It's just a fact of the industry that, inevitably, every year several development-stage biotechs implode after their lead compounds fail to pass muster in clinical trials. Unfortunately for shareholders in drug developer Renovis
If you recall, Renovis and partner AstraZeneca
Investors had high hopes for NXY-059 after an earlier 1,700-person phase 3 trial, titled SAINT I, succeeded in the same primary endpoint (with a p-value of 0.038) but failed in its secondary endpoints. Either something went wrong with the second SAINT trial compared to this one, or else these first results may have been a statistical fluke. Remember, a p-value of 0.038 means there's nearly a 4% chance that the results could occur by chance. That's why the FDA almost always requires two successful phase 3 trials for a drug to gain marketing approval.
On Tuesday, Renovis partly outlined the steps it was taking in light of the failure of its stroke treatment NXY-059. It announced a 40% reduction in its workforce to conserve its $105 million in cash and equivalents, and also reiterated its commitment to the compounds in its pipeline. Really though, what other choice does Renovis have?
Barring an acquisition -- a possibility to which Renovis seemed open in its third-quarter financial release -- the company also guided for its cash stockpile to last it until "at least" the end of 2009. Considering that all the drug candidates in Renovis' pipeline are in the preclinical stage -- except for a partnered pain drug with Pfizer
It's way too soon for me to make any judgment on the value of Renovis' pipeline, since none of the compounds have any clinical trial results attached to them. By 2008, Renovis expects to have three drugs in phase 1 testing. If there is any meaningful value in these compounds then shares of Renovis might be a deal right now, just considering the breakup value of the company.
As of last year's third quarter, Renovis had net cash and equivalents of approximately $105 million. Even with a couple of million dollars in cash burn for the fourth quarter, it's now barely trading above its cash level. Considering the other opportunities out there in this sector, though, it's tough to generate any interest for a biotech whose products have so many unknowns attached to them.