Bristol-Myers Returns Clazakizumab Rights, Alder Sinks - Analyst Blog


Bristol-Myers Squibb Company 's ( BMY ) decision to opt out of the development process of rheumatoid arthritis (RA) candidate clazakizumab (formerly ALD518) caused the shares of its erstwhile partner Alder BioPharmaceuticals ( ALDR ) to plummet by 13.15% to $14.80 on Sep 2, 2014.

Bristol-Myers arrived at the decision to hand back clazakizumab rights to Alder after a portfolio review. The decision was not based on any adverse data or technical problems. Alder stated in its press release that it will be solely responsible for the development of the candidate going forward.

We remind investors that Bristol-Myers and Alder were collaborating on clazakizumab since 2009. At the time of inking the deal, the companies had said that the value of the deal could exceed $1 billion. Alder had received an upfront payment of $85 million from Bristol-Myers. Moreover, Bristol-Myers made significant milestone payments to Alder before the deal was terminated. Consequently, Bristol-Myers' decision will hurt Alder's balance sheet as well.

The companies had presented encouraging results last year from a phase IIb study (n=418) on the candidate in adults with moderate-to-severe active RA at the annual meeting of the American College of Rheumatology. The dose-ranging study assessed the efficacy and safety of the subcutaneous version clazakizumab alone or in combination with methotrexate (MTX).

The patients had responded inadequately to MTX therapy. Data revealed that treatment with clazakizumab (both as monotherapy and in combination with MTX) across all doses met the primary endpoint of a higher ACR20 response at 12 weeks compared to MTX alone.

Our Take

We believe that the loss of a partner like Bristol-Myers, a major player in the biopharmaceutical field with substantial experience in RA drugs, is a big blow for Alder. It also throws the future of the RA candidate into uncertainty.  We expect Alder to struggle to take the candidate forward into late stage development all by itself. We expect investor focus to remain on the future of clazakizumab going forward.

Bristol-Myers carries a Zacks Rank #3 (Hold). Better-ranked stocks in the biopharma space include Celgene Corp. ( CELG ) and Gilead Sciences ( GILD ). Celgene holds a Zacks Rank #2 (Buy) while Gilead sports a Zacks Rank #1 (Strong Buy).

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of The NASDAQ OMX Group, Inc.

This article appears in: Investing , Business , Stocks

Referenced Stocks: MTX , BMY , GILD , CELG , ALDR

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