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Biocon’s drug trial results trip investors

Biocon’s drug trial results trip investors
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First Published: Wed, Jan 12 2011. 10 30 PM IST
Updated: Wed, Jan 12 2011. 10 30 PM IST
Biocon Ltd announced the preliminary data on human trials, conducted on its oral insulin drug under development, named IN-105.
Human clinical trials are critical in the research lifecycle of a drug, as a green signal at this stage is essential before the drug can reach the market. Initially, Biocon’s statement was interpreted to mean that the drug did not work.
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Usually, statements on drugs under development are couched in technical jargon, which may explain some of the confusion. Later, the company issued a clarification on the issue on its website.
On Tuesday, when it issued the first statement, its share price fell by 2.5% to a low of Rs380, before recovering to close at Rs387. On Wednesday, it closed at Rs391, back to the pre-announcement level.
Biocon’s drug did lower blood sugar in patients who took it, but not by expected levels. The drug was supposed to reduce blood sugar by a margin of 0.7% over the placebo group, or a study group of patients who were not given the drug. This did not happen and the difference was lower.
This doesn’t mean that the drug does not work, according to Biocon. The placebo group saw a large drop in their blood sugar levels, probably due to other factors such as a change in their daily routine, the company said.
A larger drop in the placebo group’s sugar levels means that the bar for IN-105 to outperform became higher. Thus, while the main goal was not achieved, the drug did show a reduction in sugar levels.
Not only that, several patients and sub-groups showed better results than the benchmark 0.7% reduction.
Biocon had presented these findings as part of a presentation made recently at an overseas investor conference. It said that further studies in the drug will be done, once it gets a global partner. This will allow it to launch the drug globally, if future clinical trials are successful.
Getting a partner will limit its individual exposure to this drug programme, as it has other drug candidates under development, which will require funding, and its research and development budget is already at about 8% of revenue.
Biocon is in a comfortable position, having signed a $350 million (Rs1,600 crore) licensing agreement for its insulin products with Pfizer Inc. Some of this amount will be paid upfront in the form of licensing payments.
The emerging markets are a key growth region for the company, with biosimilar insulin products, biosimilar mABs (mono-clonal antibodies), and of course, the lucrative market for generics.
Its core business is doing very well, with sales of biopharmaceuticals rising by 19% in the September quarter.
The next trigger for the company will be its forthcoming quarterly results, due next week, which will show if its good performance in recent times is continuing.
Graphic by Ahmed Raza Khan/Mint
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First Published: Wed, Jan 12 2011. 10 30 PM IST