Hyperion Therapeutics says it discovered 'misconduct' in studies of type 1 diabetes drug

Markets Associated Press

Hyperion Therapeutics said Monday it is abandoning work on a potential treatment for type 1 diabetes after discovering that employees of the company that developed the drug manipulated the results of a clinical trial.

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Hyperion said employees of Andromeda Biotech engaged in "collusion with a third-party biostatistics firm" to manipulate the results of a late-stage study of the drug, which is called DiaPep277. The company said the Andromeda employees saw data from the study and altered analyses of the data so it looked like DiaPep277 worked. Hyperion said the employees and the biostatistics company also improperly looked at data from an ongoing study.

Hyperion said it is looking into the misconduct and has suspended the Andromeda employees known to be involved. It said its own employees were not implicated in the wrongdoing.

"This new information leaves us with no viable regulatory path forward," said Hyperion President and CEO Donald Santel.

The company's shares fell $1.48, or 5.4 percent, to $26.16 in afternoon trading.

Clinical trials of drugs are typically "double blind," which means neither the patients nor the researchers conducting the experiment know who is getting the drug versus a sham treatment. That is supposed to prevent anyone from manipulating the results intentionally or unintentionally.

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Andromeda, which is based in Israel, said DiaPep277 was a combination of 24 amino acids that help control the immune system, preventing it from destroying pancreatic cells that secrete insulin. Patients develop type 1 diabetes when those cells are destroyed. Andromeda reported results from one late-stage trial of DiaPep277 in November 2011 and it expected results from a second late-stage trial in the first quarter of 2015.

The Food and Drug Administration designated DiaPep277 as a potential orphan treatment for newly diagnosed type 1 diabetes. That designation comes with years of marketing exclusivity.

In June Hyperion Therapeutics Inc. bought Andromeda for about $20.4 million in cash and stock. Hyperion, of Brisbane, California, said it will complete the remaining study but won't spend any more money on DiaPep277 after that. It expects to take a noncash impairment charge of $25 million to $55 million.