Celltech, Biogen bowel drug disappoints in trial(HUMICADE)

[Guest guest]

Celltech, Biogen bowel drug disappoints in trial

By Ben Hirschler, European Pharmaceuticals

Correspondent

LONDON, July 30 (Reuters) - Celltech Group Plc

announced disappointing clinical trial results on

Tuesday for a bowel drug it is developing with Biogen

Inc (NasdaqNM:BGEN - News), in the latest setback for

the battered biotechnology sector.

Britain's largest biotech group said CDP 571, also

known as Humicade, had failed to meet key targets in a

late-stage trial for the treatment of Crohn's disease,

a serious bowel disorder. Analysts said the drug now

appeared to have limited potential.

Celltech shares ended 7.4 percent lower at 397 pence,

after hitting a new three-year low of 372.

" It's clearly negative but CDP 571 is a very small

part of the overall valuation... less than one percent

of group value, " said Steve McGarry, biotech analyst

at Goldman Sachs.

" I think from a prudent point of view it makes sense

to take out forecasts for the product completely,

although it might still have a role in acute

treatment. "

Shares in Biogen, which stuck a marketing and

development deal with Celltech in April, fell 2.6

percent in Nasdaq trade to $35.01 by 1535 GMT.

The setback is a further blow for the Cambridge,

Mass.-based firm, which has lowered its earnings

forecast twice this year amid poor sales of flagship

multiple sclerosis drug Avonex.

Analysts had expected Humicade to generate $10 million

to $30 million in sales for Biogen in 2004, rising to

about $43 million in 2005.

TALKS WITH REGULATORS

Celltech said it would now seek guidance from U.S. and

European regulators on the database required for the

antibody drug to be approved.

Chief Executive Fellner said Celltech would

focus on using the drug to treat flare-ups of Crohn's

disease, as opposed to the prolonged use assessed in

the 28-week Phase III study.

In that 400-patient study, CDP 571 proved active in

helping some patients but it failed to meet clinical

objectives when results were analysed on an " intent to

treat " basis, which includes results for all patients,

even those that drop out.

" It is not a question of the drug not being active --

it is clearly active. It is a question of the exact

claims that we would be able to make, " Fellner told

Reuters.

" What we are seeking is acute use to treat disease

flare-ups. "

Genghis Lloyd- of Credit Suisse First Boston

said that even if the drug were approved, competing

with other similar drugs, such as & 's

(NYSE:JNJ - News) Remicade and Celltech's own CDP 870,

would be difficult.

In practice, the product could be dropped.

" If new trials of Humicade are required for approval,

Celltech may decide to terminate development of the

product, given that CDP 870 is no longer that far

behind Humicade in terms of development timelines, "

Lloyd- said in a note.

The setback is the latest in a string of product

disappointments to have hit the European biotech

sector, which boasts only a handful of successful

products against the dozens marketed by U.S. firms.

Other recent setbacks include a decision by MediGene

AG (XETRA:MDGGn.DE - News) of Germany to abandon heart

drug Etomoxir, Danish firm Neurosearch's

(Copenhagen:NEUS.CO - News) scrapping of its sickle

cell anaemia programme and the halting of obesity drug

trials by Sweden's Karo Bio (Stockholm:KARO.ST -

News).

Also on Tuesday, small UK biotech Vernalis Plc

(London:VER.L - News) said it had decided not to

continue with Phase I clinical trials of the first of

the anti-obesity drugs it was developing with Swiss

drugmaker Roche (ROCZg.VX), sending its shares

tumbling.

PRUNING SALES FORCE

Separately, Celltech announced it was cutting its U.S.

sales force to 170 from 350, following disappointing

sales of its hyperactivity drug Metadate.

But the company is building up its presence in the

gastrointestinal drug market and has in-licensed a

small product called Dipentum, for the treatment of

ulcerative colitis, from Pharmacia Corp (NYSE:PHA -

News).

Celltech has made an initial payment of $6 million to

become exclusive distributor of Dipentum in the United

States and has an option to acquire the rights in the

rest of the world excluding Europe in 2005 for up to

$12 million.

__________________________________________________