Hyperion Therapeutics Terminates DiaPep277 Program

Hyperion Therapeutics, Inc. is terminating development of DiaPep277 for newly diagnosed Type 1 diabetes. The company has uncovered evidence that certain employees of Andromeda Biotech, Ltd, which Hyperion acquired in June 2014, engaged in serious misconduct, including collusion with a third-party biostatistics firm in Israel to improperly receive un-blinded DIA-AID 1 trial data and to use such data to manipulate the analyses to obtain a favorable result. Additional evidence indicates that the biostatistics firm and certain Andromeda employees continued the improper practice of sharing and examining un-blinded data from the ongoing DIA-AID 2 trial. All of these acts were concealed from Hyperion and others. The company has suspended the Andromeda employees known to be involved, is notifying relevant regulatory authorities, and continues to investigate in order to explore its legal options. Hyperion employees were not involved in any of the improper conduct.

"This new information leaves us with no viable regulatory path forward," said Donald J. Santel, President and CEO. "We're shocked and disheartened at the serious misconduct and deceit by the implicated Andromeda employees, both before and after the close of our transaction. Patients and clinical investigators invested years of their lives in the expectation of an honest result. We will be engaging with clinical investigators and are prepared to complete the DIA-AID 2 trial because the data may still yield useful insights into the natural history of Type 1 diabetes. However, we will not invest further in DiaPep277 beyond completing the DIA-AID 2 trial and meeting our obligations to close out the investigational program as a whole."

The last patient visit in the DIA-AID 2 trial is anticipated to occur in the fourth quarter of 2014. The company expects to record a non-cash impairment charge in the range of $25 million to 55 million.