Stem cell believers, and investors, were dealt a serious blow today when Baltimore-based Osiris Therapeutics stopped a Crohn’s disease (CD) trial. The study, which involved giving CD patients PROCHYMAL (mesenchymal stem cells) to try an induce remission in active disease, showed that the placebo arm was working better. Not good. The markets responded harshly too, although not as bad as it could have been: Down $4.30 (or 23.5%) to $14.00.

Management claimed that the higher response rate in the patients taking placebo was due to a “flaw in the trial’s design” but the truth may be plain simple: the drug doesn’t work (read the end of this post for our reasoning).

There were actually two trials ongoing: one was to assess the efficacy (remission) in patients with active disease using two doses vs. placebo. The second trial was looking at patients who had responded to the first trial, keeping on the drug and seeing how long they were kept in remission (maintenance).

Here was CEO Randal Mills’ take on what happened:

“We had a situation where we were experiencing much higher than expected placebo response rates. As we looked into possible causes, we discovered what we believe to be a systemic design flaw in the trial that would likely affect the utility of the data for purposes of registration. After careful discussion with the FDA, we elected to discontinue enrollment rather than attempt to re-power the trial. We will keep the trial blinded and expect a solid data package for use in designing future trials in Crohn’s disease and to bolster Prochymal’s safety database.”

The reasons we think the drug might just not work – at least for CD - are several:

1. CD patients are a notoriously difficult group of patients to treat. These patients are so sick yet their response is so subjective, the trials are avoided by even some of the pharma big dawgs.

2. Patients are so sick they’ll do anything to stay on a trial and take something that will work. This study might have suffered from patients who reported a positive benefit in the first study just so they could continue to be on the drug.

3. Limited or no evidence that the drug works in CD. Lazard Capital Markets analyst Joel Sendek also thinks so: “I don’t think the drug works very well, and I have not seen any evidence that the drug works in Crohn’s disease.”

4. The trial is not powered enough. These sorts of trials have a VERY HIGH placebo rate due to the variable and subjective nature of the disease.

Conclusion: this trial is dead in the water. We’ll wait to see what Genzyme does.

Finally, we’re still bullish on the technology, but we’ll sit on the sidelines for now.

Image from stemcellresearchnews

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