- Canadian drugmaker Bellus Health saw more than three-fourths of its market value erased Monday morning after its main drug failed in a mid-stage study of chronic cough patients for whom other treatments hadn't worked.
- Bellus' drug wasn't significantly better than placebo at reducing the frequency at which patients coughed. However, Bellus claimed the trial did show a "clinically meaningful and highly statistically significant" effect in a group of patients who had high cough counts — around 32 per day — at the start of the study. As a result, the company is planning to initiate in the fourth quarter a Phase 2b trial focused on these patients.
- For now, though, the trial miss puts Bellus further behind Merck & Co., which is leading in the race to develop the first approved treatment for refractory chronic cough. Some research indicates that roughly 10% of adults develop chronic cough during their lives, setting up a large opportunity for drugmakers who can get a product on market.
Monday's announcement might have taken Bellus investors by surprise. Last month, Jefferies hosted an investor call with a cough specialist who, according to the investment bank, expected the Phase 2 study to read out positive and show efficacy data "as good as" Merck's gefapixant, which works in a similar way to Bellus' drug.
Louise Chen, an analyst at investment bank Cantor Fitzgerald, also noted Monday how Wall Street views Bellus' drug as having the best side effect profile in its class.
Yet, with negative results in hand, Bellus now finds itself further behind its big pharma rival. Merck released in March high-level results from a couple of large studies that found patients who took a certain dose of Merck's drug had significantly greater decreases in their average hourly cough frequency.
"We think this is good news for [Merck]," Chen wrote in a Monday note to clients. Merck shares were up almost 1% in late morning trading, while Bellus' fell roughly 80% to sit around $2.60 apiece. The stock drop eliminated nearly $600 million from the company's market value.
Merck took ownership of gefapixant through its 2016 acquisition of Afferent Pharmaceuticals, a deal worth $500 million upfront. Since then, gefapixant has come to be one of the pharma's most closely watched pipeline drugs, potentially offering an important source of future revenue for a company dependent on sales of its cancer therapy Keytruda and the HPV vaccine Gardasil.
Other companies, including Bayer, Germany's Evotec and Japan's Shionogi, are working on their own chronic cough treatments that are similar to Merck's and Bellus'. The drugs block a protein receptor that makes sensory neurons more sensitive, in theory preventing the hyper-sensitization in the airways and lungs that can lead to chronic cough.