The decision comes after disappointing results from two clinical trials of Actilon (CPG 10101), its DNA-based drug candidate designed to induce an immune response that can fight the potentially fatal liver disease, hepatitis C virus (HCV).
Tellingly, Actilon was not the most important drug candidate in Coley's pipeline and so the decision to prioritise other compounds in development is not surprising, especially for a company of Coley's size. Smaller companies have fewer drugs in development and so often rely heavily on an individual drug candidate for financial success.
When asked by DrugResearcher.com why the programme had failed, Sue Hager, a spokesperson for Coley, explained that in order to get the drug to market quickly, Coley had decided to test Actilon as a second generation therapy: against patients that had relapsed hepatitis C or had not previously responded to the standard treatment of pegylated interferon and ribavirin.
Although the technique failed this time, Coley is not finished with Actilon just yet:
"Coley doesn't believe that the potential of Actilon has been fully evaluated," said Dr Robert Bratzler, CEO of Coley. The company was keen to stress that failure with these particular patients didn't necessarily mean that the drug would fail with other patient populations - specifically so called 'naïve patients' who had never been treated for Hepatitis C before.
However, the market for naïve patients with Hepatitis C is highly competitive with several other companies developing drugs. These include Vertex Pharmaceuticals' telaprevir (VX-950), an oral protease inhibitor in Phase II trials. Also, Novartis and Ideniz Pharmaceuticals are collaborating on the development of valopicitabine (NM283), a first-in-class nucleoside polymerase inhibitor in Phase II clinical trials.
Actilon activates a protein called toll-like receptor 9 (TLR9), found in plasmacytoid dendritic cells and B cells. There are 10 known TLRs in the human immune system that enable the body to sense threats from pathogens (i.e. viruses and bacteria) that cause disease. Specifically, TLR9 detects a pattern in the invading pathogen's DNA - called a CpG motif - that is not found in human DNA and triggers an immune response.
Dr Bratzler said: "Actilon is a unique molecule specifically designed to treat hepatitis C by targeting toll-like receptor 9 to induce potent levels of interferon and drive long-term adaptive immune responses."
The drug is a DNA-like string of nucleotides that mimics these CpG motifs and therefore induces an immune response. Also, through activation of the dendritic cells, a TLR9 activator like Actilon can fight against the development of immune tolerance to pathogens and cancer.
Dr Bratzler added that it is also possible that Actilon could also be used to treat other infectious disease indications, "either as an interferon replacement or alongside other treatments." Although he wouldn't be drawn on speculation of which other diseases he was referring to, one possibility is the autoimmune disease, systemic lupus erythematosus.
He continued: "We have made the decision to mitigate risk by suspending further investment in Actilon until we find a partner to share in development costs or until the market opportunity and development path for a second-generation immunomodulating agent becomes clear."
As part of the decision, Coley has reduced its workforce by 22 per cent (33 staff) and will look to outsource future drug development.
Of the major drugs in Coley's pipeline, Actilon was the only drug being developed without a partner. Coley refused to speculate on possible investors in Actilon, only stating that they "were in constant contact with partners."
Dr Bratzler said: "Until [we find a partner], we believe that Coley's resources will be better deployed on the discovery and development of new medicines that exploit the broad potential of our TLR Therapeutics platform."
Coley's prime drug candidate, developed in collaboration with Pfizer, is CPG7909 (or PF-3512676), another TLR9 activator and the most advanced TLR therapeutic in the clinic.
"To date, we believe that investors had placed very little to no value on the Actilon program. All focus remains on the company’s lead product PF-3512676 for the treatment of non-small cell lung cancer, currently in two Phase III studies being run by Pfizer," said Joseph Pantginis, an analyst from Canaccord Adams.
He added: "PF-3512676 represents one of only four or five Phase III Pfizer product candidates; therefore, it should be a key growth opportunity for Pfizer and Coley in the oncology arena."
Although the price of Coley's shares initially dropped nearly 14%, they have quickly recovered to a value close to that before the announcement. Pantgini kept a 'buy' rating on the stock.
As well as CPG7909, Coley is also developing drugs in collaboration with Sanofi-Aventis that target TLR7 and 8 for the treatment and asthma and allergies.
Dr Bratzler also said: "Coley was the first to discover that the natural ligand for TLR7 and 8 is short pieces of RNA and we are trying to exploit that for uses ranging from vaccine adjuvants to other indications."
Coley currently also collaborates with GlaxoSmithKline and Novartis in the field of vaccine adjuvants. Coley could earn nearly $1bn (â€770m) from all its collaborations.