Isis Pharmaceuticals’ Lung Cancer Drug Fails in Test; Stock Dives 32%

In a stunning setback, Isis Pharmaceuticals Inc. of Carlsbad, Calif., said its leading drug candidate -- a novel therapy for lung cancer -- failed in a closely watched test of 616 patients.

Company executives said they were surprised by the results because earlier human tests seemed to show that the experimental biotech medication, Affinitak, would prolong patients’ lives. Lung cancer affects more than 1 million people worldwide.

“This is disappointing, but that is the nature of the business,” Isis Chief Executive Stanley Crooke said.

Because the drug was the most advanced in the company’s pipeline, investors reacted strongly to the news, driving Isis shares down 32%, or $1.33, to $2.83 in Nasdaq trading Monday. During the day Isis’ shares hit a 52-week low of $2.50.

The company’s drug development partner, pharmaceutical giant Eli Lilly & Co., is conducting a separate human test of Affinitak. Paolo Paoletti, vice president of oncology products for Lilly, said it would weigh the outcome of both trials before making a decision on whether to back away from the drug.

“This is a disappointment with one drug in a very difficult disease,” Paoletti said.

Lilly in mid-2001 agreed to invest at least $200 million in Isis for rights to Affinitak -- one of the largest collaborations between a big drug company and small biotech in recent years.

Isis is a leader in a potentially promising technology called “antisense,” which uses molecules designed to block dangerous proteins from being created by a single gene. Affinitak targets a gene involved in tumor growth.

In the just-completed study, 616 patients were divided into two groups: one received chemotherapy drugs with Affinitak and the other received chemotherapy alone. But patients taking the experimental drug had no better chance of survival.

Analyst David Bouchey of C.E. Unterberg Towbin predicted that Lilly would discontinue its drug trial, in part because doctors would be reluctant to offer patients an experimental medication that clearly failed.

Crooke said that although the Isis trial failed overall, Affinitak seemed to have a positive effect on 256 patients who completed the entire six-month course of treatment. Patients in this group lived three months longer, he said. “The more drug you use, the better it works,” he said.

Isis has one antisense drug on the market, Vitravene, used to treat a viral eye infection once common in AIDS patients. Sales are modest, however, largely because improved treatments for AIDS have reduced the incidence of eye infections.

Isis also is testing a drug called alicaforsen to combat Crohn’s disease, a debilitating bowel disorder that affects 800,000 people worldwide. Isis expects to know the results of those tests next year.

In the wake of Affinitak’s failure, Isis may do some belt tightening, Crooke said. But with $392 million in cash, the company does not need to make drastic changes, he said.