Clinical testing boosts biotech

Advancis shares jump 46% on results for strep throat drug

August 11, 2006|By TRICIA BISHOP | TRICIA BISHOP,SUN REPORTER

Shares of Advancis Pharmaceutical Corp. soared 46 percent yesterday - the biggest gain on the Nasdaq - after the Germantown biotech announced its once-a-day, strep throat antibiotic had succeeded in a revamped clinical trial. The company plans to seek marketing approval for the drug, which it says could have annual sales of $400 million by early next year.

Last summer, the treatment failed in two other trials, surprising executives and investors and sending the stock price on its way to an all-time low of 89 cents in late August. The news cost the now seven-year-old company a development partnership and forced executives to lay off 38 percent of the staff to save money.

Advancis' stock closed up $1.45 to $4.57 yesterday. The stock peaked at $10.05 per share in January 2004.

"We were as anxious as many of you to learn the outcome of the adult trial, and we are extremely excited [about] the results," Chief Executive Officer Edward M. Rudnic said during a conference call with analysts to discuss the outcome. "If you think about Advancis for the long term ... we have a potential to be a leading supplier of antibiotics in the U.S. market."

The company paired its Pulsys technology, designed to deliver medication in time-released bursts, with the antibiotic amoxicillin, hoping the union would allow patients to take just one dose a day. That would alleviate the need for multiple doses, which can be annoying, easily forgotten and difficult to give to children.

Advancis originally tested its Amoxicillin Pulsys in two trials, one with adults and one with children, over seven days, but the drug failed to cure infections as well as hoped. In this new trial, treating adults and adolescents only, the drug was administered for 10 days and shown to get rid of bacteria better than penicillin given four times daily.

Susan Clausen, vice president for clinical research and regulatory affairs, said the company expects to receive the full data set from the trial "within a month or so" and expects it to show that the drug is well-tolerated.

The company hopes to repeat the pediatric trial as well, but has to "do a bit more work" to figure out how to go about it, spokesman Robert Bannon said.

"I would say that we can't just extend the treatment from 7 days to 10 days [as in the adult trial]," Bannon said. "We might have to have a higher daily dose or reformulate the product."

Most drugs never make it to market, failing in one of three clinical trial phases required before the Food and Drug Administration will allow commercialization. But to fail in round three, as Amoxicillin Pulsys did, can be particularly disappointing for a company.

"It's unbelievable," said Harold Chappelear, vice chairman of UPM Pharmaceuticals, a contract drug development company spun out of the University of Maryland School of Pharmacy. "Those of us who have been in this thing for a long time keep thinking that the one we have right now is the one that's going to make it and everyone's going to be happy, then at the last minute, something goes wrong."

Advancis was so certain it had a winner the first time around, it had the press releases all ready to go last year, with spaces left to plug in data from the results.

When those numbers turned out to be negative, it threw the company for a loop, Rudnic said in an interview last winter. Soon after, New York's Par Pharmaceuticals pulled out of a partnership to co-develop Amoxicillin Pulsys. And Advancis had to cut 33 workers to afford to retool the late-stage trials, which cost about $7 million apiece. Today, it has about 50 employees.

Executives now are talking about pairing Pulsys technology with other antibiotics that require multiple daily doses, opening a market opportunity in the $1 billion range.

"It's been a long road here," said Richard B. Silver, an analyst with Lehman Brothers. "I'm very, very pleased to get this news today."

tricia.bishop@baltsun.com

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