Cephalon, Inc. (CEPH) recently reported disappointing results on a pipeline candidate, Cinquil that was being developed for the treatment of pediatric eosinophilic esophagitis (EoE). Results from the phase IIb/III study showed that Cinquil achieved a statistically significant reduction in esophageal eosinophil levels versus placebo, which was one of the co-primary endpoints.

However, although patients on Cinquil showed an improvement in clinical symptoms, which was the second co-primary endpoint, the candidate failed to show a statistically significant improvement for this endpoint.

Eosinophilic esophagitis is a rare disease that is more frequently diagnosed in children. The Journal of Clinical Investigation estimates that approximately 80,000 children in the United States have EoE.

Cinquil is being developed by Ception Therapeutics, Inc., a privately held biopharmaceutical company and Cephalon holds an option to acquire Ception. However, the companies have agreed to extend Cephalon’s option exercise period. A decision regarding the acquisition of Ception will be taken once top-line data from an ongoing phase II eosinophilic asthma study are available. We expect results from this study in the first half of 2010.

Meanwhile, the companies intend to analyze data from the EoE study and are planning to analyze data from an ongoing open-label extension study. We believe the company will need to conduct another study in order to gain approval for the EoE indication. This could lead to a significant delay in the commercialization of Cinquil.

The mixed data on Cinquil is disappointing for Cephalon given the company’s interest in diversifying its product portfolio by expanding into new therapeutic areas. We currently have a Neutral recommendation on the stock.

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