Shares of Alpha-Beta Technology Inc. (NASDAQ:ABTI) fell 42percent ($9) to close at $12.50 yesterday in what one market analystdescribed as an "overreaction" to questions about trial results for itslead product and to news that Phase III trials would be delayed.The slide began when the company presented results of Phase IIclinical trials of Betafectin as a treatment for infection in high-risksurgery patients at the annual meeting of the Surgical Infection Societyin Toronto on Friday. The trials demonstrated that Betafectin reducedthe number of serious or life threatening infections in patients withoutserious adverse effects.However, during an analysis after the 10-minute presentation,questions were raised about the company's methodology and whetherthe trial had established the efficacy of Betafectin. Then Alpha-Betaannounced on Monday that its Phase III trials would not begin in Mayas scheduled but "by the end of the year," the selling accelerated."When investors think that the data is going to be good and thensomeone in the audience comes out swinging, that's disconcerting,"said David Stone, director of the biotechnology group at Boston-basedCowen and Co. "And then the time lines are being stretched out. Weare in a market where, unless you come out of a meeting with your flagflying high, investors are prepared to shoot now and ask questionslater."David Webber, an analyst with the New York branch of Alex Brownand Sons, concurred. "Alpha-Beta was the next batter up and wasshown no mercy," he said. "We are in a market where the negatives areenhanced and the positives are muted. The glass is always half empty."Webber has lowered his rating of Alpha-Beta from "strong buy" to"buy." Nevertheless, he still believes that Betafectin has promise, andsees the $9 plunge in the company's share price as an overreaction bythe market.Data Under A Cloud"My reading was that the data as presented was encouraging. No matterhow one cuts the data, there's a benefit for those who received thedrug, and through the study the company was able to identify the rightpatient group to take into Phase III. But this was the first public peerreview of the drug's performance and the comments of an uninvolvedexpert can't be dismissed. At present, the data is under a bit of a cloud.The cloud can be dispelled by more data, but the drug won't be movinginto Phase III until the end of the year."Gustav Christensen, chairman of Alpha-Beta's board, said thecomments of the discussants at the conference were relevant to a PhaseIII trial but not a Phase II study. He said the Phase II study's goal wasto determine safety and clinical endpoints for the Phase III study _ notefficacy. Christensen said it was not possible to describe themechanism by which Betafectin works in the 10-minute talk, butpointed out that the mechanism was described last month at a scientificmeeting on experimental biology.Christensen said the Phase III trials were being delayed because thecompany is reconstructing its pilot plant. He said it was impossible tosay precisely when the new trials can begin because the FDA requires avalidation study in healthy humans to prove that the product is thesame as the one produced by the original method. If the FDA requires afull written report, the trials could be delayed an additional 60 days.Nevertheless, Christensen said his Worcester, Mass.-based companywill begin Phase III trials by the end of the year.Alpha-Beta has $60 million in the bank and a burn rate of $2 million amonth, the company said. This will rise to $2.5 million a monthfollowing the cost of clinical trials.The company also has a full-scale manufacturing plant for Betafectinunder construction in Smithfield, R.I. Betafectin is also in Phase II clinical trials as a treatment to stimulatewhite blood cell and platelet count after chemotherapy. n

-- Philippa Maister

(c) 1997 American Health Consultants. All rights reserved.