharmaxis’ business model he had been working on had not assumed the bronchiectasis trial would produce a positive result, and that the company would focus on growing its revenue from the use of Bronchitol in countries where the drug has been approved.
Pharmaxis had said this month that it was working with the FDA to design a new Bronchitol trial to improve its chances of breaking into the US market.
Frequently Asked Questions about this Article…
Pharmaxis reported that its year-long phase three trial of Bronchitol in 485 patients with bronchiectasis recorded a statistically insignificant fall in exacerbation rates, meaning the trial failed to meet the targets required for a regulatory submission.
After the trial announcement, Pharmaxis shares plunged 52.4% to 15¢ in one day. The stock was down 87.9% for 2013, following an earlier 45.6% fall on January 31 when FDA advisers negatively reviewed the drug.
Yes. Two months before this trial result, Bronchitol had been rejected by the FDA for marketing to cystic fibrosis patients, and FDA advisers had given the drug a negative review earlier in the year.
CEO Gary Phillips said the results were disappointing but noted that clinicians involved in the trial felt the outcomes were 'highly clinically relevant.' He also pointed to a disconnect between what might satisfy a regulator for approval and what clinicians consider convincing evidence for use in patients.
BBY healthcare analyst Dennis Hulme said there is 'a lot of uncertainty.' He noted that with the bronchiectasis potential off the table, Pharmaxis may be left with only modest sales in Europe and Australia for the next three years and would likely need to slash costs substantially to survive under that model.
Pharmaxis' management had not assumed the bronchiectasis trial would be positive. The company plans to focus on growing revenue from Bronchitol in countries where it is already approved, namely parts of Europe and Australia.
Yes. The company said it is working with the FDA to design a new Bronchitol trial aimed at improving its chances of breaking into the US market.
The key takeaways for investors are elevated clinical and regulatory risk: a failed phase three trial can sharply reduce share value, as happened here. Management plans to focus on existing approved markets and is engaging with the FDA on a new trial, but analysts warn the company may face several years of modest sales and could need substantial cost cutting to remain viable.
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