H. Lundbeck won't be seeing a near-term return on its $100 million investment in Myriad Genetic's Alzheimer's disease candidate Flurizan (tarenflurbil). The ink barely dried on a commercialization deal for the drug before it went south.

After the two partnered on European rights to Flurizan in May, a Phase III study evaluating the selective amyloid beta-42 lowering agent in mild Alzheimer's patients in the U.S. failed to show a benefit on either of two efficacy endpoints, cognition or daily living, the companies announced June 30.

Secondary endpoints in the 18-month trial have so far also failed to show a difference from placebo. The study enrolled 1,684 patients, comparing 800 mg of Flurizan twice daily to placebo.

Myriad said it will discontinue development of the drug. While acknowledging the outlook is diminished, Lundbeck noted a Phase III global study enrolling 840 patients is ongoing, with results expected later this year. An external data monitoring board will review the global study in light of the U.S. trial results.

"Alzheimer's is a disease with highly unmet medical needs, and obviously any project here has high risk," Lundbeck CEO Ulf Winnberg reminded investors during a same-day conference call.

The Danish drug maker jumped into the deal with Salt Lake City, Utah-based Myriad ahead of the release of the data, knowing the candidate would be far pricier if the Phase III results turned out positive (¹ Also see "Lundbeck Places Significant Bet On Myriad Alzheimer’s Candidate Flurizan" - Pink Sheet, 22 May, 2008.).

In Phase II, Flurizan showed benefits for activities of daily living and global function in mild Alzheimer's patients, although no benefits were seen in patients with moderate disease. Many in the investment community had remained skeptical. Short-sellers invested in the stock, anticipating a decline. Shares of Myriad ended the day down 5 percent.

JP Morgan analyst Geoff Meacham assumed a Flurizan Phase III failure in models for Myriad. In a same-day research note, Meacham said, "We saw failure as the most likely scenario; however, we would expect to see significant support for the stock due to investor interest in the predictive medicines diagnostic business."

Myriad sells gene tests for determining predisposition for breast and ovarian cancers. The company had also been shopping Flurizan for a U.S. commercialization deal.

The company spent $60 million on development of Flurizan in fiscal 2008, and expects to spend $8 million over the next two quarters wrapping up the program. Discontinuation of the program should allow Myriad to achieve profitability in fiscal 2009 (ending June 30), according to the firm.

For its part, Lundbeck is writing down the $100 million upfront payment as a one-time expense in its profit and loss statement for the second quarter. The company's shares fell a more substantial 10 percent June 30.

Lundbeck had hoped Flurizan could help offset an anticipated decline in revenues in the 2012-2014 timeframe as its best-selling drug, Lexapro/Cipralex , faces generic competition.

Winnberg was appointed CEO in April, joining Lundbeck from Wyeth, where he was responsible for strategic oversight of biopharma and president of Wyeth Europe, Middle East, Africa and Canada.

"We have in our pipeline some products that many think are very, very exciting for the future, but we know that the pipeline is not enough to offset the 2012/2014 challenge," the chief exec said. As a result, the company is continuing to review licensing and acquisition targets, primarily in the central nervous system disorder area, where the firm is already focused, he added.

The setback for Flurizan is one of many in the Alzheimer's disease area, where several drug makers are working to develop disease-modifying drugs focusing on the build up of amyloid plaques in the brain of Alzheimer's patients.

-Jessica Merrill (j.merrill@elsevier.com)

Lundbeck/Myriad Marriage: Short But Not Sweet

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