AbbVie Stock Dives 12% Following Cerevel’s Schizophrenia Drug Failing Phase II Clinical Trials
After AbbVie’s billion purchase of Cerevel Therapeutics, its leading candidate has failed in two Phase II trials focused on schizophrenia.
On Monday morning, AbbVie revealed that emraclidine showed no significant improvement in schizophrenia symptoms compared to a placebo during the mid-stage trials.
This news resulted in a 12% decline in AbbVie’s stock price, dropping to 4.80 from the previous close of 9.50.
Analysts were taken aback by the disappointing results from both studies, particularly as AbbVie had been testing the drug under the EMPOWER initiative for patients experiencing acute episodes of schizophrenia.
Stifel’s analysts noted, “While we always thought the prior [Phase Ib] studies potentially overestimated the drug’s efficacy, it is quite surprising to see it fail in both pivotal [Phase II] trials.”
The main goal of the study was to assess changes in the Positive and Negative Syndrome Scale, which evaluates various schizophrenia symptoms, comparing results to placebo at week six. In the EMPOWER-1 trial, emraclidine scored marginally higher than placebo in both tested doses. However, the EMPOWER-2 trial indicated a score increase for the lower dose, suggesting a worsening of symptoms, with none of the findings attaining statistical significance.
Roopal Thakkar, AbbVie’s executive vice president of research and development, expressed disappointment but emphasized ongoing data analysis for future plans, noting favorable tolerability for emraclidine.
According to Stifel analysts, the placebo response was notably high in both trials, yet BMO Capital Markets advised against attributing the failure solely to placebo effects.
This setback is significant for AbbVie’s strategy. When the company’s acquisition of Cerevel was announced, emraclidine was highlighted as a transformative candidate for treating schizophrenia and other mental health conditions. Guggenheim Securities previously estimated emraclidine sales could reach .5 billion by 2033.
In light of these developments, Guggenheim suggests AbbVie’s stock may fall an additional 3%, with investors already showing concern, although they believe the current selloff is “overdone,” citing no immediate patent expirations until September 2029 concerning the medication Vraylar.
Nonetheless, Guggenheim indicates that this unexpected failure raises “new questions” regarding AbbVie’s long-term growth potential. “We foresee investors re-evaluating AbbVie’s ability to generate new growth drivers through internal research and development or external partnerships,” they stated.
Other analysts echoed this sentiment. Emraclidine was seen as crucial to AbbVie’s neuroscience approach, while BMO recognized AbbVie’s adept management of the transition from Humira’s exclusivity to newer drugs like Skyrizi and Rinvoq.
AbbVie is also focusing on assets stemming from the Cerevel acquisition, such as Tavapadon, which recently met the primary endpoint in its Phase III trial for Parkinson’s disease.
Big Win for BMS
As AbbVie navigates through this challenge, Bristol Myers Squibb remains positioned firmly in the schizophrenia marketplace with its newly approved Cobenfy, formerly known as KarXT. This product was acquired during the billion acquisition of Karuna Therapeutics around the same time as AbbVie’s Cerevel acquisition. BMO notes that the current situation only highlights a more favorable position for Bristol. Truist forecasts that Cobenfy could achieve peak sales of billion, with revenues expected to start flowing by late 2025.
Both emraclidine and Cobenfy fall within the muscarinic drug class.
Though the mechanism of action for KarXT remains somewhat unclear, it acts on M1 and M4 receptors, in contrast to AbbVie’s candidate, which exclusively targets M4. Stifel noted a prevailing theory suggesting M1’s role in enhancing cognitive efficacy.
The landscape of neuroscience has been rejuvenated in recent years, highlighted by the Karuna and Cerevel acquisitions. There have also been numerous notable approvals across central nervous system disorders, including several Alzheimer’s treatments and the August 2023 FDA approval of Sage Therapeutics’ zuranolone, developed with Biogen, for postpartum depression.
However, Sage Therapeutics did not receive a broader indication for major depressive disorder, despite pursuing it. Stifel remarked that AbbVie’s emraclidine setback is “puzzling” and likens it to Sage’s struggles in replicating zuranolone’s positive outcomes in larger trials.
“The perception that CNS development was easing may shift, as the emraclidine failure may cause investors to approach CNS [Phase II] studies with greater caution regarding how they determine risk for [Phase III] efforts,” Stifel concluded.