Protein Design Labs Inc. suffered its second late-stage setback withthe failure of its anti-cytomegalovirus (CMV) antibody to performbetter than placebo in a Phase II/III trial assessing the antibody as asupplement to antiviral drugs.
The Mountain View, Calif., company's stock fell 33 percentThursday following release of the news Wednesday evening. Thestudy in CMV retinitis patients had enrolled 209 of 325 patients whenthe Studies for Ocular Complications of AIDS (SOCA) groupdecided to stop enrollment and treatment of the Protein Design Labs(PDL) drug, Protovir.
SOCA stopped the study upon recommendation of an independentmonitoring board, which reported the median time to progression ofCMV retinitis was 65 days in the Protovir group and 66 days in theplacebo group. SOCA also reported a higher mortality rate among thedrug group, a difference seen only in patients with relapsed retinitis.
PDL is developing human and SMART (humanized) antibodies forvarious diseases. The company has two other trials of Protovir (MSL109) ongoing in CMV patients and is in human studies withantibodies for myeloid leukemia and hepatitis B, as well as theZenapax antibody for prevention of kidney transplant rejection.Partner Hoffmann-La Roche, of Nutley, N.J., is expected to releasethose results next month or in October.
Zenapax, a humanized antibody targeting the interleukin-2 receptoron T cells, failed to show efficacy in preventing graft vs. host diseasein bone marrow transplant patients. Those Phase II/III studies werereported in July 1995. A positive aspect of that trial was the lack ofhuman anti-mouse antibody responses.
"This is two strikes on lead compounds and there have been delayson others," said Jay Silverman, an analyst at Schroder Wertheim &Co. Inc., in New York. "You have to think the other two CMV trialsongoing are suspect now [especially since the SOCA study used thehighest dose]. It leaves a lot resting on the Zenapax results."
Analysts at Cowen & Co., in Boston, downgraded the stock(NASDAQ:PDLI) to neutral from buy Wednesday. Cowen ManagingDirector David Stone took sales of the CMV antibody out of hismodel, cutting projected earnings in 1999 from $2.95 per share to$1.45.
Stone said the Zenapax results may not be overly significant from afinancial standpoint, since PDL will be getting only sales royalties,but they are important to validate the company's approach.
"If positive they will be an important step toward recovery," Stonesaid of the Zenapax results. "If it does work you probably have theturning point in the story, after which progress in other things theyare doing will at least be paid attention to. If the results are negativethat would conceptually be the third strike against the technology.
"But from a trading standpoint we have no more basis to tellinvestors Zenapax trials are going to work than we had to say theCMV trials were going to work," Stone said. "We thought both weregoing to work.
"The company is by no means out of business," Stone said. "Theyhave more than $100 million [in cash] and are burning less than $20million per year."
Both Stone and Silverman said mortality data from the SOCA studycould have an adverse impact on the ongoing CMV studies, sinceinvestigators and patients will be informed. One of those studies _ aPhase II in AIDS patients with newly diagnosed CMV retinitis _ ismost at risk since many patients still need to be accrued. Accrual isnearly complete in a study of Protovir to prevent CMV infections inpatients undergoing bone marrow transplantation.
SOCA said there was no mortality difference in newly diagnosedpatients given Protovir or placebo, and noted the mortality rate inrelapse patients assigned to placebo was lower than expected.
The study was designed to examine the antibody in combination withother CMV retinitis drugs, particularly the FDA-approved agentsfoscarnet and ganciclovir. The primary endpoint was lengthening thetime to progression, which generally is between 60 and 100 days withcurrent therapies. CMV is a common infection that can be life-threatening in those with weakened immune systems.
PDL's stock lost $7.63 Thursday to close at $15.50 after reaching alow of $12 on the day.
Matthew Geller, an analyst at Oppenheimer & Co., in New York,maintained a buy rating on PDL. "The reaction is way overdone,"Geller said, explaining PDL is a mutli-product company that hasabout a dozen products in development.
"This is one of their least important products," Geller said. "It wasn'teven developed in-house, it was licensed from Sandoz Ltd. [of Basel,Switzerland]. It has nothing to do with their humanized antibodytechnology."
Geller pointed out PDL has its own manufacturing plant, about $6.75million value in cash, a number of corporate partners and potentialmilestones coming in. Also, he said, "the risk-to-reward ratio is oneof the best in biotechnology."
Peter Dworkin, PDL's corporate communications director, said datafrom a trial of Protovir in preventing CMV infection in bone marrowtransplant patients may be available around year's end. Protovir isbeing developed in collaboration with Boehringer Mannheim GmbH,a unit of Hamilton, Bermuda-based Corange Ltd.
Mannheim, of Mannheim, Germany, is gearing up to begin a Phase IIand Phase II/III trial of the human anti-hepatitis B antibody later thisyear, Dworkin said.
PDL on Tuesday reported second-quarter numbers showing revenuesof $5 million and a net loss of $3.5 million. The company had about$103 million in cash and 15.6 million shares outstanding. n
-- Jim Shrine
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