Shares in Human Genome Sciences Inc., a 15-year-old Rockville biotech company that has yet to get a drug on the market, plummeted to their lowest level since 1995 yesterday after disclosing that serious side effects emerged during a clinical trial of a potentially lucrative hepatitis treatment when patients received high doses.
The share price dropped nearly $4.40 to $5.62, or almost 44 percent.
Human Genome Sciences officials said they were still optimistic that Albuferon would win approval - and have market success - at a lower dose.
"We continue to have every confidence that Albuferon will become the market-leading interferon for the treatment of chronic hepatitis C," H. Thomas Watkins, president and chief executive officer, told analysts in a conference call. The company says that's a $2.3 billion market.
But some analysts say the problem with side effects raises questions as to whether the drug can be approved by the Food and Drug Administration and foreign regulators.
Joseph P. Schwartz, an analyst for Leerink Swann & Co., lowered his estimate for the probability of Albuferon winning market approval to 65 percent from 90 percent.
And Dr. Jim Birchenough, an analyst for Lehman Brothers, wrote in a research note that Albuferon had also shown increased coughing and shortness of breath in earlier trials, and said he would "expect significant FDA scrutiny of this issue," according to Forbes.com.
But Schwartz, while seeing reduced chances for Albuferon's success, also termed the magnitude of the price drop "an overreaction."
In a research note, Schwartz wrote that the lower dose had done well in earlier trials, and he did not view success for the higher dose "as likely or necessary."
"This is not positive news, but should the stock be cut in half for this?" asked Jason Kolbert, an analyst for Susquehanna Financial Group, who also said the magnitude of the share price drop represented overreaction. He said the higher dose "was never the one HGS planned to take forward," and the key is whether the lower dose can win approval.
Albuferon is a longer-acting form of interferon, which is an approved hepatitis treatment. Some patients in the HGS trial were receiving 1,200-microgram doses every two weeks; other patients were receiving 900-mcg doses. They were being compared against a control group receiving the current standard treatment, called Pegasys.
