Tough day for heart drugs

NEW YORK (CNNMoney.com) -- An experimental drug from AtheroGenics and its partner AstraZeneca failed a late-stage clinical trial and is not considered an effective treatment in reducing heart disease, the companies said.

AtheroGenics' (down $4.80 to $3.03, Charts) stock price plunged 58 percent on the news.

AtheroGenics, Inc., a drugmaker based in Alpharetta, Ga. said on Monday that it failed a late-stage clinical trial with its lead pipeline drug, called AGI-1067.

This casts doubt on AtheroGenics' chance of getting the drug on the market, and puts its $1 billion partnership with the larger AstraZeneca on shaky ground, an industry analyst said.

"We did not meet the primary endpoints of the study and of course we're disappointed," AtheroGenics CEO Russell Medford told CNNMoney.com by telephone.

But Dr. Medford said he was still "optimistic" about getting the heart disease drug on the market. While the test failed to show AGI-1067 was an effective treatment in reducing heart disease overall, results showed that it effectively reduced the chances of heart attacks, strokes and death, said Dr. Medford. The company is continuing to test the drug in a larger late-stage study.

Further information about AGI-1067 and other drugs will be released at the 54th annual conference of the American College of Cardiology (ACC) in New Orleans, from March 24 to 27.

But even if the additional data is strong, AtheroGenics faces "real challenges" in getting its drug on the market, according to Mark Monane, analyst for the investment banking firm Needham & Co.

"We expect the ACC meeting data will provide some encouraging findings on the drug['s] effect, as we believe the drug is active, yet we believe that there will be a long road ahead for further AGI-1067 development," Monane wrote in a note to clients.

AstraZeneca, a London-based drugmaker with a market cap of $84 billion, partnered with the smaller AtheroGenics in producing AGI-1067. AstraZeneca's (Charts) stock price slipped 1 percent following the news but later recovered. The larger company has 45 days to renege on the deal, if it desires.

In addition, AstraZeneca's anti-cholesterol Crestor failed to succeed in a clinical trial that measures its effectiveness in fighting a specific type of heart disease, according to Morgan Stanley analyst Jami Rubin.

Unlike AGI-1067, Crestor is not experimental. Crestor is one of AstraZeneca's top-selling drugs with $2 billion in 2006 revenues. If the study results had been strong, it would have provided Crestor with a competitive edge against rival anti-cholesterol drugs Vytorin and Zetia, made by Schering-Plough (up $0.06 to $23.55, Charts) and Merck (up $0.30 to $43.39, Charts).

Rubin, who cited an abstract of clinical data from the study, wrote in note that "while there is still good news here for Crestor, we view this as even better news for [Schering-Plough and Merck's] Vytorin and Zetia

AstraZeneca spokesman Steven Brown said he couldn't discuss specific details of the study because the results are covered by a conference embargo, but he said there are two other studies that had strong results backing the use of Crestor.

Also at the conference, Abbott Laboratories (up $0.38 to $53.26, Charts), the No. 3 U.S. drugmaker behind Pfizer (up $0.36 to $25.34, Charts) and Johnson & Johnson, will unveil test results on its experimental stent Xience, which is already available in Europe. Xience is a more advanced, drug and polymer-coated version of Abbott's earlier model of a stent called Vision.

Vision is the market leader among the bare metal stents. Even though the technology for bare metal stents is older than the drug-coated stents, the new type of stents have been accused of causing blood clots. No one knows why these stents appear to cause blood clots. The Food and Drug Administration advisors held a meeting on the topic in December, but the results of the meeting were inconclusive.

In this study, Abbott compared Xience to the drug-coated stent called Taxus, a potential competitor from Boston Scientific. If the test is successful, that could help Abbott get its product approved by the FDA, a necessary step in entering the $3 billion U.S. market for stents.

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