Alteon Inc.'s stock tumbeled $3.37 a share on Tuesday to closeat $12.88 a share. The stock (NASDAQ:ALTN) has been in anaccelerating free-fall since Monday, giving up 30 percent of itsmarket value, or $5.62 a share, over three trading days.

The decline is perhaps one sign of how seriously Wall Street isnow looking at regulatory risks facing biotechnology drugs.

Alteon of Northvale, N.J., was asked last Friday by the FDA formore detailed summaries on two Phase I clinical trialsinvolving its drug aminoguanidine, which is aimed at reversingthe complications of diabetes and aging. The company figures itwill need about two to three weeks to comply with the FDA'srequest, Charles A. Faden, Alteon's president and chiefexecutive officer, said Wednesday.

Alteon had hoped to get the FDA's go-ahead within a fewweeks to start a Phase II/III clinical study of the drug, he said.

The request for more detailed summaries "is kind of a normalcourse of events," said Faden, who said he explained therequest on Monday to four investment analysts who cover thecompany. Final reports from four other Phase I trials ofaminoguanidine were already submitted to the FDA, Fadensaid.

Alteon's decline on Wednesday might be partly attributed to areported switch in opinion Tuesday by Alex. Brown & Co.analyst David S. Webber, who has written favorably about thecompany. In a conversation with his firm's brokers, Webber issaid to have given a "neutral" ranking to Alteon, according topeople who have heard reviews of the conversation. Webber,whose firm co-managed the underwriting on Alteon's initialpublic offering last November, could not be reached forcomment on Wednesday. Webber is said to have not lost hisfaith in aminoguanidine, but to have doubts about its chancesfor smooth sailing through the FDA.

Some other analysts share the company's view that the FDA'srequest poses no lengthy delay or possible trouble ahead forthe drug. "We think that it will involve some delay -- perhapsthree weeks to a month -- to comply," said Reijer Lenstra, anassistant analyst with Montgomery Securities in San Francisco,which last month rated Alteon stock an "aggressive buy."

"I think the stock market is a little jittery at the moment,"Lenstra said. There is also a concern that the FDA's requestmight be seen as an indication that the company, which beganfiling its information with the FDA last March, may not be inclose contact with FDA staff, he said.

However, the only recent sign of scientific concern to arisearound Alteon's aminoguanidine was results from a study,conducted at Washington University in St. Louis, using the drugin rats that had been given streptozotocin to induce diabetes.Researchers found that aminoguanidine-treated rats developeda higher incidence of tumors than those given onlystreptozotocin, which is known to cause tumors. However, thecompany pointed to results from two years of toxicologystudies and noted that no study has ever shown an associationbetween the drug and tumors.

In any event aminoguanidine is headed for lengthy clinicaltrials, which because of the complexity of the disease mayrequire about three years to complete, Alteon said.

-- Ray Potter Senior Editor

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