An experimental bowel drug from GlaxoSmithKline and its partner Adolor has little commercial future following safety problems that caused trials to be put on hold, analysts said on Tuesday.
The setback is bad news for Adolor , whose shares fell 57% in after-hours trading on Monday, but will barely move the dial at Glaxo , Europe's biggest pharmaceuticals group, where future sales are expected to be impacted by less than 1%.
Glaxo and Adolor suspended clinical tests of Entereg as a treatment for constipation due to opioid painkillers after it was linked to a higher risk of heart attacks and other serious heart problems, fractures and skin cancers.
The problems with Entereg, also known as alvimopan, mark the second safety issue for a bowel medicine in just over a week, after Novartis's Zelnorm was pulled from the U.S. market on March 30 for a different constipation condition.
Glaxo and Adolor said they would continue to push ahead with development of Entereg as a short-term treatment for post-operative ileus (POI), or bowel dysfunction after surgery, but analysts said this was a much smaller potential market.
Entereg has had a chequered history, with the U.S. Food and Drug Administration seeking more information on the product twice already, so the latest setback is not a complete surprise.
Both companies still plan to resubmit an application for POI use this quarter but analysts at UBS said the new safety signals could delay this process and raise questions as to whether Entereg would ever get to market.
Analysts had been expecting a U.S. marketing green light and launch either late this year or early in 2008.
The opioid-induced bowel dysfunction (OBD) indication was seen as higher-risk, since the drug would be used on a long-term basis, potentially exposing patients to greater side effect dangers. But that also made it commercially more attractive.
Most analysts said they were now stripping out all sales forecasts for the product, which Deutsche Bank said could reduce Glaxo's valuation by around 1%.
UBS, which had been forecasting Entereg sales for Glaxo of 200 million pounds ($394.8 million) by 2011, also said loss of Entereg would remove 1 percent from its 2011 earnings per share forecast of 121.6 pence.
WestLB, meanwhile, cut its share price valuation for Glaxo by 10 pence to 15.90 pounds, while keeping the stock an "add," after removing forecast peak sales of 350 million pounds a year from its financial model.
Glaxo shares were 0.4% lower at 14.14 pounds in a flat London stock market.