Cerus Halts Trial for Blood Transfusion Safety Product
Thursday September 4, 3:49 pm ET
By Daniel Rosenberg
CHICAGO -- The discovery of antibodies in two of 160 patients in a blood- safety trial is a setback, but won't stop Cerus Corp. (NasdaqNM:CERS - News) from continuing to pursue a pathogen inactivation system for red blood cells, the company's chief executive said Thursday.
"It obviously is a setback -- we can't pretend it isn't," Cerus President and Chief Executive Stephen Isaacs said after the company announced the antibody discovery and halted the Phase III, or late-stage, clinical trial.
Mr. Isaacs and Chief Medical Officer Dr. Larry Corash said they intend to find out what caused the problem and get it fixed.
Until Thursday, analysts had been expecting a mid-2005 launch for the company's red blood cell program, which represents a $1.7 billion market opportunity.
But now, it's impossible to say when the product will come onto the market. The company found out about the antibodies' appearance "very recently," Mr. Isaacs said, and is just beginning to assess what might have gone wrong.
"It's very difficult to speculate on a timeline," Dr. Corash said. "We need to understand exactly what structure the antibody is binding to and what part of the S-303 treatment process caused the antibody to be produced."
S-303 is the Cerus product designed to inactivate pathogens in red blood cells. Cerus, along with partner Baxter International Inc. (NYSE:BAX - News) , is working on ways to enhance the safety of blood transfusions by inactivating pathogens in blood components. The appearance of antibodies in some of the patients participating in this trial could be a sign that their bodies were rejecting the red blood cells they had been given, something that would make the red blood cells ineffective.
Although neither of the patients suffered any ill effects, Cerus and Baxter called an immediate halt to the Phase III trial to examine what went wrong.
The news sent shares spiraling downward. At around 3 p.m. EDT, Cerus shares were down $2.36, or 31%, to $5.35 on the Nasdaq Stock Market (News - Websites). Earlier in the session, the stock hit a 52-week low of $4.55 a share.
Asked why these patients may have developed antibodies to the red blood cells treated with the Cerus product, Mr. Isaacs and Dr. Corash said this is the first time the company has seen such a response, starting with animal trials.
"We did a lot of animal studies to look for just this kind of effect, and saw none," Mr. Isaacs said.
The company then tested the product on healthy human volunteers, and found no antibodies produced.
In the Phase III trial, the two patients who developed antibodies were both people who because of their illnesses had required numerous transfusions over the years. None of the trial volunteers who hadn't had numerous transfusions in the past developed antibodies.
This leads Cerus to believe that the two patients who did develop antibodies were perhaps "primed" to do so.
"The patients are people who have been chronically transfused as part of their medical care in the past," Dr. Corash said. "Their immune systems may have been more stimulated than the average patient's; more ready to recognize a non-self structure and make an immune response. This appears to be an antibody directed against a foreign substance. We do believe it's related to these transfusions."
Though Cerus wouldn't make any predictions as to how long it might take to get the trial back on track, analyst Ben Andrew of William Blair & Co. said it could be anywhere from "three months to five years."
The five-year prediction, Mr. Andrew said, would be if the company had to start all over again from the animal stage. Mr. Andrew rates Cerus a "market perform" and doesn't own shares. His company may have had or may seek an investment banking relationship with Cerus.
Analyst Glenn Reicin of Morgan Stanley (MWD) revised his model to exclude from future revenue Cerus' Intercept system for red blood cells. This reduces his 2006 earnings-per- share estimate to three cents from 91 cents. He maintained his "underweight" rating.
"It is hard to point to any near-term news or catalyst that could get investors excited about this name," Mr. Reicin wrote in a note to investors. Mr. Reicin doesn't own shares of Cerus, but Morgan Stanley has had an investment banking relationship with the company in the past and may have one in the next three months.
Mr. Reicin said Thursday's announcement could have long-term implications for Cerus, including the possibility that the U.S. Food and Drug Administration (News - Websites) won't approve the product.
Mr. Isaacs and Dr. Corash emphasized that the trial halt doesn't affect the company's other blood safety products designed to inactivate pathogens in plasma or in platelets, which use a different active compound. And they said their Intercept pathogen inactivation technology has been effective against both the West Nile virus and severe acute respiratory syndrome, or SARS. The product has an excellent safety profile, they said, and there have been no clinically adverse effects in any of the patients they have studied.
"There are many positive aspects to this technology and it's a critical task to recognize the mechanism of action and see if we can implement a fix," Dr. Corash said.
According to analyst Andrew, Cerus has too much invested to let a setback like this end the program. Red blood cells represent by far the biggest market opportunity for the company.
"They and Baxter have spent around $400 million developing this puppy, so they aren't going to give up right away," Mr. Andrew said.
- Daniel Rosenberg, Dow Jones Newswires; 312-750-4118 |
