SYDNEY, Australia ¿ SmithKline Beecham declined to exercise an option to license a rotavirus vaccine being developed by Amrad Corp. after evaluating the initial immune response data from a clinical trial.
In an announcement to the Australian stock exchange, Amrad, which recently had announced a major reshaping of its operations and research portfolio, declared that it would not fund further development of the vaccine, known as AM94.
But the Melbourne-based company said it will complete the evaluation of data from an ongoing surveillance study to determine the longer-term protective effects of the vaccine.
¿SmithKline Beecham¿s decision to decline to exercise the AM94 option was based on initial immune response data from the clinical trial conducted in Melbourne, that did not provide a clear answer to the potential effectiveness of the vaccine,¿ according to a company statement.
The statement also noted that the value of the project to Amrad was ¿minimal, as the market for a vaccine of this type is relatively small.¿
Amrad managing director John Grace could not be contacted for further comment, but Australian analysts believe that the effective elimination of AM94 has hurt Amrad¿s prospects in the eyes of investors.
John O¿Connell, an analyst at Sydney stockbroker Macquarie Equities, noted that all the other projects being developed by the company are a long way from the market ¿ at least six years.
AM94 had reached Phase II trials, but with SmithKline Beecham declining to spend money on Phase III trials, there was ¿nothing new to come¿ to generate interest among investors, O¿Connell said.
Although O¿Connell believes Amrad¿s underlying business is sound (it has substantial pharmaceutical operations) and the company¿s shares were probably worth between A$1.35 (US$0.86) and A$1.45, investors were pegging the shares at between A$0.90 and A$1.10.
At the close of business on Monday, Amrad¿s share price was A$0.99, well down on the mid-May share price of A$1.21.
In mid-May, Amrad announced a major restructuring of its operations, including selling off two major operations, a number of retrenchments and a rationalization of the company¿s research portfolio. The rationalization involved concentrating research efforts on seven projects the company considered promising, and putting development efforts for a further 23 projects on hold.