Chuca, amazing how much damage an analyst (Mark Augustine) could do to the stock. But I think GNLB will rebound nicely over the next few days. The following article came out after the close(it's an updated version with comments from other analysts and new price target which were not in the afternoon version when it first came out)
Regards,
Tom
February 15, 2000
Dow Jones Newswires
Genelabs Still Dn After Analyst's Doubting
Note On Drug
By DINAH WISENBERG BRIN
PHILADELPHIA -- Shares of Genelabs Technologies Inc. (GNLB)
continued to slide Tuesday, the day after U.S. Bancorp Piper Jaffray
issued a research note challenging prospects for the company's lupus
treatment.
The Redwood City, Calif., biopharmaceutical company's stock recently
traded at 9 19/32 down 31/32, or 9.2%, on volume of 3.9 million shares,
compared with average daily volume of 1.1 million. It lost 22.5% the
previous day.
Genelabs on Monday announced "statistically significant" phase III trial
results for GL701, its investigational drug for systemic lupus
erythematosus, or lupus, an autoimmune disease that primarily affects
women, causing such symptoms as severe fatigue, arthritis, facial rash,
sensitivity to sunlight, inflammation of the lungs and heart, and in severe
cases, organ damage.
Patients who received the hormone-based therapy showed significant
improvement or stabilization of disease activity and symptoms compared
with those who took placebos, the company said, calling the study
groundbreaking.
They also experienced fewer bouts of heightened disease symptoms, called
flares, and had improved quality of life, according to Genelabs. A clinical
researcher presented the findings Sunday at an autoimmunity medical
conference in California.
If approved by the U.S. Food and Drug Administration, GL701 would be
the first drug in 40 years indicated for the treatment of lupus.
U.S. Bancorp Piper Jaffray analyst Mark Augustine, however, issued a
note Monday reporting that Genelab's data on GL701 failed to impress the
audience of researchers at the autoimmunity conference. Results, he said,
"were met with considerable skepticism."
"We believe that GL701 has questionable efficacy in the treatment of mild
to moderate lupus, is associated with a poor benefit-to-risk ratio, and
faces a mountainous challenge to win regulatory approvals," he wrote.
Some other analysts disagreed, and Genelabs said Tuesday that Augustine
misunderstood the trials and data.
Among other complaints, Augustine said Genelabs' method of analyzing
patient response was not clinically validated. "A number of lupologists in
attendance agreed with our assessment that this instrument is confusing and
the reported results were difficult to interpret," he wrote.
He also said there was no statistically significant difference in disease flares,
and expressed concern that GL701 lowered patients' HDL, or "good,"
cholesterol. In addition, he said, the higher incidence of acne and facial hair
among those who received the drug had the effect of "unblinding" the
study, making patients and physicians aware of who received the therapy
and who got the placebo.
"I think he doesn't understand. I'd love to have the opportunity to educate
him further," Genelabs President James A.D. Smith said of Augustine,
whom he's never met. Smith told Dow Jones Newswires he'd been trying
to reach Piper Jaffray's research department for two days but had not
received a return call. "Quite frankly this came out of the blue."
Genelabs worked with experts in lupus research and with the FDA in
preparing the trials, according to Smith. "We've worked very closely with
the FDA in this process," he said.
In November, Genelabs had a pre-new drug application, or pre-NDA,
meeting with FDA officials, who told the company that data from the study
supports the filing of an NDA, Smith said.
"They have seen the study designs, they participated in the study designs.
They have seen the study results. Their representation to the company was
that these data will support a fileable NDA," he said of the FDA.
Contrary to Augustine's evaluation, Smith said, the data show that GL701
is effective and has a favorable risk-benefit ratio.
The Genelabs president said he attended the same automimmunity
conference as the analyst. "I guess Mr. Augustine and I have very different
opinions of what went on there. I felt the data were well-presented," he
said.
Piper Jaffray analyst Mark Augustine, in a note, described the audience at
a question-and-answer session at an autoimmunity conference as
"unanimously hard on GL701," a Genelabs Technologies Inc. (GNLB)
investigational drug for lupus.
Genelabs President Smith, though, said he thought the presentation was
well-received. He spoke with outside researchers afterwards, and "they
seemed favorably impressed with what they saw."
Other analysts shared Genelabs' view of the study.
A. Paul Boni of Punk Ziegel & Co. raised his target price Monday for
Genelabs to $20 a share from $10 and issued a research note saying the
new data "strengthen our conviction in GL701 for the treatment of lupus."
The Genelabs presentation provided a more complete profile of the drug
and its benefits, Boni wrote. "We continue to believe that this drug will be
approved for marketing in early 2001, and should achieve United States
sales in excess of $100 million," he said.
Genelabs has had several discussions with potential European marketing
partners and should choose one by the end of the year, according to Boni,
who did not attend the weekend conference.
GL701 alone justifies a $20 per share, or more than $880 million market
capitalization, for Genelabs, he said. Boni said the company otherwise has
achieved "proof of concept" in its core technology of DNA- and
RNA-regulating molecules, which has potential medical and agricultural
applications.
Piper Jaffray's Augustine said the study showed that GL701 patients had
no statistically significant benefit on any one of four scores used to measure
the disease.
But Boni said Genelab's definition of a response to the drug "represents a
very high hurdle, where patients must improve on each of four different
scoring instruments for measuring lupus disease." Genelabs' Smith said
patients had to show improvement or stabilization in all four categories to
be counted as showing a response.
Boni noted that lupus patients treated with GL701 who also were on
chronic steroid therapy - currently the primary treatment for the condition -
showed greater bone density. Steroid treatments can reduce bone density
in lupus patients.
Analyst Charles Engelberg of AmeriCal Securities also had a positive view
of GL701.
"On the face of it, it looks like an approvable drug" that could generate
$200 million to $400 million a year in sales, he said.
Augustine's note acknowledged that researchers, in general, disagree on
methods used to study lupus and the drugs proposed to treat it.
Results Of Trial
In the double-blind placebo trial conducted by investigators at 27 sites
nationwide over a year, women treated with GL701 showed a 35%
greater response rate than the placebo group; and 66% of patients
responded to treatment with the drug, compared with 49% who
responded to the placebo, the company said.
Genelabs plans to start submission of its rolling new drug application in the
first half of the year and complete submission in the second half.
Some study participants continued using their current medications,
including the steroid prednisone and immunosuppressives. GL701 could be
used on its own or in conjunction with other therapies, depending on the
patient, Genelabs said. The company hasn't studied whether it could
replace other treatments.
An earlier trial showed that GL701 enabled a significant number of patients
to reduce prednisone while taking GL701.
Trial findings were presented by one of the investigators, Dr. Philip J.
Mease, associate clinical professor at the University of Washington and
director of clinical research at the Minor and James Medical Center,
Seattle.
"The study showed that treatment with GL701 resulted in meaningful
improvements in important clinical and quality of life measures for patients
with lupus," Mease said in a statement. "No other drug currently being
used for the treatment of lupus is both anti-inflammatory and capable of
increasing bone density."
Company President Smith said Genelabs may issue a formal statement
addressing Augustine's comments.
There is no cure for lupus, which Genelabs said affects about 200,000
people in the United States and more than one million globally. Wall Street
analysts give higher estimates for U.S. patients. Current treatment relies
primarily on chronic use of steroids that may cause serious side effects.
Genelabs reported only mild side effects for GL701.
-By Dinah Wisenberg Brin; Dow Jones Newswires,
215-656-8285; with Christine Nuzum
(Corrected 4:28PM) |
