Celgene Corporation (CELG) has halted clinical trials of a Crohn's disease therapy three years after it paid more than $700 million to acquire it. The shares are down almost 10 percent, as of 9:34 a.m. in New York.
In a statement released Thursday, Celgene said its Crohn's disease therapy GED-0301 (Mongersen) had failed. The decision was taken after the trials' data monitoring committee, an independent group of experts, recommended it. The company estimated the move would result in a net pre-tax charge to earnings in the range of $300 million to $500 million, or $0.27 to $0.45 per diluted share after tax, according to an SEC filing.
In 2014, Celgene paid $710 million to acquire the late-stage drug from a private pharmaceutical company based in Dublin, Ireland called Nogra Pharma Limited. At the time, the firm called it a "potentially transformative therapy."
“We thank the patients and the investigators involved in the REVOLVE trial,” said Scott Smith, President and Chief Operating Officer for Celgene. “Crohn’s disease is a debilitating condition with few effective long-term treatment options. While we are disappointed with the results of REVOLVE, we remain committed to advancing our portfolio of novel medicines for patients suffering from this disease and other inflammatory bowel disorders.” The company added it will review data to check the drug's effectiveness in treatment of ulcerative colitis (UC).
GED-0301 was meant to decrease a protein that causes inflammation in patients suffering from Crohn's disease.
“We expect recent increased nervousness on Celgene stock to prevail given various sell-side and bearish commentary has picked up,” Jefferies analyst Michael Yee said in a note reported on by Reuters. Earlier this month, Morgan Stanley analyst Matt Harrison downgraded the stock to underweight because of challenges to key pipeline assets including GED-0301.