Apparently, Genentech (NYSE:DNA) doesn't know about the unwritten rule that you're not supposed to dump your partner right before the holidays.
Last Wednesday afternoon, the biotech giant pulled out of its partnership with Altus Pharmaceuticals (NASDAQ:ALTU) to develop ALTU-238, a crystallized form of human growth hormone, causing Altus' stock to tumble 44% on Thursday. Happy holidays!
In the year-old deal, Altus received a $30 million upfront payment and equity investment, and could have earned an additional $110 million in milestone payments. As a consolation prize, Genentech will supply Altus with the growth factor for a limited time and give it cash to tide it over, in exchange for royalties if the drug makes it to the market.
Like all of Altus' products, ALTU-238, is a crystallized form of a protein that's been proven to work. By crystallizing the protein, it's believed that the protein could be injected less frequently and compete well with the growth factors from Genentech, Novartis (NYSE:NVS), and Eli Lilly (NYSE:LLY) that make up the multimillion-dollar market.
After being dropped, Altus is down, but certainly not out. On the conference call, Altus stressed that it wasn't a problem with the drug, but a business decision on Genentech's part. The company still plans to continue development of the drug, with another trial starting in the middle of next year.
Its farthest-along product is a pancreatic enzyme replacement therapy for cystic fibrosis patients. Data from its ongoing phase 3 trial should be available in the second quarter of next year and -- if positive -- Altus could file a marketing application in the first half of 2009, after safety data is complete.
With cash and short-term investments of $152 million at the end of the third quarter, and an increasing burn rate now that it has more clinical trials on its books, Altus will likely need to find a partner or two for its programs before it can bring a product to market.
More Foolishness on drugmaker makeups and breakups:
- Array BioPharma Has No Problem Finding Partners
- Breaking Up Is Easy to Do
- PDL Liquidation Sale Begins
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