BioWorld International Correspondent
SYDNEY, Australia Melbourne-based Amrad Ltd. blamed a general industry shift into late-stage research projects on the decision by GlaxoSmithKline plc and DevoCo Pharmaceuticals Ltd. to separately abandon development work on Amrad compounds.
The announcements, the latest in a string of bad news for the company including a poor Phase II result for another project and a board challenge by a major shareholder caused Amrad’s share price to plunge last week.
The share price fell from A$0.85 (US$0.45) mid-week to A$0.66, before recovering to eventually close at A$0.74 Monday a long way down from the sharp peak of A$1.50 the stock reached in mid-March after announcing good results from another project.
Amrad Chief Scientific Officer Johnathan Coates said decisions by both Guilford, UK-based DevoCo Pharmaceuticals and London-based GlaxoSmithKline to walk away from separate development projects involving Amrad compounds came as a complete surprise to him.
He said that he was pulled from a meeting and handed a letter from DevoCo stating that it will cease preclinical development of AM36, a compound being developed for use against stroke. There also was no prior warning to the Glaxo announcement that it will withdraw from development of the SOCS drug discovery platform, involving the Cytokine signaling pathway.
The Australian Stock Exchange was informed of both withdrawals in the same announcement.
Coates said he can only speculate on the reasons for both decisions but he believes the companies decided to rationalize their portfolios and concentrate on late-stage development projects in order to get more tangible results for shareholders a shift which he sees as part of an industry trend.
Although both decisions are regrettable, he said, the result for Amrad is that considerable work has been done on both compounds for free. In the case of the SOCS platform, Glaxo paid Amrad a “great deal of money” to be permitted to do the work, he said.
The work done to prepare the compounds for clinical trials is now available to Amrad, but the company has yet to decide what it will do with either compound. Coates also noted that Amrad recently announced a successful Phase I/II trial of AM336, a compound for treating chronic severe pain in cancer patients.
Amrad’s chief financial officer, Anthony Moore, said that the company was making every effort to tell shareholders that both AM36 and the SOCS platform remain valuable assets.
The announcements by DevoCo and Glaxo came just as the company was forced to call an extraordinary general meeting of shareholders to combat a major shareholder trying to push three directors off the board.
In a busy few days for Amrad, the company was recently served notice by a wholly owned subsidiary of listed biotech company Circadian Technologies Ltd. in Melbourne to hold the meeting to remove three directors Helen Cameron, Chairman John Mills and Jeremy Curnock Cook but not Managing Director Sandra Webb. If removed, the directors would be replaced by three nominees of Circadian, controlled by noted biotech industry figure Leon Serry. Circadian holds 19.3 percent of Amrad stock.
Investors are generally unhappy with Circadian after the recent string of announcements, including a bad Phase II result for a compound called Emfilermin, which is intended to reduce nerve damage during chemotherapy. Last week, a number of analysts also announced that they are downgrading their recommendations on the stock.
In response to the Circadian move, the nonexecutive directors of Amrad sent a letter to shareholders telling them that they had carefully analyzed the proposal and “concluded it was not in the best interests of shareholders, large or small,” the company said.
The letter said that the board appointed Sandra Webb as managing director just five months ago and has made other changes. Also, the Circadian proposal could hand control of the company to a shareholder with less than 20 percent of the company.