Through a recent, nearly $9 billion acquisition, AbbVie surged to the front of a new wave of antipsychotic drugs that Wall Street expects to become big sellers. But on Monday, the company’s plans came crashing down.
AbbVie said the main asset it got from its purchase of Cerevel Therapeutics, an experimental medication called emraclidine, had failed across two clinical trials. The mid-stage studies, which could have provided the most concrete evidence yet that the drug helps alleviate the symptoms of schizophrenia, instead found it not significantly better than a placebo.
The “flat out” failure, as one analyst described it, took investors by surprise. AbbVie shares were down more than 12% Monday, erasing roughly $40 billion in value. Among large pharmaceutical companies, it’s one of the larger single-day stock price dips of at least the past several quarters.
Meanwhile, shares of Bristol Myers Squibb, which sells a medicine that emraclidine would have competed against, rose around 12%. Bristol Myers got the medicine, now sold as Cobenfy, through a $14 billion deal for Karuna Therapeutics that closed in March.
AbbVie’s acquisition “just went up in flames,” according to Olivia Brayer, an analyst at the investment firm Cantor Fitzgerald who covers Bristol Myers. And in a note to clients, Stifel analyst Paul Matteis wrote that emraclidine’s failure is “outright surprising” and will “significantly bolster” Bristol Myers’ leading position with Cobenfy.
Both Cobenfy and emraclidine are part of a fresh class of antipsychotic medications designed to boost “muscarinic receptors,” a type of protein that tunes brain chemistry. Earlier antipsychotics all work by directly regulating dopamine, a vital brain-cell-signaling chemical that can cause disorders when there’s too much or too little of it. Muscarinic drugs affect dopamine, too, but in a more roundabout way.
Multiple mid- to late-stage trials have shown Cobenfy can quickly alleviate schizophrenia symptoms while avoiding some of the more troubling side effects seen with its predecessors, such as weight gain or sedation. An earlier, much smaller study of emraclidine also found two different doses demonstrated “clinically meaningful antipsychotic activity.”
AbbVie’s chief scientific officer, Roopal Thakkar, said the company will keep analyzing the new data to determine next steps for emraclidine. AbbVie also got a slate of other experimental drug programs through the Cerevel deal, including one for Parkinson’s disease that surprisingly succeeded in a late-stage trial this spring.
Still, the new failures will likely cast a shadow over the acquisition. Raymond James analyst Sean McCutcheon titled a note to clients “Bristol Bet on the Right Horse,” while Brian Abrahams of RBC Capital Markets posited that AbbVie may need to consider additional external deals to “make up for” the setback.
Analysts also envision the results having broader implications on schizophrenia drug development, particularly for other companies researching muscarinics.
One such company, Neurocrine Biosciences, saw its stock price drop more than 20% in late August after its medicine generated mixed results in a schizophrenia study. Neurocrine shares were up Monday — perhaps, according to Jefferies analyst Akash Tewari, because investors no longer see emraclidine as competition.
Shares of another developer, Neumora Therapeutics, bobbed following AbbVie’s announcement. A trial of Neumora’s muscarinic drug was halted this spring, after new findings from animal tests raised safety concerns.
Graig Suvannavejh from Mizuho Securities anticipated Neumora would give up on that drug and focus its efforts on getting a backup candidate into human testing next year. But in the wake of emraclidine’s failures, the analyst thinks Neumora “may revisit” whether its muscarinic program “should remain a priority, especially in light of its already deep and diversified [central nervous system] pipeline.”
“Despite today’s news, we remain quite bullish on the muscarinic class for schizophrenia,” Suvannavejh wrote in a client note, adding that AbbVie’s results more so reflect “clinical trial execution risk” rather than an inherent risk with the way muscarinic drugs work.
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- Source: https://www.biopharmadive.com/news/abbvie-wall-street-cerevel-emraclidine-schizophrenia-neurocrine-neumora/732557/