BioMS Stock Free-Falls as Late-Stage Development of Sole Clinical Candidate Gets the Axe

Eli Lilly and BioMS Medical are halting development of the latter’s multiple sclerosis drug candidate after one of three late-stage trials failed to meet its endpoints. Considering dirucotide was its only candidate in clinical development, BioMS crashed in morning trading, falling roughly 90%.

The company lost about 50% of its value six months ago when dirucotide failed to meet a primary endpoint in a mid-stage study called MINDSET-01, evaluating the compound as a treatment for relapsing-remitting MS. "It is the intention of BioMS to complete the MINDSET-01 trial as planned in the fourth quarter of 2009," says Ryan Giese, vp corporate communications.

Today the firms say that dirucotide did not meet the primary endpoint of delaying disease progression during the two-year MAESTRO-01 Phase III trial in patients with secondary progressive multiple sclerosis (SPMS). Additionally, there were no statistically significant differences between dirucotide and placebo on the secondary endpoints of the study. MAESTRO-01 was a multicenter, double-blind, placebo-controlled trial and was conducted in Canada and nine countries in Europe with 612 patients.

Ongoing late-stage studies including MAESTRO-02 and MAESTRO-03 are being discontinued while the data is reviewed. MAESTRO-02 is an open-label, follow-on study to MAESTRO-01. MAESTRO-03 is a 510-patient U.S. trial designed to evaluate dirucotide for the treatment of SPMS.

“The MAESTRO-01 study was well designed and executed, and we believe these data, while disappointing, are very instructive for us and for the larger MS community,” notes John Hayes, vp of Lilly Research Laboratories.

In December 2007, Lilly paid $87 million up front for worldwide, exclusive rights. The company also agreed to pay $410 million in development- and sales-related milestones. BioMS has only reported the receipt of one milestone fee, which was worth $10 million. This was achieved in September, when an initial analysis of a Phase II/III trial showed positive results.

At the end of this year’s first quarter, BioMS reported working capital of $78.4 million. Kevin Giese, president and CEO of BioMS, believes this is sufficient, commenting, “We are fortunate to have suitable resources in place to remain flexible to pursue whatever options emerge once we understand these results more fully.”