Johnson & Johnson backs away from diabetes drug; returns rights to Diamyd

STOCKHOLM, Sweden—A few weeks after reporting a late-stage study failure for its Type 1 diabetes treatment GAD65, Diamyd Medical AB has reported that Johnson & Johnson's Ortho-McNeil-Janssen Pharmaceuticals division has bailed on the drug and handed rights for the drug back to Diamyd.

On May 9, Diamyd had reported that its European Phase III study with the antigen-based therapy had not met the primary efficacy endpoint of preserving beta cell function at 15 months, as measured by meal stimulated C-peptide, although a small positive effect was seen and the drug seemed to be well-tolerated. As part of a planned, longer-term follow-up, patients in the study were being followed for an additional 15 months, aiming to determine the durability of the treatment effect at 30 months. Following comprehensive evaluation of the collected study data, Diamyd Medical has decided not to complete the follow-up period.

"Given that the European Phase III study did not meet the primary efficacy endpoint, it is difficult to justify continuing the follow-up period, although the results suggest beneficial effects in certain subgroups," says Peter Zerhouni, acting president and CEO of Diamyd Medical. He adds, though, that the parallel U.S. Phase III study, DiaPrevent, continues "and we hope it will result in a different outcome."

It's not a total bust for the Swedish biotech, of course. DiaPrevent may still yield some good news and, while it's far from the total potential $625 million from last year's licensing deal with J&J, the company did get $45 million upfront through Ortho-MacNeil-Janssen after the June signing of the deal.

Zerhouni says he is optimistic his company will "have more opportunities for cooperation in the future" with J&J, and notes that "With all the rights to returned to us we are free to decide on how to extract the most value from GAD65."

As for the DiaPrevent trial, it was fully enrolled in December 2010 and results are expected in the summer of 2012. In addition, the research consortium Type 1 Diabetes TrialNet is conducting a Phase II trial with the drug in the United States and Canada with similar design. Another externally funded and researcher-initiated Phase II study with the agent is in progress, aiming to prevent type 1 diabetes from developing in high-risk subjects.

Diamyd's portfolio also includes several drug candidates in clinical and preclinical phases that use the company's NTDDS (Nerve Targeting Drug Delivery System) platform for the administration of drugs directly to the nervous system.

The rights to the application of the GAD65 gene in the treatment of Parkinson's disease have been out-licensed on a non-exclusive basis to Neurologix Inc., which recently presented Phase II data on their GAD-based drug candidate NLX-P101 confirming sustained, positive long-term efficacy in Parkinson patients.