Magainin Pharmaceuticals Inc. picked a bad day to release some badnews.The announcement of discouraging study results coincided with yetanother volatile day on the stock market: Magainin's(NASDAQ:MAGN) stock fell 57 percent on Monday after thePlymouth Meeting, Pa., company released results of its initial PhaseIIb/III trial of MSI-78 for the treatment of impetigo. The study showedthat responses in some 290 patients were about the same in threeconcentrations of MSI-78 (.5, 1 and 2 percent) as they were in thecontrol vehicle."The three concentrations that were in our study achieved a clinicalcure rate of about 75 percent," Magainin's president, Jay Moorin, toldBioWorld. "That was a number we were happy with and hoping for.Unfortunately, and very surprisingly, the vehicle control also achieveda 75 percent clinical cure rate."The vehicle control response was unexpected, unprecedented,nowhere in literature and nowhere in the experience of theknowledgeable people who have been working" on the trial, Moorinsaid. Further confounding results was the rescue group (about 44treatment failures), which was placed on systemic therapy, systemicand topical therapy, or topical only. "In the three groups we also saw aclinical cure rate of 75 percent, regardless of therapy, or what theyfailed on,"said Moorin.He said the trial was well-controlled and well-run, and those analyzingthe data can only speculate on the perplexing results. The highestprevious clinical cure rate Moorin knows of for vehicle controls was45 percent in the trial on Bactroban, a treatment for impetigo and theonly topical wide-spectrum antibiotic on the market.The company's stock was down $7.50 per share on Monday to close at$5.75. The 57 percent drop resulted in a market capitalization loss of$99.8 million on the company's 13.3 million shares outstanding.David Stone, an analyst in Cowen & Co.'s Boston office, said $5.75per share is an attractive price for those willing to give the stock sometime."The trial of MSI-78 was unsuccessful in that they didn't get asignificant difference between the drug and placebo, not because thedrug was inactive," Stone said. "It's clearly a disappointment, but Ithink (the price drop) is somewhat of an overreaction."Cowen & Co. continue to recommend the stock, but has downgraded itto "buy" from "strong buy."Tim Wilson, an analyst with Hambrecht & Quist Inc., has a "hold" onthe stock. Wilson said he suspects that the trial's design or execution,or perhaps an indication issue may be responsible for the unexpectedplacebo response. "I have it on hold at the moment," he said, "becauseI want to understand more about the way forward for the drug. I stillbelieve that MSI-78 has profound anti-microbial properties on man."MSI-78 is a synthetic magainin, a natural host-defense peptide isolatefrom frogs. The company altered the original molecule throughchemical synthesis, though it still consists of natural amino acids.What Magainin does next with the drug will depend on furtheranalysis and interpretation of the data by the FDA, Moorin said,adding, "We believe there will be continued development of MSI-78."The company said a pivotal trial of MSI-78 for infected diabetic footulcers also was put on hold.
-- Jim Shrine
(c) 1997 American Health Consultants. All rights reserved.