Global Insight Perspective | |
Significance | Danish biotech Genmab is to cut two Phase III drug candidates and three pre-clinical compounds from its pipeline in order to focus R&D capacities on treatments with more potential profitability. |
Implications | The cutbacks will mean the elimination of some 101 jobs from Genmab's global staff. The company's finances have been shaky of late, and the scaling down has been designed to buy it more time to bring other compounds to market. |
Outlook | For companies of Genmab's size, focusing on niche or orphan drug markets is too risky, whereas concentrating on disease areas with a wider patient population makes more business sense. Genmab will be hoping to divest the compounds to a Big Pharma buyer, again as a means of boosting available funding for R&D. |
Danish biotech Genmab is to undergo a major overhaul of its clinical pipeline as well as a restructuring of its staff in order to cut costs and boost value. The news followed a strategic review of the company's portfolio, which led Genmab to conclude that it needed to streamline its drug-development activities in order to "establish a sustainable level of R&D investment". Consequently, the firm is to abandon development of late-stage anti-cancer compound zanolimumab as well as a host of other product candidates.
- Zanolimumab: Currently in Phase III trials for cutaneous T-cell lymphoma (CTCL), a rare form of non-Hodgkin's lymphoma. Genmab decided that this market segment is too small and too crowded with rival drug candidates to justify further heavy spending on late-stage development.
- Zalutumumab: While pursuing Phase III and two earlier-stage trials in head-and-neck cancer, Genmab will discontinue early studies focusing on colorectal and lung cancer.
- HuMax-HepC: A human antibody currently in pre-clinical development for treating hepatitis C virus re-infection after liver transplant.
- HuMax-IL8: A pre-clinical, high-affinity human antibody directed to IL-8 (interleukin-8) that Genmab had been considering for potential applications in oncology and inflammatory disease.
- HuMax-TAC: A human antibody targeting the TAC antigen (CD25) or the interleukin-2 receptor alpha subunit (IL-2Ra), which is over-expressed by activated T-cells. Genmab was looking to develop HuMax-TAC for T-cell mediated diseases including autoimmune disorders, inflammatory and hyperproliferative skin disorders.
Genmab has gone to great lengths to reassure investors about the strong therapeutic potential of the compounds that it is leaving behind. In other words, it is not discontinuing development on zanolimumab and zalutumumab because they have performed disappointingly in clinical trials, but rather because the investment required to complete their development is unlikely to be sufficiently compensated for through future sales. Ironically, it was little more than a year ago that Genmab first regained the development and marketing rights to zanolimumab from German biopharmaceutical company Merck Serono (see Denmark: 29 June 2007: Genmab Regains Rights to HuMax-CD4, Receives First Milestone for HuMax-CD20 Deal). Speaking at the company's Investor Day conference yesterday, CEO Dr Lisa Drakeman said that Genmab had spent months trying to secure the 70 patients required to complete the Phase III CTCL trial, but the disease's small pool of treatable patients meant that this proved to be impossible.
In addition to the pipeline shake-up, Genmab will also be cutting some 101 jobs at its facilities around the world. The company has not specified which fields will be most heavily affected by the redundancies, but Drakeman has said that "the changes are necessary to ensure that we have the correct level of staff for the planned development programmes." As such, it would seem that at least some of the jobs to be lost will be sourced from Genmab's R&D facilities.
Outlook and Implications
The pipeline reshuffle will leave Genmab with six ongoing Phase III clinical trial programmes, including its collaborations with U.K. pharma giant GlaxoSmithKline on ofatumumab in chronic lymphocytic leukaemia, non-Hodgkin's lymphoma and rheumatoid arthritis (see Denmark: 26 August 2008: Genmab to Take on New Ofatumumab Clinical Studies). The Danish biotech has said that the cutbacks should not affect its financial guidance for 2008, which currently predicts a net loss of 800-900 million kroner (US$146.9-165.2 million), operating loss of 850-950 million kroner and revenues of 850-900 million kroner. The group's finances have been shaky throughout the year, as the cost of late-stage clinical trials takes hold.
Earlier this month, Genmab revealed that GSK has increased its stake in the firm to 9.99%. While this will provide some welcome additional support for Genmab, the biotech has clearly realised that it will not be sufficient to ensure its long-term survival. Rationalising at the clinical pipeline level is a strategy that has been used by several pharmaceutical and biotech companies recently, as they struggle to adapt to challenging market conditions. For companies of Genmab's size, it seems that focusing on niche or orphan drug markets is simply too risky a strategy, whereas concentrating on disease areas with a wider patient population makes more business sense. Given the promise shown by zanolimumab, zalutumumab and the others to date, Genmab will doubtless be on the lookout for opportunities to divest the compounds to a buyer from the Big Pharma sector, again as a means of boosting available funding for R&D.