Among the more volatile shares last week, Pharmos (Nasdaq: PARS) should be singled out in particular. The share finished the week down 10%, after setting a record of $5, 37% higher than its Monday morning price. Investors were disappointed by the absence of new announcements before the company presentation last Tuesday at the important conference in Boston, and responded with the inevitable wave of profit taking, following the share’s surge from its $0.80 price of less than six months ago. On Friday, the company published a prospectus for registering 11.5 million new shares and options, as a result of its recent financing round, which helps to explain these recent developments.
Pharmos is now predicting that it will complete the final phase in its trial for dexanabinol, its drug for treating head trauma, in January 2004. The trial is currently being conducted on 900 patients at 15 medical centers in the US. In July 2004, six months after the last patient gets the drug, the results will be compiled and transferred to the US Food and Drug Administration (FDA). As a result of the fast track obtained for the trials of the drug, the company hopes that it will be approved quickly. I think the approval will be forthcoming in the first half of 2005.
The company’s prospectus describes a second trial it is conducting, which has been little discussed in the capital market, and which is designated for a new market, which I believe could be worth many billions of dollars, should the trial prove successful. I’m referring to a drug derived from dexanabinol, designed to prevent the circulation of tiny particles in the blood in the direction of the head among cardiac patients undergoing bypass surgery. The company is conducting Phase II trials of this drug at four medical centers in Israel that perform bypass surgery, and the trial is planned to include 200 patients.
Among developments expected at Pharmos in the coming weeks, which could arouse a new wave of speculation the share, is the FDA’s granting of orphan drug status for dexanabinol. Among other things, this will guarantee Pharmos seven years protection against generic drug companies, starting from the beginning of sales, if the patent itself does not grant such protection. This status is granted to young companies lacking resources, which undertake large investments in a drug that the FDA very much wants to reach the market. These companies tend to avoid progressing too far before they have a registered patent. In biotechnology, a drug on the market in 2005 constitutes the very short term, so I predict new records in the share as the company timetable progresses, provided that the trials of the drug proceed without interference. Every day that passes without the FDA halting the trial is evidence that nothing serious has gone wrong. |
