MiddleBrook stock soars 139% over time-release antibiotic

January 25, 2008|By M. William Salganik | M. William Salganik,Sun reporter

After several years of reversals and failed trials, MiddleBrook Pharmaceuticals Inc. announced yesterday that it had won federal approval to sell a once-a-day version of the top-selling antibiotic amoxicillin to treat strep throat in patients 12 or older.

"It's a significant step for the company," said Greg Wade, an analyst for Pacific Growth Equities, who projected that the product, called Moxatag, could generate $100 million in annual sales.

MiddleBrook also is working on a tasteless, sprinkle-on version of Moxatag that would work with younger children, potentially opening up wider use with kids who resist taking multiple daily doses of antibiotics for fevers or ear infections.

Robert Bannon, MiddleBrook's vice president of investor relations, said, "Even a sick child will eat pudding or ice cream or something."

Even the age 12-and-up version is a huge boost for a company that had only $7.6 million in sales through the first three quarters of 2007, lost $33.2 million over that period and was running low on cash.

MiddleBrook shares soared $1.74, or 139 percent, to close at $2.99, making it the biggest percentage gainer on the Nasdaq stock market.

The Germantown company had already announced it is seeking a buyer or merger partner, and Wade said the approval was likely to accelerate the process.

"Winning approval [for Moxatag] certainly gets the attention of a larger audience," he commented.

Bannon said MiddleBrook, which has 31 regular employees and 30 contract sales representatives, doesn't have the capacity to market Moxatag on a large scale and needs "a large-pharma-type partner that has a thousand sales reps."

While MiddleBrook could partner though a licensing agreement, Bannon continued, "our plan A would be an outright acquisition of the company with someone with an appropriate sales infrastructure."

He said the company hoped to complete its "strategic process" in time for the acquirer or partner to launch Moxatag for next fall's cough-and-cold season.

When it completes its strategic process, MiddleBrook hopes to have a partner who can finance a pivotal test of timed-released Keflex, a version of another popular antibiotic, cephalexin. It is also planning midstage trials of Moxatag for younger children.

The FDA approval came as the company was running low on money. By the end of the third quarter of 2007, MiddleBrook was down to $5.9 million in reserves - and burning through cash at a rate of $6.3 million a quarter.

But with Moxatag trials nearing a conclusion, it raised up to $10 million by selling the rights for Keflex, its one drug on the market, to Deerfield Management, an investment fund that is one of its largest shareholders.

MiddleBrook said then the cash infusion would allow it to carry its sale/merger search beyond the January date for the Food and Drug Administration to rule on Moxatag.

For a company that has had a series of sharp ups and downs - not unusual for a small biotech with only a few products in the pipeline - the FDA approval was a huge up.

Bannon said the company's board was in a conference call that began at 5 p.m. Wednesday, the day the FDA's decision was due. But the news didn't come until 5:30, when an FDA e-mail landed, affirming the approval.

The biotech was founded in 2000 as Advancis Pharmaceuticals. It changed its name in June after being sued by Paris drug giant sanofi-aventis, which said the Advancis was too similar to aventis. Its founder and chief executive officer is Edward M. Rudnic, who also chairs the trade group MdBio.

From the beginning, the company worked to develop timed-release versions of approved antibiotics. By working on new delivery systems for already-accepted drugs, rather than on entirely new compounds, MiddleBrook hoped to shorten the time from lab to market.

MiddleBrook said its research showed that releasing pulses of drugs, rather than a steady stream, killed bacteria better. And it promised medications that could be taken once, rather than three times, a day, making it easier for patients to get proper doses.

But the path wasn't smooth. It lost a broad licensing agreement with GlaxoSmithKline in 2004, cutting off potential payments of up to $102 million. And in 2005, clinical trials for a seven-day dosage of Moxatag showed that the drug was less effective than standard treatments.

The company launched another clinical trial for Moxatag, this time with 10 days of dosage. In 620 patients, half took once-a-day Moxatag, and showed a slightly higher rate for killing the strep germs (85 percent vs. 83.4 percent) than the patients who got four-times-a-day penicillin.

bill.salganik@baltsun.com

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