Bristol-Myers Squibb Co. (BMY:US) has abandoned an experimental hepatitis C pill it bought for $2.5 billion earlier this year after one patient died and others were hospitalized while taking the drug in a study.
Bristol-Myers will take a charge of $1.8 billion in the third quarter related to research and development of the therapy, the New York-based company said in a regulatory filing today. The drugmaker suspended testing the medicine, known as BMS-986094, on Aug. 1 after a patient developed heart failure.
Bristol-Myers said yesterday it has discontinued development of the drug, part of a class of medicines called nucleotide polymerase inhibitors, and was consulting with U.S. regulators to assess the treatment’s effects. Along with the death, eight patients suffered from heart and kidney toxicity, the company said in a statement.
“Bristol-Myers paid a fortune for a pearl that turns out to be fake,” said Erik Gordon, a University of Michigan business professor who follows the health industry, in an e-mail today, referring to the company’s “string of pearls” name for its acquisition strategy. “The Inhibitex acquisition shows the dangers of paying huge premiums for late-stage drug candidates in hot areas. They still can fail.”
Bristol-Myers rose (BMY:US) 1.3 percent to $32.57 at the close in New York.
The hepatitis C drug was thought by researchers and analysts to be a key therapy in a push by companies, including Gilead Sciences Inc. (GILD:US) and Vertex Pharmaceuticals Inc. (VRTX:US), to replace the standard injectable treatment with pills that are more convenient and have fewer side effects. Analysts estimate the market may be $20 billion for the new therapies.
“We’re still focused on our HCV development program, and will continue to follow the science as we execute on our strategy,” Cristi Barnett, a Bristol-Myers spokeswoman, said in an interview. “We’re going to do whatever it takes to get the best treatment to patients.”
Two of the eight patients from the study remain hospitalized, Bristol-Myers said in its statement.
Hepatitis C is a viral infection that can cause liver damage and is estimated to affect 180 million people worldwide, according to the National Institutes of Health. The disease can lay dormant for decades before harming patients. Rising deaths among baby boomers from the infection prompted U.S. health officials to declare in May that all of those born from 1946 to 1964 are at risk and should be tested.
After Bristol-Myers earlier this month suspended its mid-stage trial of BMS-986094, the Food and Drug Administration put a clinical hold on Idenix Pharmaceuticals Inc. (IDIX:US)’s testing of a similar therapy, IDX 184. The agency was looking at others as well, Idenix Chief Executive Officer Ron Renaud said on Aug. 16.
Gilead, which spent $10.8 billion to acquire its nucleotide polymerase inhibitor, GS-7977, hasn’t had the same safety issues, said Cara Miller, a company spokeswoman.
“In all studies to date, GS-7977 has been well tolerated and has exhibited a favorable safety profile,” Miller said.
Vertex hasn’t been contacted by the FDA regarding safety issues for its nucleotide polymerase inhibitor drug, said Megan Pace, a company spokeswoman.
“Our drug is structurally different” than those from Bristol-Myers and Idenix, Pace said in a telephone interview. “We’re moving forward with our studies.”
Vertex shares fell less than 1 percent to $53.56. Gilead rose 2.2 percent to $57.29. Idenix fell 1.3 percent to $6.01.
Bristol-Myers gained the compound in January with the acquisition of Inhibitex Inc. as it seeks new drugs to diversify its products and replace revenue from Plavix, its best-selling drug, that lost patent protection this year. Plavix generated $7.09 billion in 2011, about one-third of the drugmaker’s revenue.
In July, another of the company’s experimental prospects, the blood thinner Eliquis being developed with Pfizer Inc. (PFE:US), was rejected by U.S. regulators, who asked for more data from existing trials. Approval of the drug may be pushed into next year, according to the company. And the diabetes drug dapagliflozin was rejected in January when the FDA asked for more safety information.
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