Abbott Laboratories partner Reata Pharmaceuticals Inc. said it ended a study of the chronic kidney disease drug the companies were developing, citing death and complications in the trial. Abbott declined the most in two years.
The drug, bardoxolone methyl, was in the third of three stages of trials usually required before U.S. regulators would rule on an approval. Closely held Reata, based in Irving, Texas, owns the rights to the treatment in the U.S. and Asia. Abbott paid Reata $450 million in 2010 to acquire the rest of the worldwide rights.
Patients in the trial had “excess serious adverse events and mortality in the bardoxolone methyl arm,” the Abbott Park, Illinois-based company said in a regulatory filing today announcing the end of the trial. Reata and Abbott will examine the study’s data to determine whether the drug can still be developed for chronic kidney disease or other indications, according to the filing. Abbott said last year the drug might generate $1 billion in sales.
“This is certainly a negative for Abbott, as this development program was, along with Hep-C, one of two potential multi-billion dollar pipeline opportunities for Abbott,” said Michael Weinstein, an analyst with JPMorgan Chase & Co. The announcement “calls into question the path forward for the compound,” he said in a note to clients today.
Abbott fell 5.8 percent to $65.05 at 11:21 a.m. New York time, after dropping to $64.52 in the biggest intraday decline since May 2010. Today’s decline follows a 4.3 percent drop yesterday after the company released third-quarter earnings and provided details of its plans to split in two.
“It doesn’t impact our 2013 financial profile information,” Scott Davies, an Abbott spokesman, said in a telephone interview. David Sherzer, a spokesman for Reata, declined to comment beyond a statement the company posted on its website that announced the end of the trial.
Richard Gonzalez, who will be chief executive officer of the prescription drug company AbbVie that Abbott is spinning off, said last year that bardoxolone might generate $1 billion in sales and be on the market by 2014.
The trial failure likely takes down a key pipeline product that would have helped Abbott’s soon-to-be-independent drug company, AbbVie, grow after the companies split in two on Jan. 1. It could also have helped replace sales of Humira, Abbott’s top drug for rheumatoid arthritis, which loses patent protection in 2016.
Abbott announced yesterday that the tax rate for AbbVie would double to 22 percent from what it had been paying this year. The company will pay the higher rate to bring profits earned abroad back to the U.S. and fund a dividend to shareholders after the companies split.
Patients with chronic kidney disease lose their ability to filter blood, letting waste build up in the body. About 50 million people worldwide have some form of it, according to Abbott. People with advanced disease may need dialysis. Bardoxolone is meant to improve the functioning of damaged kidneys.
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