BioWorld Today Correspondent

Underlining both the general volatility in the wider public markets and the specific uncertainties attaching to the FDA's present treatment of new drug applications for antibiotics, Arpida AG hit a 52-week low on news that it had completed a regulatory filing for Iclaprim, a synthetic diaminopyrimidine in development for treating complicated skin and skin structure infections (cSSSI).

Shares in the Reinach, Switzerland-based firm dropped as low as CHF12.65 (US$12.69) during early trading Wednesday, although they later recovered most of the lost ground. By the end of the day, the stock (ARPN:ZURICH) was back to CHF13.50, down 3.6 percent from the previous day's close of CHF14.

Arpida is seeking a priority review, but it will take another month or two to learn whether it gets one.

"We had a fast-track designation during the clinical process. That is no guarantee of a priority review, but it is something that is relevant," Arpida's head of corporate communications, Paul Verbraeken, told BioWorld Today. "The difference would be roughly four months - a six-month or a 10-month review."

Iclaprim's development was fast-tracked because of its potential in life-threatening conditions, including methicillin-resistant Staphylococcus aureus (MRSA) infection; its potential for treating community-acquired MRSA infection; and its potential to offer an alternative for patients unable to take existing therapies. The drug demonstrated non-inferiority in two head-to-head trials comparing its efficacy with that of Zyvox (linezolid), marketed by New York-based Pfizer Inc. (See BioWorld International, July 18, 2007.)

Assuming a standard review, the compound could be on the market by the first quarter next year. Arpida is planning to commercialize the product in the U.S. itself. "We think for the U.S. we'll need around 70 sales reps to cover the distinct prescriber base we're targeting," Verbraeken said. Its primary target market, he said, is the membership of the Infectious Diseases Society of America.

It has not yet decided on whether to commercialize the product itself in Europe or to seek a partner. "Both options are still on the table," Verbraeken noted. "We expect to file in Europe about one quarter from now, so there's a bit more time on that side."

The investor reaction was "very puzzling," Verbraeken said. He attributed it to "general nervousness" plus "spillover" from news this week that Basilea Pharmaceutica AG had received an approvable letter from the FDA in response to its filing for approval of ceftobiprole in cSSSI, including diabetic foot infections. Theravance Inc., of South San Francisco, and Pfizer also received approvable letters, for the antibiotics telavancin and dalbavancin, respectively.

Analyst Martin Vögtli at Bank Sal. Oppenheim Jr. & Cie. in Zurich, Switzerland, agreed. "Investors are completely in the dark at the moment," he said. "You essentially do not know what the timelines for the [ceftobiprole] review are."

Although Vögtli said he does expect Iclaprim to gain approval, he added that he does not expect it to obtain a priority review. And it could face a cash shortage, as the CHF68.1 million Arpida reported on hand on Dec. 31 is only sufficient to fund its activities through the first quarter of 2009. Vögtli therefore is attaching a 20 percent discount to his valuation of the company, to allow for a potential dilution impact.

Nevertheless, his target price on the stock is CHF41, implying that the company is undervalued significantly at present. "The upside is substantial," he said. Moreover, Arpida represents "an ideal takeover target" for a large pharmaceutical firm wanting to enter the antibiotics market, since its pipeline is unattached at present.