Hyperion Therapeutics Inc. (Nasdaq: HPTX) has cancelled its acquisition of Israeli company Andromeda Biotech, which is developing a Type 1 (juvenile) diabetes drug DiaPep277. Hyperion says it has “uncovered evidence” that Andromeda employees falsified the drug’s clinical trial results. The deal was to have reached hundreds of millions of dollars with the successful approval and marketing of the drug.
Sources inform ''Globes'' that Andromeda did not receive any notice of Hyperion’s intent to cancel the deal between them. Clal Biotechnology Industries Ltd. (TASE: CBI), controlling shareholder of Andromeda prior to the sale to Hyperion, halted trading toward the end of the day, following Hyperion’s announcement. Hyperion’s shares, traded on Nasdaq, dropped 11% in premarket trading.
According to Hyperion, Andromeda colluded “with a third-party biostatistics firm in Israel to improperly receive un-blinded DIA-AID 1 trial data and to use such data in order to manipulate the analyses to obtain a favorable result.” Hyperion further stated that “All of these acts were concealed from Hyperion and others.” The workers were suspended, the matter was reported to the authorities, and Hyperion is continuing to examine its legal options.
"We're shocked and disheartened at the serious misconduct and deceit,” said Hyperion President and CEO Donald J. Santel. The company expects to record an accounting loss of $25-$55 million as a result of this incident.
Hyperion announced six months ago that it was acquiring Andromeda for an amount that could have reached $570 million, plus royalties from sales. The first payment was $20 million (of which $8 million was in shares). Hyperion, which is a profitable company specializing in orphan drugs, agreed to finance Andromeda’s continued development and to return the loans given to the company by its owners.
When the deal was signed, there were some who raised their eyebrows and wondered why the product was being sold at a relatively low price, earlier than expected, to a relatively unknown partner. This was instead of waiting for the completion of another Phase III clinical trial. At the time, the company explained that in so doing, the company was saving a lot of money and reducing risk, and that the partner was a good one. In retrospect, the question arises whether other companies ran away from the deal after seeing Andromeda’s data.
Industry sources say today that rumors of misconduct had been raised in the past regarding inconsistencies between the trial results recorded in some of the Israeli medical centers and the statistical results that were published.
Published by Globes [online], Israel business news - www.globes-online.com - on September 8, 2014
© Copyright of Globes Publisher Itonut (1983) Ltd. 2014