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Abbott Laboratories (ABT - Analyst Report) and its partner Reata Pharmaceuticals, Inc. recently announced the discontinuation of the pivotal phase III BEACON (Bardoxolone methyl EvAluation in patients with Chronic kidney disease and type II diabetes: the Occurrence of renal eveNts) study with bardoxolone methyl. The study was being conducted to evaluate the safety and efficacy of bardoxolone methyl in patients with stage 4 chronic kidney disease (CKD) and type II diabetes.

The study was terminated after the Independent Data Monitoring Committee (IDMC) recommended discontinuation of the study due to safety concerns. It was found that a higher number of serious adverse events and mortality was associated with the use of bardoxolone methyl.

Investors have reacted negatively to the news with Abbott Labs’ share price falling 3.5% on the news.

Abbott Labs and Reata Pharma had announced the initiation of the phase III study in mid-2011. The discontinuation of the BEACON study is a huge disappointment for Abbott Labs, which remains on track to split into two separate publicly traded companies from January 1, 2013. One company will deal in diversified medical products, while the other (AbbVie) will focus on research-based pharmaceuticals.

Bardoxolene methyl was one of the most promising late-stage candidates in AbbVie’s pipeline. The CKD market represents significant commercial potential with more than 26 million adults affected in the US as per data from the National Kidney Foundation. The successful development of bardoxolone methyl would have helped reduce AbbVie’s dependence on Humira for growth.  

Other late-stage candidates at Abbott Labs includes levodopa-carbidopa intestinal gel (LCIG) for advanced Parkinson's disease and daclizumab for the treatment of relapsing-remitting multiple sclerosis (RRMS). Abbott Labs has partnered with Biogen Idec (BIIB - Analyst Report) for daclizumab.

We currently have a Neutral recommendation on Abbott Labs, which carries a Zacks #3 Rank (short-term Hold rating).

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