In its strongest showing since being walloped by an FDAdecision concerning its flagship product in April, Centocor Inc.stock gained $3 a share in trading Wednesday to close at$14.63.
The jump was triggered by an announcement on Wednesdaymorning of FDA approval of a protocol for a new Phase IIIclinical trial of the anti-bacterial drug Centoxin. That followedon the heels of an upbeat presentation by a Centocor founder toan investment conference Tuesday.
Centocor's R&D spinoff, Tocor II, rode the same wave, rising$1.25 a share to close at $14 on Wednesday.
Centocor stock (NASDAQ:CNTO) tumbled from $31 a share onApril 14 to a low of $10.50 on May 14 after the FDA asked fora new "well-controlled" trial before granting marketingapproval to Centoxin for treating sepsis. For investors, thedecision cast doubt on prospects for the Malvern, Pa.-basedcompany, which reacted with a shakeup of top managementand by trimming its payroll by 15 percent, cutting costs, andsaying it was prepared to relinquish its independence to raisenew capital.
"The company had to accomplish two things in the short termto right their ship," said Jeff Casdin, an analyst withOppenheimer & Co. One objective, FDA agreement on a newprotocol for Centoxin trials that was announced Wednesday,showed "there isn't something seriously wrong with theproduct or the company's relations with the FDA," he said.
Centocor also needed to form a relationship with a largercompany that could give Centocor's already hired U.S. salesforce something to sell. Centocor founder Michael Wall,speaking to an investment conference on Tuesday, said thatCentocor was in hot discussions with several companies about aco-marketing deal for Centoxin in Europe, where the drug isalready approved, but where sales have been disappointing.Centocor said Wednesday that four companies are involved intalks.
Casdin said the likely candidate to help Centocor would alreadyhave a large stake in the antibiotic field and might be expectedto provide investment by taking a minority stake in thecompany.
Although Centocor officials declined to suggest a timetable forthe additional trials or marketing approval, Casdin said thatpositive test results could send Centoxin to marketing approvalby the first quarter of 1993.
Centocor said the objective of the the new Phase III studywould be to compare the mortality rates of a single 100-mgdose of Centoxin, or HA-1A, and a placebo on patients in septicshock who have gram-negative bacterial infections of thebloodstream.
Oppenheimer's Casdin on Wednesday reaffirmed his "short-term buy" recommendation for Centocor that he first made onMay 18, when Centocor's stock was at $10.50 a share. "I'malways most comfortable in situations like this, where peopleare turned off and don't want to hear anymore news," he said.
-- Ray Potter Senior Editor
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