OxiGene Inc. had an odd, but beneficial, Monday on the market. It received orphan drug designation for Combrestatin A4 Prodrug in four thyroid cancer indications, sending its stock up more than 50 percent in very heavy trading.

Early morning action Monday saw the stock leap by as much as 88 percent, to $15.15 after closing Friday at $8.05. The company's stock (NASDAQ:OXGN) ended Monday at $12.35, up $4.30, or 53.4 percent.

For industry observers, it was difficult to explain why - news such as orphan drug designation might provide some lift, but nothing like the ride OxiGene had.

"This is really unusual, even for a biotech stock," said Jason Zhang, analyst for the Independent Research Group, a division of "I don't know who is behind this."

Zhang acknowledged the news from OxiGene, "but as you know, fast-track and orphan drug designation is not anything that can be used as a validation of a product," he said. Besides, Zhang pointed out, just about any product can get orphan drug designation - it's simply a matter of approaching the FDA with a sound application.

By comparison, Seattle Genetics Inc., of Bothell, Wash., received orphan drug designation Monday for its SGN-30 product in Hodgkin's disease. The company's stock (NASDAQ:SGEN) rose 45 cents Monday to close at $5.36.

Combrestatin A4 Prodrug (CA4P), Watertown, Mass.-based OxiGene's lead product, received orphan drug designation for anaplastic thyroid cancer and for the treatment of medullary, stage IV papillary and stage IV follicular thyroid cancers. OxiGene said it estimates the patient population for those cancers to be about 58,000 individuals.

CA4P is one of OxiGene's vascular targeting agents. It is administered intravenously and is designed to be converted via blood enzymes to its active form, which then enters endothelial cells, particularly the endothelial cells in tumor-associated blood vessels. The product is then designed to disrupt the internal skeleton of endothelial cells and cause them to bloat, thus plugging capillaries and preventing blood flow to tumors, OxiGene said.

OxiGene has been hot this summer. It received a stock boost on the news of South San Francisco-based Genentech Inc.'s success in May with Avastin, an anti-angiogenesis drug, in a metastatic colorectal cancer trial. The successful trial helped instill investor confidence in anti-angiogenesis technologies, whose utility was coming under question. (See BioWorld Today, May 20, 2003.)

OxiGene's stock, which had been below $2 a share in May, began a steady climb. In June, the company took advantage of its rising stock and raised $15 million privately, placing 1.5 million shares at $10 apiece. (See BioWorld Today, June 11, 2003.)

Those institutional investors paid too little, according to today's market. But Zhang, who added OxiGene to his coverage about 45 days ago, rates the stock a "sell."

"I had a sell rating on it when it was trading at $10," he told BioWorld Today. "We have serious doubt about CA4P. We have spoken to several oncologists and they all notice the same problem with this class: toxicity, which is actually predicted by the mechanism of action for this drug."

Zhang doesn't like the clinical news he's seen out of OxiGene. The company had its vascular targeting agents partnered with Bristol-Myers Squibb Co., of New York, but the pharma company gave rights back in October 2001 after conducting some Phase I work, he said. Bristol-Myers didn't make the data public, something that also bothers Zhang, and he doesn't have a good feeling about the drug.

"[OxiGene has] seen some response in Phase I trials but at levels you usually see high toxicity," he said. "I'm assuming they are using a much lower dose level than what they used in the Phase I. You have to wonder if the drug might be effective or not and I think it might not be."

The company has CA4P in a Phase II single-agent trial in anaplastic thyroid cancer; a Phase I/II radiotherapy combination trial in lung, head and neck and prostate cancer; a Phase I/II carboplatin and paclitaxel combination trial in ovarian cancer; a Phase Ib carboplatin combination trial in solid tumors; and a Phase I/II single-agent trial in wet age-related macular degeneration. Patient enrollment in the solid tumor trial has completed.

OxiGene has about 14.2 million shares outstanding. Its average trading volume is about 1.8 million shares. On Monday, about 19.2 million shares were traded. Zhang would caution against being one of the buyers right now.

"What we are trying to tell people is that [orphan drug designation] is not what you should base your investment on," he said. "It should be based on solid clinical progress, not a piece of news like this."

Based on pipeline news, Zhang set his target price at $5.

"We'll see that the stock will lose some steam, the volume will dry up, the support will not be there and the stock will go down," he said.