West Coast Editor
Advancis Pharmaceutical Corp.'s stock was pounded severely, losing more than 60 percent of its value, on news that GlaxoSmithKline plc has decided to break off the deal to use Pulsys technology with Augmentin - a project that had been aimed for Phase III trials next year and could have meant $49 million in development milestones eventually, plus $50 million in sales milestones apart from royalties.
Bob Bannon, director of investor relations for Germantown, Md.-based Advancis, told BioWorld Today the company would not comment until its conference call, slated for today at 10:30 a.m. EST. Meanwhile, Wall Street spoke loudly, apparently taking the news as a reflection of Advancis' technology, rather than its partner's priorities. The company's stock (NASDAQ:AVNC) closed Tuesday at $2.75, down $4.53, or 62.2 percent.
From the deal with London-based GSK, which will end Dec. 15, Advancis so far has gained a non-refundable $5 million payment upon signing and a $3 million milestone payment in the fourth quarter of last year. Remaining deferred revenue from the collaboration adds up to about $3.5 million, the company said.
Bad news about the deal for Pulsys Augmentin (amoxicillin with potassium clavulanate) overshadowed Advancis' third-quarter earnings report, which tallied revenue for the period of $3.1 million from amortization of payments and reimbursed development costs under collaborations, as well as product sales of the antibiotic Keflex (cephalexin), for which Advancis paid $11 million to Eli Lilly and Co., of Indianapolis. Keflex sold $1.1 million in the third quarter, Advancis' first quarter selling and marketing it.
A once-per-day Keflex is expected to enter the clinic next year and reach the market about a year after the company's version of amoxicillin using Pulsys, which has begun dosing in a Phase III trial with a new drug application targeted for the second half of 2005. Keflex currently is dosed two to four times daily for a period of seven to 14 days.
Pulsys deploys a combination of polymers and osmotic ingredients that allows for staccato bursts of antibiotic, as opposed to normal waves, with the first released in the stomach and later at definite, reproducible and localized areas.
In its earnings report, Advancis said the net loss applicable to common stockholders was $9.2 million for the third quarter, compared to a net loss of $8.5 million in the second quarter of 2004 and a net loss of $29.1 million in the third quarter of 2003. Net loss per share during the third quarter of 2004 was 41 cents, compared to a net loss of 37 cents in the prior quarter, and a net loss of $20.19 per share in the comparable quarter of last year.
The third-quarter 2003 net-loss figures include $22.6 million, or $15.65 per share, in non-cash beneficial conversion charges taken resulting from the sale of securities during that quarter.
As of Sept. 30, the company had cash, cash equivalents and marketable securities totaling $36.5 million.