Lifecore Biomedical Inc. stock plunged 81 percent after thecompany announced Monday that its hyaluronate product fortreating surgical adhesions had not demonstrated "anticipatedlevels of efficacy."
The company's stock (NASDAQ:LCBM) fell to $3.25 from $14 intrading of 3.8 million shares on Monday. The stock had tradedin a 52-week range of between $11 and $31.
Lifecore received the news that the trials did not produce theresults the company was looking for from the Ethicon divisionof pharmaceutical giant Johnson & Johnson, its partner in thetrials.
"J&J called us on Friday and said that the clinical studies arenot showing the level of statistical significance they are lookingfor," James Bracke, Lifecore's president and chief executiveofficer, told BioWorld.
Ethicon's report was based on a partial statistical analysis. "J&Jwon't have the final data until later this week," Bracke said.
Bracke expects the company to continue to work with J&J onthe hyaluronate product -- even if it means abandoning iteventually.
Lifecore is developing other applications for its hyaluronate --in veterinary, ophthalmic, wound-healing and orthopedicapplications. The company is also developing bone graftsubstitutes and a dental implant system.
"A lot of analysts have made a big deal out of the Ethicon story.They assume our whole business is based on Ethicon, and it'snot," Bracke said.
Analyst Ed Mutsch, managing director at Piper, Jaffray &Hopwood, a Minneapolis securities firm, said it seems probablethat Ethicon will discontinue the project with Lifecore.
Mutsch said Lifecore's stock had been buoyed by thecollaboration with Ethicon and that without the project thestock should trade in the mid-single digits. He said thecompany has $13 million in cash and reported a loss of $1million for its most recent quarter.
The company "is not going out of business tomorrow," he said,but it may struggle for a while.
The shakedown appeared not to disturb Genzyme(NASDAQ:GENZ), which also has a hyaluronate product forsurgical adhesions in clinical trials.
"There was a rumor that our HA (hyaluronate) product was introuble because of Lifecore," said Steve Cox, Genzymespokesman. The Cambridge, Mass., company applies its anti-adhesion compound pre-surgically, a strategy that seems towork, said Cox. He told BioWorld that Lifecore uses its solutionpost-surgically. "I'm not surprised about the Lifecore [clinical]results ... Genzyme tried its product post-surgically, and itdidn't work."
-- Jennifer Van Brunt Senior Editor
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