It hasn’t been a fun month to be an investor in clinical-stage biotech ChemoCentryx Inc (NASDAQ:CCXI). After announcing at the end of August that its lead drug candidate vercirnon failed the first of four late-stage trials targeting Crohn’s disease, the company dropped a bomb Tuesday with less-than-riveting top-line interim results for its second most advanced drug candidate. CCX140 is being evaluated in a phase 2 trial in patients with diabetic nephropathy, or diabetic kidney disease. Results failed to impress some analysts and shares finished the day down more than 24%. They have been sliced in half in the last three months alone.
Investors could look at recent developments as a short-term hiccup in the road for a developmental company, but I may be a little more cautious about investing in ChemoCentryx Inc (NASDAQ:CCXI). Why? The company has positioned its entire pipeline to take advantage of a specific biological pathway shown to be associated with inflammation. Should two early misses with its most advanced drugs push investors toward the exits?
The company’s platform is centered on inhibiting the chemokine system, which is a complex communication system between cell receptors and the immune system. When certain signal-inducing cells aggregate at a source of inflammation a specific immune response is triggered. Inhibiting receptors has been shown to reduce inflammation, but will it do so with significance in a clinical setting? That is the question investors need to begin asking themselves.
In case you have been asleep in the past, well, decade or so, anti-inflammatory drugs are hot commodities in biotech. Companies have had the most success inhibiting the TNF-alpha pathway, while JAK inhibitors are quickly shifting from potential to performance. Consider how AbbVie Inc (NYSE:ABBV) and Johnson & Johnson (NYSE:JNJ) have fared with their first-generation immunology drugs:
|Drug or Sector||1H13 Sales||Year-Over-Year Growth|
|Immunology, JNJ||$4.45 billion||16.5%|
Humira brings in more than half of AbbVie’s total revenue and will become just the second drug ever to record $10 billion in a single year. That poses potential problems down the road, but investors sure aren’t complaining about owning a piece of the most successful drug in the world. All companies want to lead their markets and AbbVie Inc (NYSE:ABBV) has done exactly that. And while Johnson & Johnson (NYSE:JNJ) relies heavily on Remicade, it has already begun transitioning its anti-inflammatory portfolio to expanded treatment options for Simponi and its next-generation blockbuster Stelara. In fact, Stelara has enjoyed one of the most successful launches in the history of the industry on the heels of incredible convenience for patients: Far fewer injections are given in the same time period when compared to previous generation blockbusters.