BioCryst Pharmaceuticals Inc., after riding high on the potential of itstopical treatment for cutaneous T cell lymphoma (CTCL) andpsoriasis, crashed on Wall Street Monday after reporting that somepositive trial data for the drug was overstated because of a basic errorin analysis.

BioCryst, of Birmingham, Ala., said the placebo-controlled Phase IItrials of its small molecule compound, BCX-34, were not statisticallysignificant as first reported in February. The company's stock(NASDAQ:BCRX) fell $4.12, closing at $8.75, a 32 percent drop.

The fall apparently was cushioned by encouraging data from a secondpart of the Phase II trials _ a six-month open-label study for CTCLthat followed the shorter, six-week, placebo-controlled testing period.Both parts involved the same CTCL patients.

BCX-34 is a small molecule compound designed to inhibit purinenucleoside phosphorylase, an enzyme linked to proliferation of Tcells.

Charles Bugg, BioCryst's chairman and CEO, linked the error ininterpreting the first portion of the Phase II studies in February tofaulty randomization codes that credited some of the placebo-treatedgroup's improvements to the drug.

"We have egg all over our face," Bugg said. "We made an error weshouldn't have made." He said the company has implementedmeasures to avoid a similar mistake.

Meg Malloy, an analyst with Needham & Co., in New York, saidsuch an error is unusual, but not unheard of in clinical trial analysis.

"Management has a lot of integrity," she said, adding that she isconfident the company "will do everything to put in place amechanism to make sure it doesn't happen again."

Malloy added, "The question is whether the FDA will requireadditional studies in psoriasis and CTCL."

In late May, BioCryst raised $8.5 million in a private placement,giving the company 18 months of cash. Bugg said he has spoken tohis major investors and "they are undaunted by this whole thing."

The randomization code error, Bugg said, was spotted Sunday in are-analysis of the data. It was reported to the FDA Monday morningand trading in the company's stock was halted to give BioCryst timeto announce the news.

Bugg said the six-month open-label portion of the CTCL study,which was reported May 31, had proved that a six-week trial was tooshort to assess efficacy. The proposed Phase III studies for CTCL areto be based on three months of treatment.

BioCryst now must wait for the FDA to decide whether it canproceed with Phase III trials of BCX-34 for CTCL and psoriasis. Theagency had approved the late-stage trials of CTCL based on datafrom the six-week Phase II study and the open-label trials.

The only data considered for allowing the psoriasis studies tocontinue was the erroneous analysis of the six-week trial. Movingahead for treatment of psoriasis may require more Phase II studies,Bugg said.

However, in the open-label CTCL studies, 11 of 19 patients whocompleted six months of treatment with BCX-34 experienced clinicalclearance of the disease's skin lesions and seven of those showedcomplete clearance.

"The efficacy results at six weeks are not as pronounced as they areat three months and six months," Bugg said. At six weeks, patientstaking the drug showed a trend toward improvement, but so did thoseon placebo.

The company's stock had soared this month following release of thesix-month open-label study results of CTCL, which is a potentiallydeadly form of cancer that begins on the skin and can progress to thelymph nodes and internal organs. After trading for months around $6,it had climbed 100 percent in June.

"I don't think [the error] will have a significant effect on the courseof this company," Bugg said, adding that BioCryst still hopes toproceed with the Phase III trials for CTCL as previously planned andexpects to hear from the FDA within the next two months.

"I think the stock will recover," he said. "Except for the fact thecompany has a black eye and we don't have direct evidence the drugworks on psoriasis, it's the same company it was a week ago." n

-- Charles Craig

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