Share prices rarely stay steady when a pharmaceutical company's drug candidate (with multibillion-dollar sales potential) fails in late-stage clinical testing. But that's just what happened to Rule Breakers pick Myriad Genetics (NASDAQ:MYGN); its shares only fell 5% yesterday -- only to gain it all back and then some today -- after announcing that its most advanced pipeline compound failed in phase 3 testing as a potential treatment for Alzheimer's disease.
Myriad said in a short press release yesterday that lead drug Flurizan failed to show a statistically significant benefit in functioning or cognition in patients with mild Alzheimer's disease. Not giving investors any false hope, Myriad also announced that it was discontinuing all development of Flurizan
Flurizan had produced mixed data in earlier phase 2 testing, so hopes for its success in phase 3 testing were not that high. While there is rarely any positive takeaway when a drugmaker deep-sixes its top drug candidate, Myriad did manage to squeeze some cash out of Flurizan. In May, Myriad was able to get $100 million in nonrefundable up-front cash after giving up European marketing rights to Flurizan.
At the time, this deal looked like a good hedge to at least get something for all of its work with Flurizan in case the phase 3 study results turned sour. While Myriad loses out on the chance to gain another $250 million in regulatory milestone payments, Myriad's financial execs are still looking pretty savvy right now for simply getting this deal done.
Considering the tough clinical-trial endpoints for all Alzheimer's-disease drug candidates, difficulty in understanding the disease, and large market potential for drugs with even modest efficacy effects, it is understandable why a company like Myriad or Wyeth (NYSE:WYE) and Elan (NYSE:ELN) would bring these compounds into phase 3 testing with less than unblemished data from previous clinical trials. It's a high-risk, potentially high-reward proposition, and unfortunately Myriad came out on the losing end of things with Flurizan. Thankfully, Myriad's future success was not predicated solely on Flurizan getting to market, and the rest of its business is booming.
