Novavax shares slide 16% on setback for Estrasorb

Study links ovarian cancer to estrogen therapy

July 18, 2002|By Julie Bell | Julie Bell,SUN STAFF

Shares of Novavax Inc., developer of an estrogen-replacement lotion, took another beating yesterday, sinking 16 percent after the release of a study linking ovarian cancer with estrogen-replacement therapy.

The study, which appeared in yesterday's issue of the Journal of the American Medical Association, was one more bit of bad news for a Columbia company that had hoped to put Estrasorb, the first drug it developed itself, on the market by now.

"There's no question it's been a challenging few months," said Chief Executive Officer John A. Spears. But Spears said all biotechnology companies go through ups and downs, and he predicted a continued market for estrogen therapy, including Estrasorb, should the Food and Drug Administration approve it.

Yesterday's 40-cent drop left Novavax shares at $2.10 on the Nasdaq stock market. It was the second time in a week that the stock had fallen on news of disappointing results from a hormone-replacement study.

Last week, government scientists announced that they had halted a study that tested the combination of estrogen and progestin in post-menopausal women. The combination, the scientists said, raised the risk of stroke, heart attack, cardiovascular disease and breast cancer - though the overall risk of the diseases remained small.

Novavax's shares had been trading near $12 when, in April, they began an 82 percent decline after the Food and Drug Administration decided not to approve Estrasorb without additional information. The company said the additional information related to the chemistry and manufacturing section of its application. Novavax withdrew the application and expects to submit a new one this summer.

The company has continued to market a line of vitamins and prescription drugs it acquired when it bought St. Louis-based Fielding Pharmaceutical Co. in 2000. That business - which includes prescription prenatal vitamins under the Nestabs brand and the Gynodiol prescription estrogen-replacement pill - is generating about $20 million in sales a year.

Yesterday, Novavax announced its 65-person sales force also will market a prescription drug for hemorrhoids. The drug, Analpram HC, generated sales of $17 million last year for privately held Ferndale Laboratories Inc. of Ferndale, Mich. Under an agreement with Ferndale, Novavax stands to get more than 50 percent of revenue generated by Analpram HC once it is selling the drug at a monthly rate equivalent to $500,000 a year.

"Everything over that, we get over 50 percent of," Spears said of the $500,000-a-year goal.

Still, Wall Street has hung its recent hopes for Novavax on Estrasorb and the $2 billion a year hormone replacement therapy market.

Analysts Jason Zhang of Stephens Inc. and Michael Colon of A.G. Edwards & Sons gave mixed views yesterday on whether Novavax can recover from this year's setbacks.

Zhang said his firm was so disappointed by the string of events that it decided "a couple days ago" to quit following Novavax.

"We just don't think [Estrasorb] has a chance to be approved" this year, he said.

Colon agreed that approval this year is unlikely. But he said Novavax could be successful if it shows women the differences between its product and hormone therapies used in the studies released this week and last.

Those studies found increased risk among women who took the hormones for an average of at least five years. One of the studies involved a therapy that combined two hormones - estrogen and progestin.

Estrasorb, a lotion, would be the first transdermal hormone replacement therapy if approved.

It contains only estrogen and is intended for the relief of hot flashes. That means it likely would be taken for periods of two years or less, the amount of time it generally takes menopausal women to get past those symptoms, analysts and the company said.

As are a number of other estrogen-only therapies, Colon said, Estrasorb also may be marketed to women who have had hysterectomies, eliminating the risk of uterine cancers long thought to be associated with estrogen-only therapy.

"The best thing for reducing hot flashes is estrogen," Spears said. "Women who are going through it, they'll do anything to get rid of them."

Hormone therapy has been an issue since its inception decades ago, and women have always had to weigh the risks with the benefits, Spears said. He said the latest studies don't change that.

"Clearly, the market driver for us is Estrasorb," Spears acknowledged. But, he said, if it doesn't succeed "it wouldn't mean the end of Novavax."

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