By Jim Shrine

Medarex Inc.'s stock lost about one-quarter of its value Monday, after the company suspended enrollment in a Phase III trial of its cataract product because of adverse events.

Donald Drakeman, president and CEO of Annandale, N.J.-based Medarex, told BioWorld Today the company is "investigating the potential causes" of the problems. "It looks as if it isn't the active drug," he said. "We have focused now on things common to the placebo and drug, such as the formulation, and we're reviewing that."

Thirteen of 565 patients in the MDX-RA study experienced sight-limiting events during the trial, which was being run to determine whether the immuntoxin could prevent secondary cataracts. The unusual aspect of the news was that the adverse events affected seven placebo patients and six who were taking the drug.

MDX-RA is a monoclonal antibody linked to ricin, a plant-derived toxin. It is one of six products the company has in clinical trials, but the only product in Phase III. It was acquired through Medarex's purchase last year of Houston Biotechnology Inc., of The Woodlands, Texas.

Medarex (NASDAQ:MEDX) stock lost $1.06 Monday, to close at $3.125 per share.

The study, started in December 1997, was scheduled to enroll more than 600 patients. Drakeman said it is not clear whether additional patients will be needed for the efficacy side of the review, or whether additional studies will be needed once the cause of the adverse events is determined.

BT Alex. Brown Inc., of New York, lowered its rating to "market perform" from "strong buy." Todd Nelson, vice president of equity research at Josephthal & Co. Inc., in New York, maintained his buy rating on the stock, however.

Nelson described the stock drop as a "visceral response, and quite frankly a reasonable response. The company is being judged on its ability to get their drugs through clinical trials. But that has to be tempered by their opportunity going forward. Based on that, I think the market overreacted."

Adverse events among both drug and placebo patients are "bizarre," he added, and often are related to site-specific differences in medical or technical procedures rather than the drug.

Nelson said MDX-RA was not the significant driver of shareholder value at Medarex, though "nobody likes to see a late-stage candidate drop out. It's my hope they can salvage it. In the event they can't, it frees us capital for investment in other products with higher net present value."

The Medarex programs now driving shareholder value, Nelson said, are the HuMAb-Mouse system for creating high-affinity antibodies; and the anti-HER-2 cancer product, MDX-210, which recently demonstrated in Phase II trials the ability to improve prostate-specific antigen levels and quality of life in patients failing other therapies.

MDX-RA is delivered directly into the eye after primary cataract surgery, where it binds to and destroys lens epithelial cells. Those cells can otherwise proliferate and lead to secondary cataracts. The product achieved its primary endpoint of reducing opacification in an earlier placebo-controlled study.

Plenty Of Other Products In The Pipeline, Says CEO

Medarex also has the cancer products MDX-447 and MDX-22 in Phase II studies and, in Phase I or Phase I/II studies, MDX-220 for cancer and MDX-33 for autoimmune disease. Drakeman said the company has "a couple more products that should enter the clinic shortly. Altogether we have 12 corporate partnerships. [MDX-RA] is one piece of a fairly broad product pipeline and portfolio of partnerships."

MDX-RA is partnered in Japan with Osaka-based Santen Pharmaceuticals Co., which initially had its deal with Houston Biotechnology. Medarex has all rights elsewhere.

Medarex has been posting net losses of about $5 million per quarter this year. On Sept. 30, it reported cash and equivalents of $40 million, and 25.8 million shares outstanding. *