Advancis plunges 59% on poor test results

Drug-delivery system trails plain penicillin

June 17, 2005|By Tricia Bishop | Tricia Bishop,SUN STAFF

Shares of Advancis Pharmaceutical Corp. plunged 59 percent yesterday to an all-time low of $2.03 after it announced disappointing clinical results that cloud the future of the six-year-old Germantown biotech company.

Advancis said its pairing of the antibiotic amoxicillin and its drug-delivery system called PULSYS failed in final clinical stages. Penicillin performed better in adults with strep-throat-related complications, with a cure rate of 88.5 percent, compared with about 76 percent for Amoxicillin PULSYS.

Advancis developed the PULSYS drug delivery system to distribute medications in short, time-released bursts, which could cut down on having to take multiple doses throughout the day. The company plans to earn revenue applying the technology to antibiotics, such as amoxicillin, which is typically used to treat bacterial infections.

"I can't sit here and tell you that our confidence hasn't been shaken," Edward M. Rudic, Advancis' president, chairman and chief executive officer, said during an early conference call yesterday. "To get this result is pretty surprising."

Shares closed down $2.96, or 59 percent, to $2.03 on the Nasdaq stock market. The company took a similar hit in October after GlaxoSmithKline ended a licensing deal that could have been worth $100 million. On that day, the stock dropped 62 percent to $2.75 from $7.28.

The company said it hasn't determined why the combination didn't work. It is awaiting final data before deciding whether to abandon the project or try again. Results from another final-stage testing of the treatment - in children - are expected late next month. Advancis officials said they will wait until then before announcing their plans.

Staffers spent yesterday morning "checking and double-checking, looking for some sort of an explanation," Chief Scientific Officer Barry Hafkin said. "We have to wait for further evaluation of the data to really understand the meaning of this - these results."

The findings could signal greater trouble for the company, whose plans are based almost entirely on pairing PULSYS with other antibiotics.

Bob Bannon, senior director of Advancis investor relations, said it was too early to speculate about the future, but he acknowledged the news was a setback.

Even if the trial, which has cost between $6 million and $7 million, is resumed and the drug ultimately is approved by the U.S. Food and Drug Administration, time and potential revenue has been lost, he said. Bannon estimates the market opportunity for this one application at about $300 million. The company had planned to file for a new drug application from the FDA this year.

If the experiment ultimately fails, it could signal other disappointments to come, as well as affect a collaboration with Par Pharmaceutical Companies Inc. of New York, finalized a year ago. Par is paying for the two final-phase clinical tests and expected to market and commercialize the finished, successful product with Advancis.

"It clearly will have an impact on our decision" whether to continue the agreement, Par spokesman Stephen Mock said yesterday, adding that it was "just too early" to tell what would happen. Similar results from the pediatric testing of the drug would likely dissolve the relationship.

Last year, Advancis posted a net loss of $34.7 million. It lost $19.4 million in 2003. Revenue nearly tripled in 2004 to $11.4 million. The gain was fueled by the Par partnership, reimbursement for research and development costs, and sales of Keflex, a drug the company bought the U.S. rights to in July to manufacture, market and sell.

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