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Building on an already once-expanded relationship, Anadys Pharmaceuticals Inc. and F. Hoffmann-La Roche Ltd. added an undisclosed program to their efforts, which means more research and development funding, plus potential milestone payments and royalties for Anadys.

"It's a completely different therapeutic area," said Kleanthis Xanthopoulos, San Diego-based Anadys' president and CEO, adding that research is at the preclinical stage but Roche, of Basel, Switzerland, "has clinical experience with this particular indication."

The firms began their partnership in August 2002, using Anadys' medicinal chemistry, structure-based drug design, chemoinformatics and biology to advance lead compounds against Roche's oncology program. That deal was expanded in the fall of last year, and the new indication affords a potentially larger opportunity than the cancer program, though Xanthopoulos said Roche prohibited further disclosures.

Anadys has its own work ongoing, too. Having raised $43.75 million through an initial public offering in March, the firm licensed a Phase II nucleotide analogue for front-line treatment of chronic hepatitis B virus from LG Life Sciences Ltd., of South Korea. (See BioWorld Today, March 29, 2004, and April 20, 2004.)

"We'll have the interim data hopefully by the end of this year and complete results in mid-2005," Xanthopoulos said.

But the product that proved "the big excitement and the key attraction for our IPO" is its lead drug for hepatitis C virus, isatoribine, which is "in the middle" of a Phase I/II trial, Xanthapolous said. Isatoribine stimulates the body's immune system and responds to infections by activating Toll-like receptor 7.

"With that program, we have a chance to be synergistic with interferon or completely replace interferon [for HCV]," he told BioWorld Today, adding that the drug "has been in more than 50 subjects, and we have an oral prodrug that we hope to introduce into Phase I in the first quarter of 2005."

Among the firms conducting IPOs in the first part of this year, Anadys was "one of the few that were doing very well," Xanthopoulos said. "We traded at between 10 percent and 22 percent above our IPO for about three-and-a-half months, but in the last two weeks we have been drifting down and broke price."

In the IPO, Anadys offered 6.25 million shares at $7 each, below the price range of $11 to $13 set in February. The company had intended to raise $86.25 million in the IPO when it filed in November. But the first day of trading, its share price rose slightly, closing at $7.06, and the trend continued - at least for a while.

Some industry pundits, analyzing stock charts with the eyes of seismologists waiting for a big quake, are predicting hard times ahead for the industry. One theory is that upward surges are followed by dry spells lasting two or three years.

Xanthopoulos acknowledged there's generally a "12-to-18-month run, and we experienced that starting in March or April of last year. There was a lot of news in the first part of [2004]. We're not going to have that much news in the second part of the year, and that's a drawback."

He also cited uncertainty about the outcome of the presidential election, but said he does not buy in to the gloom-and-doom forecasts. "I think there is going to be some drifting downward, but my sense is that there is not going to be a nuclear winter," Xanthopoulos said.

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