By Jim Shrine

Lidak Pharmaceuticals reported on Wednesday that itstopical treatment for oral herpes had comparable activityto the widely used and approved treatment, acyclovir, in aPhase III European study.

The company, while not disclosing specific results,termed the results "positive" and "encouraging." But themarket reacted as if the news was negative as Lidak'sstock (NASDAQ:LDAKA) fell 23 percent Wednesday,closing down $1.63 per share at $5.50.

Michael Lorber, Lidak's vice president and chieffinancial officer, said the trial showed that Lidakol (n-docosanol 10 percent cream) was equivalent to acyclovir,which London-based Glaxo Wellcome plc sells asZovirax 5 percent cream.

Officials at La Jolla, Calif.-based Lidak and its Europeanmarketing partner, Yamanouchi Europe B.V. in theNetherlands, said results still are needed from placebo-controlled Phase III studies ongoing in North Americabefore they can seek marketing approval. Lorber saidinitial results from the first of the three ongoing Phase IIItrials are expected in the first quarter of 1996.

The primary endpoint in the North American Phase IIIstudies is the time to healing for oral herpes, also calledcold sores and fever blisters. The company previouslywas developing Lidakol for genital herpes, but narrowedthe focus to oral herpes because of financial constraintsand the fact that earlier studies showed Lidakol workedbetter in oral herpes.

Lorber said Lidak does not understand the marketreaction. "It was not consistent with our feelings aboutthe results of the study," he said. He speculated that somedid not understand the news, or perhaps they mistakenlybelieved that the trial would support regulatory filings inEurope. He said Lidak never said the European studycould lead to filings there. n

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