Theravance Biopharma has one more chance for the Johnson & Johnson-partnered JAK inhibitor izencitinib after the therapy failed to alter symptoms of ulcerative colitis in a midstage test.
J&J's pharmaceutical unit Janssen dished out $100 million upfront in a partnership with Theravance to develop izencitinib back in 2018. Another $900 million in milestones are on the line for the therapy, which Theravance is also testing in a phase 2 trial for Crohn's disease. Janssen can opt out of the collaboration following the phase 2 studies.
But an opt-in from J&J is unlikely at this point, according to SVB Leerink analysts. The firm already placed the program on thin ice before the Monday stumble.
"In our view, this program appears to have no future, and we have no confidence that it will show benefit in Crohn’s disease, or in the continuing follow-up observations in ulcerative colitis," SVB Leerink said.
It's safe to say that the small Irish biotech was looking for better results with the phase 2b test. Instead, the company revealed after market Monday that izencitinib failed the main goal of the trial, which was to induce a change in symptoms of ulcerative colitis such as rectal bleeding, stool frequency and physician-assessed severity.
The therapy also failed a key second endpoint of achieving clinical remission at week 8 compared to placebo in the dose finding study.
The trial flop is a blow to Theravance, which wanted to go up against some of the biggest medicines in the crowded immunology business—including partner Janssen's Stelara and AbbVie's Humira. Bristol Myers Squibb also secured an FDA nod for Zeposia in treating ulcerative colitis patients in May.
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Janssen will still have Stelara and the $7.7 billion in revenue collected in 2020 to fall back on. The world's largest healthcare company snagged FDA approval for Stelara in ulcerative colitis in 2019, which added to a badge in Crohn's disease from 2016 and other indications dating back to 2009.
Theravance, on the other hand, will need some good results from the second trial in Crohn's disease, which is ongoing, the company said.
Shares of Theravance dropped nearly 25% to $10.74 apiece in after hours trading after the trial results were issued.
Balancing safety and efficacy
Prior to the failure, Theravance had big hopes for izencitinib and was prepping a late-stage study of the gut-selective JAK inhibitor in moderately-to-severely active ulcerative colitis later this year, CFO Andrew Hindman said during a Monday afternoon investors call.
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Theravance "wanted to thread the needle" with finding the highest possible dose for the phase 2b trial given the "safety liabilities with JAK inhibitors in general," said Richard Graham, senior vice president of development.
JAK inhibitors have come under increasing scrutiny by the FDA since Pfizer’s Xeljanz was flagged for heart-related side effects. The entire class of medicine is now being examined more closely with drug after drug getting hit with regulatory delays, such as Incyte’s Jakafi.
Theravance was clearly trying to be careful with dosing and did not see any safety signals of concern, but unfortunately missed the mark on efficacy.
"Clearly, based on these results, we fell short on efficacy," Graham said. In an earlier phase 1b trial, some patients received 270 mg of the treatment, whereas the phase 2b trial didn't dose that high. "200 mg just may not be enough to do it."
Now, Theravance will limit future expenses associated with izencitinib, executives said on the call. The company has more data to analyze from the phase 2b, including forthcoming 16-week extended induction data. "A small dose-dependent increase in clinical response" on a measure of rectal bleeding was noted in the trial, according to the release.
RELATED: Incyte the latest to fall victim to JAK scrutiny as FDA pushes back Jakafi review in GVHD
As for how the failure will impact the company's financials, CFO Hindman said "we do have a number of elements in the program ongoing, so the impact to our guidance for 2021 is likely to be negligible, or not that great."
The company will conduct a full portfolio review and continue "flexing all aspects" of its capital, he added. SVB Leerink analysts expect shareholders to demand a restructuring and existing tangible assets could be auctioned off.
Theravance will continue with the phase 2 trial of izencitinib in Crohn's disease patients, with top-line results slated for late-fourth quarter or early first quarter next year. Executives declined to speculate on the future of the Crohn's program.
Editor's Note: This story was updated at 9 a.m. ET on Aug. 24 to include analyst commentary.