Guilford halts drug trial

Baltimore biotech's stock down 34% in heavy trading

Sedative Aquavan being tested

Talks with FDA planned on alternative testing

March 25, 2005|By Tricia Bishop | Tricia Bishop,SUN STAFF

Shares of Guilford Pharmaceuticals Inc. tumbled yesterday after the Baltimore-based biotechnology company announced that it was halting late-stage clinical trials of its sedative Aquavan because patients experienced levels of sedation greater than expected and subsequent adverse effects.

Investors traded nearly 7.7 million shares, 35 times the average volume. The stock fell to $2.34 from $3.53 a day earlier, a 34 percent drop. It was the biggest decline by percentage on the Nasdaq stock market yesterday.

"You can look at the market's reaction today, but what's important to emphasize is that it's a prudent judgment by the management team," said Guilford spokeswoman Stacey Jurchison. "By taking this step, we're really trying to ensure the highest probability of regulatory success for Aquavan."

The company plans to meet with the Food and Drug Administration within the next several weeks to discuss altering the trials, perhaps by lowering the trial dosage, which could push the drug's release date back months.

Guilford, which originally planned to apply for a New Drug Application in mid-2006, estimated that the latest setback could add about three months to the process. Analysts estimated a delay of five to six months, depending on the results.

The 10-year-old company has yet to show a profit. It has been hoping that Aquavan will be its turnaround drug, potentially bringing in $200 million in annual sales.

Its two marketed drugs - the Gliadel Wafer, a brain cancer treatment, and the Aggrastat Injection, used to treat heart attack patients - had combined sales of about $40 million last year while the company reported an annual net loss of about $88 million.

Early trials of Aquavan showed that the "sedative hypnotic agent" affects patients more quickly and has a lighter level of sedation and shorter recovery time than some other drugs on the market. Guilford said it could be used during uncomfortable medical procedures such as colonoscopies.

The company is hoping to get wider distribution approval of the drug by keeping its sedation light enough that an anesthesiologist won't have to administer it. But the phase-three trials - the last required approval stage by the FDA before a drug can go to market - were disheartening.

In the trials, 209 people undergoing elective colonoscopies were given Aquavan and 69 were given Midazolam HCL, a drug with $300 million in annual sales and produced by New Jersey-based Hoffmann-La Roche Inc. Aquavan was shown to meet its efficacy goals - it sedated 96 percent of those who took it - but the sedation level was deeper than that of its competitor and was too deep to permit it be approved for use without an anesthesiologist present.

Aquavan did show a quick onset, taking about two minutes to sedate patients, who took about 11 minutes to reawaken.

"It was kind of a `good news, but' type of thing," said Brian D. Rye, an analyst with Janney Montgomery Scott LLC in Philadelphia. In the early part of the day, investors seemed to take it that way, too, pushing the stock up 18 percent, to more than $4, before the price dived about noon.

"I guess people read the second paragraph of the press release," said Rye, who said the drop yesterday was an overreaction and probably resulted from the lack of details in Guilford's printed announcement.

"It's a tough environment for biotech stocks already," he said. "When you leave things open to interpretation, the interpretation that's made is often the worst one."

Guilford said no serious adverse events took place during the trial, but it declined to say what adverse events were experienced. A detailed review of the results will be presented April 6 during the company's investor meeting.

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