West Coast Editor
Metabasis Therapeutics Inc.'s overseas partner Sankyo Co. Ltd. pulled the plug on a pair of studies with CS-917, the glucose pathway inhibitor for diabetes, after two serious averse events apparently involving potentially fatal lactic acidosis.
The news sent Metabasis' shares (NASDAQ:MBRX) into a tailspin, closing Wednesday at $3.90, down $3, or 43.5 percent. Analyst Edward Nash at Legg Mason Wood Walker in New York downgraded the stock from a "hold" to "sell" rating.
"We were already looking at the drug hitting at 2008, so it was really 2009 before it got any ramp up," he told BioWorld Today. "Now that we've got this hiccup, we're farther out, and I can't condone investors [owning the stock]."
Metabasis officials were traveling and could not be reached.
Patients in one trial who developed problems were given high doses of metformin - which has been associated with lactic acidosis - in combination with CS-917. That interaction study has been stopped, along with a dose-administration study that gave relatively high doses of CS-917, though no serious adverse events have surfaced in that study.
A third study testing various doses of CS-917 is under review, as Metabasis and Tokyo-based Sankyo try to figure out what is going on.
"This is something we've known has been an issue, and now it's cropping up again," Nash told BioWorld Today. "They were trying to figure out whether it was a dosing issue." Nash pointed out the problem of elevated lactic acid in earlier trials when he initiated coverage of the stock in October.
Although metformin might be more of a culprit than CS-917 in the latest acidosis, "we don't know at this point whether you're going to be able to use [CS-917] alone. That's why we've got this drug going [into development]. Metformin has issues."
The longtime Sankyo partnership grew in the fall of 2002 when Metabasis granted an exclusive option to enter an agreement that could range from $25 million to $50 million to develop a second-generation gluconeogenesis inhibitor for Type II diabetes. Already the firms were working on the first-generation product, CS-917. (See BioWorld Today, Oct. 30, 2002.)
Metabasis has more than CS-917 in its hopper. Remofovir (formerly known as Hepavir B) - which uses the firm's HepDirect technology to target the active form of marketed Hepsera with lower toxicity - is in Phase I/II trials for hepatitis B. The drug is being developed in collaboration with Costa Mesa, Calif.-based Valeant Pharmaceuticals International Inc., which has licensed worldwide rights.
But the company would have to wait until Hepsera, from Foster City, Calif.-based Gilead Sciences Inc., goes off patent to market remofovir. That compound is a prodrug of adefovir, of which Hepsera is a non-liver-specific prodrug, and adefovir is covered by U.S. and foreign patents that are scheduled to expire in April 2006, Nash wrote in his October research note.
"Who knows what Gilead will do?" he said. "They could file for an extension under Hatch-Waxman" and get even longer patent protection.
HepDirect also is deployed in MB07133 for primary liver cancer. Metabasis holds exclusive worldwide commercialization rights to the drug, which is in a Phase I/II study that aims the active form of the cancer drug araC specifically at the liver.
In January, Metabasis extended and expanded a hepatitis C collaboration with Merck & Co. Inc., of Whitehouse Station, N.J., which was established in December 2003. The firms will continue their joint efforts to identify novel small-molecule therapeutics for another 12 months, through 2005.
But all those are relatively early stage, Nash said, in a market that demands products further along.
"The smaller names really get jerked around harder in this time period, especially with such a difficult drug class," he said. "Poor Amylin has been through so many approvable letters."
San Diego-based Amylin Pharmaceuticals Inc. has two diabetes drugs under FDA review, Symlin and exenatide.
"To me, [Metabasis] is a diabetes pure play," Nash said. "If the other two drugs work, it's an upside you didn't expect." What's in question now, though, is whether CS-917 works - at least, whether it works safely enough for Metabasis to get it approved.
"These guys just went public about this time last year, and we were involved in the deal," Nash said. "It's rough. I'm not saying [CS-917] is dead, but the bar is much higher than before."