Just as researchers geared up to start a second pivotal trial of iseganan in ventilator-associated pneumonia (VAP), the floor fell from beneath IntraBiotics Pharmaceuticals Inc. Wednesday.
The Palo Alto, Calif.-based company discontinued the first trial due to safety issues, then watched its stock (NASDAQ:IBPI) lose 69 percent of its value, dropping $9.45, to close at $4.23.
Henry Fuchs, IntraBiotics' president and CEO, offered brief comments in a three-minute conference call, and declined to take any further questions until the company is able to attain more information.
"A higher rate of both ventilator-associated pneumonia and mortality was observed in the active treatment group compared to the placebo group," he said. "As a result, we have stopped the study."
The company learned of the safety issue Tuesday, when an independent data monitoring committee recommended that the company discontinue the pivotal trial based on an interim analysis.
"This is probably the worst possible outcome for them because this was a drug that [failed] in a different indication, and this was their backup program for the drug," said Jason Kantor, an analyst with WR Hambrecht + Co. in San Francisco.
As Kantor said, it is not the first time iseganan disappointed IntraBiotics and its investors. The drug failed in a Phase III study in oral mucositis in 2002, causing the company's stock to drop 70 percent. But while Iseganan did not meet its primary and secondary endpoints, it didn't raise the red flag of safety concerns at that time, so the company later decided to go ahead in the VAP indication. Two weeks after the failure in oral mucositis, the company laid off 70 percent of its then 37-employee work force. (See BioWorld Today, Oct. 1, 2002, and Oct. 15, 2002.)
IntraBiotics has not received detailed data from the independent committee on the VAP trial, but company officials intend to meet with the group in the near future to determine where to go from here.
"In respect to what happened to explain this result," Fuchs said, "I can only offer that this result was a complete surprise for us, since we had concluded that iseganan was safe and well tolerated based on previous studies in over 800 patients."
Kantor said that his firm knew the clinical risk associated with the trial was high, but agreed that iseganan showed no significant toxicities in previous studies. He downgraded the company's stock on Wednesday from "buy" to "sell."
"They were running what appeared to be a well-controlled, well-designed study that had FDA buy-in," Kantor told BioWorld Today. "They were doing everything right, and this was sort of very unexpected. They have nothing behind this, so in reality they shouldn't be trading for much above cash."
He said the company has slightly more than $5 in cash per share.
The pivotal program for iseganan was formed under a special protocol assessment with the FDA, which detailed the pivotal trial design for the VAP indication that would support registration upon success of the trial. The SPA required two identical pivotal trials, the one that now is discontinued and the one the company expected to soon start. Each trial was to enroll 900 patients, with the primary endpoint being the occurrence of VAP. The first trial began enrolling patients in September and had more than 450 enrolled as of May. In a previous Phase I/II study of iseganan in 42 patients on life support, data showed it was safe and resulted in several 100-fold reductions in levels of microbes in the mouth. (See BioWorld Today, Feb. 10, 2003, and Sept. 22, 2003.)
Kantor previously said that iseganan in the VAP indication could bring in U.S. sales of $245 million in 2010, assuming a 2007 launch. Now, he said in his research note that "although the company may in-license a new product, we believe there is no fundamental reason to own the stock."
IntraBiotics also is studying the product in patients with cystic fibrosis. It was expected to soon enter two Phase II trials.
"In terms of potential additional development of iseganan for ventilator-associated pneumonia or other indications, we are not encouraged by these data," Fuchs said. "In any case, we would not plan for new clinical activities, if any, to occur before a complete analysis of the data from the trial has been conducted."
Kantor said he doubted that the drug would be further developed in any indication. He could offer no explanation as to why iseganan showed safety issues in the pivotal trial, but not the previous trial in oral mucositis.
"It's really troubling and confusing," he said. "I don't know the answer. They don't know the answer. No one has seen the data. I don't know why it would do that."
As of March 31, IntraBiotics had cash on a pro-forma basis of $64.1 million, which includes proceeds of a recent public offering. In May, the company raised $39 million to advance iseganan in the clinic. (See BioWorld Today, May 6, 2004.)
IntraBiotics reported a net cash loss of $5.5 million in the first quarter. The company has no long-term debt and no material long-term obligations, Fuchs said. He added that the management is being "very pragmatic in conserving cash."