- In a surprise move, Alexion Pharmaceuticals is dropping further development of its drug candidate SBC-103, a potential treatment for mucopolysaccharidosis (MPS) IIIB which it acquired as part of its $8.4 billion acquisition of Synageva in 2015.
- Alexion decided to cut back investment in the drug and doesn't plan to conduct any further studies on the enzyme replacement therapy, according to a brief update tucked into its fourth quarter earnings release. As a result, Alexion recognized an $85 million impairment charge to write-down the asset to fair value.
- Patients currently enrolled in the Phase 1/2 trial testing SBC-103 will continue to receive the drug, but no new patients will be enrolled nor will the trial be expanded.
The decision to cut funding for SBC-103 came as part of a strategic evaluation, Alexion said, and was tied to increases in development timelines and updated cash flows.
But it's not clear what changed in Alexion's development plans. While the drug was still in early-stage testing, SBC-103 had been seen as the leading pipeline candidate in the acquisition of Synageva, which also brought the rare disease drug Kanuma (sebelipase alfa) on board.
On a call with analysts, Alexion executives painted the move as a prioritization decision, pointing to continued enrollment in ALXN-1210, a potential complement to the company's principal revenue driver Soliris (eculizumab).
SBC-103 had been granted both an Orphan Drug designation and Fast Track designation from the Food and Drug Administration. Designed to treat children with MPS IIIB (also known as Sanfilippo syndrome type b), the drug had shown some preliminary evidence of disease stabilization in trial results released last summer.
MPS IIIB is a progressive and serious genetic lysosomal storage disease. Symptoms typically first emerge in infancy and more than half of children diagnosed with the condition die by age 17. There are no approved treatments.
Analysts from Jefferies noted uncertain neurocognitive effects could have played a role in the decision, along with a shift in focus to ALXN-1210. That drug is currently in Phase 3 testing for treatment-naive adult patients with paroxysmal nocturnal hemoglobinuria and could potentially reach the market by late 2018 or early 2019.
But the decision to cut further funding for SBC-103 draws attention to Alexion's returns from its $8.4 billion deal to pick up Synageva. Kanuma has failed to deliver as expected, earning only $11 million in sales in the fourth quarter last year.
Slow growth from Kanuma, as well as Alexion's other marketed drug Strensiq (asfotase alfa) has meant Alexion continues to be almost wholly dependent on revenues from Soliris. Alexion has given guidance that predicts Soliris will account for nearly 90% of all revenues in 2017.
Interim CEO David Brennan, who took over after an investigation into Soliris sales practices led to the departure of the former CEO and CFO, can still hang his hat on a growing Soliris franchise. But questions may begin to mount about the future, especially as the search for a new permanent CEO continues.