Liposome Technology Inc.'s stock dropped 31 cents per share (3percent) on Wednesday in heavy trading to close at $8.75.Approximately 23 percent of the company's outstanding shares (4.3million) changed hands. On Tuesday, the FDA's Oncologic DrugsAdvisory Committee (ODAC) voted to recommend approval of thecompany's drug to treat AIDS-related Kaposi's sarcoma, but on aconditional, "accelerated approval" basis. (See BioWorld Today,Feb. 15, p. 1).

If granted by the FDA, accelerated approval status would allowLiposome Technology to sell the drug, DOX-SL, but would requireit to conduct additional safety and efficacy studies. DOX-SL'sindication is for a narrow subset of Kaposi's sarcoma patients, thosewho have failed first line chemotherapy.

Although ODAC members voted 10 to zero (with one abstention) torecommend DOX-SL be granted accelerated approval, the vote spliton the crucial question of whether Liposome Technology's pivotalstudy was "adequate and well controlled." Five members said no,five said yes and one abstained.

The FDA's analysis of the trial showed that the company allowed asignificant number of patients into its study that did not meet theentry criteria, as defined in the protocol. Further, the data suggestedthat the drug produced a "net clinical benefit" in only a handful ofpatients, perhaps as few as six out of 77.

Analysts said that ODAC's lambasting of the clinical data may havegiven investors the jitters. "The negative reaction is a result of thefact that the panel was very critical of the way the trials wereconducted," Matthew Geller, an analyst at Oppenhemier & Co., toldBioWorld. "It wasn't the kind of thing where you could jump up anddown with excitement. But, believe me, the stock drop would havebeen more dramatic had the drug been turned down entirely."

Geller, whose investment banking firm served as the leadunderwriter in 1991 and 1992 for two Liposome Technology publicequity offerings that grossed more than $65 million, reiterated hisfirm's "analyst buy" rating on the stock (NASDAQ:LTIZ) onWednesday (an "analyst buy" is reserved for small-capitalizationstocks). He said the strategy of obtaining accelerated approval was agood one. "They're now in a stronger position to negotiate for acorporate partner (to market DOX-SL)," he predicted.

David Stone, an analyst from Cowen & Co. in Boston who tracksLiposome Technology but does not issue recommendations on thestock, told BioWorld that criticisms of the clinical data are sinkingin. "The initial news seemed positive but, in essence, the committeepunted the question of the adequateness of the clinical trial data tothe FDA," said Stone. "The split decision doesn't give the FDAmuch to stand on." By law, a clinical trial must be deemed "adequateand well-controlled" in order to form the basis for any kind ofapproval, conditional or unconditional. n

-- Lisa Piercey Washington Editor

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