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Serono halts development of skin cancer treatment

Serono's cancer franchise has suffered a blow after the Swiss company announced it was halting development of experimental skin cancer treatment Canvaxin

Serono's cancer franchise has suffered a blow after the Swiss company announced it was halting development of experimental skin cancer treatment Canvaxin.

Europe's largest biotech firm, along with its smaller US biotech partner CancerVax said they had decided to abandon Phase III clinical trials of the drug in patients with Stage III melanoma. It follows a similar move earlier this year to halt late-stage trials in patients with Stage IV melanoma.

CancerVax bore the brunt of the damage, with its shares losing more than a third of their value following news of the decision. The company said it would cut its work force from 183 employees to 80 and refocus its resources on developing other products and acquisitions of products and technologies.

The third interim analysis by the independent US Data and Safety Monitoring Board determined that the data were unlikely to demonstrate significant evidence that Canvaxin would show an overall survival benefit for patients with advanced melanoma compared with those who received placebo.

CancerVax CEO David Hale, who described the news as particularly disappointing, said: ìWe will discontinue all further development and manufacturing operations for Canvaxin but we currently plan to continue to further the development of the other products in our product pipeline, which we believe hold promise for the treatment of patients with cancer.î

Analysts said Serono was eager to see new products coming through its pipeline to offset its reliance on its best-selling drug, multiple sclerosis treatment Rebif, which amassed second quarter sales of $326m. They estimated that the company had spent SwFr37m ($28m) on development of the drug.

Lombard Odier Darier Hentsch analyst Bob Pooler said Canvaxin had been one of Serono's most advanced products: ìThis is a blow to its cancer franchise, and means it's still under pressure to lessen its dependency on Rebif.î

Analyst Denise Anderson at Kepler Equities said the abandonment of the Canvaxin project meant Serono would ìhave to write down its investment. On top of that, it removes potential upside for the stock.î

There were no significant safety issues associated with the Canvaxin trial, the companies said.

30th September 2008

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