AbbVie Shares Plummet 12% as Cerevel Schizophrenia Asset Fails Phase II Trials

Brain shaped maze. Concept image of study and brain behavior.

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The shocking failure of AbbVie’s emraclidine has investors questioning the Big Pharma’s long-term neuroscience strategy, which put the drug at the center of expectations.

The centerpiece drug of AbbVie’s $9 billion acquisition of Cerevel Therapeutics has failed in two Phase II clinical trials for patients with schizophrenia.

AbbVie announced Monday morning that emraclidine did not show a statistically significant improvement in symptoms of the psychiatric disorder when compared to placebo during the mid-stage trial.

The news brought AbbVie’s shares down 12% to $174.80 as the markets opened Monday, compared to $199.50 at the previous close.

Analysts expressed surprise at the failure in both studies. AbbVie had been testing the drug in the EMPOWER program for patients with schizophrenia who are experiencing an acute exacerbation.

“While we always thought the prior [Phase Ib] . . . plausibly overestimated the effect size of the drug, it’s outright surprising to see it flat out fail in both pivotal [Phase IIbs],” wrote Stifel’s analysts in an early Monday note to clients.

The primary endpoint of the trial was a change in baseline on the Positive and Negative Syndrome Scale, which measures the different symptoms of schizophrenia, compared to placebo at week six. Emraclidine’s score was slightly higher than placebo in the EMPOWER-1 study for both doses. In the EMPOWER-2 trial, the lower dose saw an increase in the score, indicating a worsening of symptoms. None of the results were statistically significant.

“While we are disappointed with the results, we are continuing to analyze the data to determine next steps,” Roopal Thakkar, AbbVie’s executive vice president of research and development and chief scientific officer, said in a Monday statement. On safety, emraclidine was well tolerated, AbbVie noted.

Stifel analysts noted that the placebo response in the emraclidine trials was very high in both studies, but BMO Capital Markets urged investors not to blame placebo for the drug’s failure.

The failure is a blow to AbbVie’s strategy. At the time of its Cerevel transaction at the end of last year, AbbVie touted emraclidine as having “the potential to transform the standard of care in schizophrenia and other psychiatric conditions.” Guggenheim Securities had previously predicted that sales of emraclidine could reach $1.5 billion by 2033.

Now, Guggenheim predicts AbbVie’s shares could fall by as much as 3% on the news given the removal of those sales from expectations. Already, investors have sent the company down much more, but Guggenheim called the stock selloff “overdone,” given the company does not face any near-term patent expirations until September 2029 when depression treatment Vraylar opens up.

Nevertheless, Guggenheim noted that the surprising failure creates “new questions” about AbbVie’s longer-term growth outlook. “We expect renewed focus from investors now on AbbVie’s ability to bring in additional growth drivers, either through their internal R&D efforts or through external business development,” Guggenheim said.

Others agreed. Emraclidine was considered a pivotal part of AbbVie’s neuroscience strategy, Truist Securities wrote. BMO, meanwhile, looked to AbbVie’s immunology portfolio, crediting the company for “expertly managing” the loss of exclusivity on Humira and the switch of commercial focus to Skyrizi and Rinvoq.

The Big Pharma is also looking to the remaining pipeline from the Cerevel deal. Tavapadon, for example, recently met the primary endpoint of a Phase III trial in Parkinson’s disease.

Big Win for BMS

While AbbVie regroups, Bristol Myers Squibb will face little near-term pressure on the schizophrenia market for its recently approved Cobenfy, previously known as KarXT, which was picked up through the $14 billion acquisition of Karuna Therapeutics around the same time as AbbVie’s Cerevel buy. BMO said AbbVie’s failure “points to an even clearer win for Bristol.” Truist predicts that peak sales for Cobenfy could hit $4 billion. Revenue could start trickling in by the second half of 2025.

Emraclidine and Cobenfy both belong to the muscarinic class.

“Exactly how KarXT works is an open question (it’s a bit of a promiscuous drug),” said Stifel. But it targets the M1 and M4 receptors, while AbbVie’s candidate only targets M4. “There’s been a longstanding thesis that M1 may contribute to efficacy on cognition,” the firm added.

Neuroscience has seen something of a renaissance in recent years, with the Karuna and Cerevel acquisitions revitalizing excitement in the disease area. There’s also been high profile successes across central nervous system diseases, including multiple approvals in Alzheimer’s and Sage Therapeutics’ zuranolone, developed in partnership with Biogen, gaining an FDA nod for postpartum depression in August 2023.

But Sage was not granted a wider indication, despite requesting a label for major depressive disorder as well. Stifel said that AbbVie’s emraclidine failure is “puzzling,” but calls to mind Sage’s challenge in replicating results for zuranolone in larger trials.

“There had been a perception that CNS, long known to be one of the most challenging areas of drug development, has been getting a tad easier,” Stifel wrote. “The emraclidine failure today is likely to make investors incrementally more cautious on CNS [Phase II] studies (especially small ones) and the degree to which they firmly derisk a [Phase III].”

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