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Now what? How biotechs deal with failure

Aveo Pharmaceuticals is pressing forward three years after US regulators rejected its kidney cancer drug candidate and three months after a trio of former executives were charged with fraud.
Aveo Pharmaceuticals is pressing forward three years after US regulators rejected its kidney cancer drug candidate and three months after a trio of former executives were charged with fraud.Suzanne Kreiter/Globe Staff/File

In biotechnology, failure is more the rule than the exception.

Nine out of 10 companies that begin clinical trials never bring a drug to market. And for those that make it out of the gate, clinical, regulatory, or competitive setbacks are common.

Last week, Juno Therapeutics Inc., a highflier in the field of engineering the immune system’s T cells to kill cancer tumors, halted a study of its leading drug candidate after three patients died. The Seattle company’s stock fell more than 30 percent.

How companies respond to setbacks — whether they are blindsided or clear-eyed, devastated or determined to recover — is telling, said Laurie Halloran, president of Halloran Consulting Group, a Boston firm that advises life sciences companies. While some reversals prove fatal, she said, others can be overcome by companies that are smart, flexible, and lucky.


“You need to be humble and admit to what you don’t know,” Halloran said. “You have to be transparent and honest, and own the setback at every level rather than look for a scapegoat. Those are the common threads I see in companies that can weather a setback and move on.”

Here are some recent examples of how local biotech companies have responded after hitting a roadblock.

The fade

Forum Pharmaceuticals Inc. had high hopes, a seasoned chief executive, and what it thought was a promising compound for hard-to-treat diseases like Alzheimer’s and schizophrenia. But last fall, the Watertown company abruptly halted its clinical trials when patients suffered gastrointestinal side effects. And late last month, it quietly shut its doors.


Aveo Pharmaceuticals Inc. is pressing forward three years after US regulators rejected its kidney cancer drug candidate and three months after a trio of former executives were charged with fraud. Under a new chief executive, the Cambridge company is conducting another set of tests and hopes to seek federal approval to market the same drug next year.


“It’s about restoring confidence,” said Michael Bailey, who took over as Aveo chief executive last year and secured $17 million in financing in May from an investor group that included Piper Jaffray & Co. “What happened, happened. We have to take a forward-looking view.”

Hanging on

Sarepta Therapeutics Inc. is awaiting a much-delayed Food and Drug Administration decision on its drug candidate for Duchenne muscular dystrophy. Shares of the Cambridge company have swung wildly this year as it absorbed a series of blows, ranging from a blizzard that delayed a key FDA hearing to an influential advisory committee’s recommendation to reject its experimental treatment. Buoyed by a campaign by Duchenne patients and their families who say the Sarepta drug has been effective in a clinical study and are seeking to override skeptical scientists, the company remains hopeful it can win approval.


Infinity Pharmaceuticals Inc. last month said it will cut 100 jobs after disappointing clinical findings prompted drug maker AbbVie Inc. to end a partnership that was helping fund development of the Cambridge company’s blood cancer drug.

Infinity also awarded retention bonuses to remaining employees, including a total of almost $1 million to four top executives.

Waltham’s Chiasma Inc. similarly has been restructuring its staff and pondering its next steps after FDA rejection in April of its drug to treat a pituitary gland growth disorder.

Verastem Inc. of Cambridge is limping along following a cutback stemming from last year’s failure of its lead drug candidate for lung cancer; last month, its executive chairman, Christoph Westphal, and high-profile director Henri Termeer resigned from the board of directors.


And Zafgen Inc. of Boston is conducting new tests of its obesity drug, and still plans to seek FDA approval, despite last year’s deaths of two patients who took the medicine in a clinical trial.

Sarepta, Chiasma, Verastem, and Zafgen all declined interviews for this story.

It’s easier for bigger companies with more than one product to rebound from bad news.

Sanofi SA had its eye on the multiple sclerosis drug candidate Lemtrada, developed by Cambridge-based Genzyme, when it paid $20.1 billion to acquire Genzyme in 2011. But in December 2013, the FDA surprised Sanofi by rejecting the drug application.

Sanofi responded in 2014 by handing over additional information from a clinical study and a fresh analysis of the data, and the FDA reversed its decision almost a year later and allowed Lemtrada on the US market.

Shire PLC, an Irish company with its top management in Lexington, was notified last fall that the FDA was seeking more clinical data on its experimental treatment for dry-eye disease, delaying the introduction of an important new drug. But the company gathered the data and resubmitted its application in January. The drug was approved Monday for sale in the United States.

As the recoveries of Sanofi and Shire show, the FDA is all-powerful when it comes to a product living or dying.

Halloran, the Boston consultant, said her advice to companies that are working to begin, design, or advance clinical trials of experimental drugs is to take regulatory feedback seriously.


“Listen very closely to what FDA is saying and make as many accomodations as you can to address their concerns,” she said. “The biggest mistake executives can make is to ignore the advice or say its’s not important.”

Robert Weisman can be reached at robert.weisman@globe.com. Follow him on Twitter @GlobeRobW.