Kindred shares plummet as company nixes atopic dermatitis drug

Shares of Kindred Biosciences ($KIN) fell 30% to $6.44 in premarket trading Thursday, after the company announced that it would discontinue its research on AtoKin, a drug it was developing to treat atopic dermatitis in dogs. It was the latest in a string of setbacks for the San Francisco company--and an indirect acknowledgement of the high barrier to market for atopic dermatitis treatments set by Zoetis's ($ZTS) recently launched hit drug Apoquel.

Kindred CEO Richard Chin

"While the market for atopic dermatitis is large, the space has recently undergone a major transition. The rapid uptake and success of a recently launched atopic dermatitis product, while confirming the large size of the market, has substantially raised the bar for future atopic dermatitis products," said Kindred CEO Richard Chin in a statement from the company.

Indeed, Apoquel, designed to relieve dogs of the itchiness caused by atopic dermatitis, has been so popular that it helped boost Zoetis's third-quarter revenues 10% year over year to $1.2 billion. Its instant success has also been a thorn in the company's side, though, as it has been unable to manufacture Apoquel fast enough to meet the growing demand. The supply shortages won't be resolved until next year.

Kindred's AtoKin was a chewable, beef-flavored histamine H1-receptor antagonist--inspired by a class of drugs that has long been used to treat allergic disorders in people. Steven St. Peter, CEO of Kindred rival Aratana Therapeutics ($PETX) tells FierceAnimalHealth he questioned AtoKin's prospects from the start. "It has never made sense from our perspective to bring forward tired generics with undifferentiated mechanisms and call that innovation," St. Peter says in an e-mail. "Frankly, Aratana drew that conclusion about the use of antihistamines for atopic dermatitis within hours of considering that approach."

St. Peter says Aratana isn't at all discouraged by Kindred's decision or by Zoetis's domination of the atopic dermatitis market. In fact, in October, Aratana completed a licensing agreement with U.K.-based Atopix Therapeutics to develop and commercialize a drug that attacks the disease by addressing cell populations that carry itch-causing cytokines. It's a therapy, St. Peter says, that "gets to the fundamental derangement in the biology." Similar approaches are being developed in human medicine, "again illustrating that others think it is a good mechanism." He adds that he's "pleased" by Apoquel's success, but that "at the end of the day, the best drug will win market share."

As for Kindred, it had already suffered one big blow in August, when disappointing trial results prompted it to abandon CereKin, a drug it was developing to treat osteoarthritis in dogs. Kindred is now left with just one late-stage drug candidate: SentiKin, a treatment for postoperative pain that the company has told investors will be ready for an FDA filing next year.

During an earnings call earlier this month, Kindred's executives told analysts the company may be ready to start pivotal studies on two additional drugs next year--one to treat metabolic disease in horses and the other that's an appetite stimulant for cats. Still, it will be challenging to regain the confidence of investors, who have been bailing in high numbers since pushing the company's shares up to a high of nearly $27 in February.

- here's the press release
- read more at Reuters