Press Release Source: GlycoGenesys
J.M. Dutton & Associates Announces Investment Opinion: GlycoGenesys Rating Maintained at Strong Speculative Buy by Dutton & Associates
Monday June 7, 1:00 pm ET
EL DORADO HILLS, Calif.--(BUSINESS WIRE)--June 7, 2004--
J.M. Dutton & Associates continues coverage of GlycoGenesys (Nasdaq:GLGS - News) with its rating maintained at Strong Speculative Buy and a price target of $2.75.
The 7-page report by J.M. Dutton senior analyst Sherry Grisewood, CFA, is available at www.jmdutton.com as well as from First Call, Bloomberg, Zacks, Multex and other leading financial portals.
GlycoGenesys is a drug discovery and development company whose focus is glycomics, an emerging science focused on the chemistry and interactions of carbohydrates and polysaccharides in biological systems.
<FONT COLOR=GREEN><FONT SIZE=5>GlycoGenesys is one of only a handful of companies with established intellectual property in glycomics with a glyco-compound that has entered human clinical trials.
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The initial weakness in the Company's shares was triggered by the March 17 announcement of the placement of a significant portion of the GLGS stock held by Elan Corporation with institutional shareholders, and Elan's April 26 filing for the conversion of its 1.1 million Series C Preferred Shares into common shares.
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GlycoGenesys continues to make steady progress in the clinical program for GCS-100.
We are encouraged that Dr. Cotter is submitting data from his studies with GCS-100 for publication.
This is a strong endorsement of the Company's core science and may potentially support a wider range of therapeutic application for GCS-100, thus expanding its market opportunities.
About Dutton & Associates
Dutton & Associates is one of the largest independent investment research firms in the U.S. Its 24 senior analysts are primarily CFAs and have expertise in many industries. Dutton & Associates provides continuing analyst coverage of over 70 enrolled companies, and its research, estimates and ratings are carried in all the major databases serving institutions and online investors.
The cost of enrollment in our one-year continuing research program is US$33,000 prepaid before commencement of our research activities. We received $25,000 from the Company for four reports commencing 1/20/2004, and do not accept payment of our fees in company stock. Our principals and analysts are prohibited from owning or trading in securities of covered companies. The views expressed in this research report accurately reflect the analyst's personal views about the subject securities or issuer. Neither the analyst's compensation nor the compensation received by us is in any way related to the specific ratings or views contained in this research report or note. Please read full disclosures and analyst background at www.jmdutton.com before investing.
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THE JMDUTTON REPORT - in part
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Recent News</FONT>
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GlycoGenesys reiterated the clinical development timetable for GCS-100 in the Company’s recent conference call to
discuss year-end results. The Company has initiated a Phase I dose escalation trial with a new formulation of GCS-100 this quarter.
Up to 30 patients with advanced relapsed cancers will be treated in this monotherapy trial aimed at evaluating the
safety, pharmacokinetics and maximum tolerated dose of the new GCS-100 formulation.
GlycoGenesys has retained Glenmere Clinical Research, Inc., a contract research organization, to facilitate and support its clinical trial program.
Company management also detailed circumstances related to the David Platt severance litigation and the issues
surrounding its license agreement with David Platt.
Platt served as the Company’s CEO until 2000.
After leaving GlycoGenesys, he founded Pro-Pharmaceuticals, Inc., a glyco-science company that is a direct competitor in the development of glyco-compounds for cancer treatment. We believe that GlycoGenesys will prevail in the resolution of these matters.
GlycoGenesys has opened its new research laboratory in Cambridge, Massachusetts. The facility will largely be devoted to process development, batch scale-up and GCS-100 compound development.
Until now, the Company had outsourced this
development work. The addition of an in-house development laboratory should allow the Company to greatly reduce the
use of outside consultants and move its process and compound optimization along more efficiently and cost-effectively.
• The U.S. Patent and Trademark Office granted GlycoGenesys a key patent to expand the use of GCS-100 and
other galectin-binding carbohydrate compounds in combination with chemotherapy or surgery, thus expanding the intellectual property surrounding GCS-100.
• GlycoGenesys announced the placement of 1.3 million shares of its stock sold by a subsidiary of Elan in open
market transactions through March 12, 2004.
• R&D Directions magazine included GlycoGenesys’ lead cancer compound, GCS-100, in its 2004 report on 100
advances in medicine. The investigative drugs highlighted were selected from thousands of products in
development.
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Clinical Update
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GlycoGenesys is moving ahead with its clinical program for the new low-ethanol formulation of GCS-100. The Company
initiated a Phase I dose escalation trial this quarter to determine the maximum tolerated dose (MTD) of GCS-100 in up to 30 patients with advanced solid tumors.
Following the determination of the MTD, the Company will initiate Phase II trials in late 2004/early 2005 to evaluate the safety and efficacy of GCS-100 as a monotherapy at that dosage.
The Company will choose the specific indication for the Phase II trials based on bioactivity data from previous preclinical and clinical studies.
Also in late 2004/early 2005, the Company intends to apply for Fast Track Status for GCS-100 monotherapy.
If the compound successfully moves through the clinical process, the Company expects to file a New Drug Application for GCS-100 monotherapy in 2006.
A Phase I/II program for GCS-100 combination therapy is expected to kick off late this year or early next year.
In the Company’s recent conference call, management also noted progress in preclinical studies being conducted by Dr. Finbarr Cotter, a noted cancer researcher of St. Bartholomew’s and The Royal School of Medicine in London.
Dr. Cotter’s laboratory discovered the antisense compound Genasense™.
Previous work by Dr. Cotter has indicated that GCS-100 may
be efficacious in bloodborne cancers as both a mono and/or combination therapy.
Dr. Cotter presented a full dossier of data to Company management in March 2004. Relevant portions of that data are being prepared for submission for publication.
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Litigation Update
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During the first quarter, GlycoGenesys became the object of two separate but related legal proceedings with David Platt.
The first issue concerns a dispute surrounding Dr. Platt’s terms of severance and noncompetition. We believe that this
dispute is personal in nature and, although nettlesome, will prove to be of little material consequence to GlycoGenesys.
The second action concerns the prosecution of patent applications licensed from Dr. Platt. The particular circumstances surrounding these patent-related issues have been previously disclosed in Company filings.
GlycoGenesys is the exclusive licensee of all the patents in question. Our personal conversation with the Company’s patent attorneys, as part of our due diligence process before issuing our initial report, encourages our belief that these issues will be resolved in a manner
favorable to the Company.
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New Laboratory Facility Opened
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GlycoGenesys has announced that its new laboratory facility, based in Cambridge, Massachusetts, has been operational since March.
The facility focuses on three development areas:
(1) process optimization and scale-up,
(2) analytical and preclinical studies relative to the mechanisms of action of GCS-100 and
(3) the evaluation of potential additions to the
Company’s product pipeline.
The Company is seeking to add at least one new compound to its pipeline either through internal development or by in-licensing. The Company is also exploring the expansion of indications for GCS-100 outside of cancer. By bringing these development areas in-house rather than employing outside consultants, we believe that the Company may be able to manage these areas in a more cost-effective and timely manner.
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GlycoGenesys Broadens its Intellectual Property Base
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The U.S. Patent and Trademark Office granted GlycoGenesys a key patent to expand the use of GCS-100 and other
galectin-binding carbohydrate compounds in combination with chemotherapy or surgery.
With this new patent, the Company has expanded the intellectual property surrounding GCS-100 to include chemotherapeutic synergies with other widely used anticancer agents.
GCS-100 is currently in development as a monotherapy for the potential treatment of solid tumors.
The potential synergistic qualities of GCS-100 were first reported this year in a presentation of preclinical data
demonstrating the potential synergy of GCS-100 with etoposide.
In a series of in vitro studies using a chemotherapyresistant human lymphoma cell line, the addition for GCS-100 to etoposide produced an effective treatment at substantially lower dosage levels than typically administered for the cell line.
These findings, along with the preclinical
work, have led the Company to consider opportunities for GCS-100 as a combination therapy in various cancer treatment settings.
GlycoGenesys has a number of other U.S. and international patents pending in the area of galectin-binding
carbohydrates and GCS-100.
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Placement of 1.3 Million Shares
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In mid-March, GlycoGenesys announced the completion of the placement of 1.3 million shares of stock by Elan
International Services, Ltd, an investment company subsidiary owned by Elan Corp plc.
The sales took place as open market transactions through March 12, 2004. The stock was placed with two existing GlycoGenesys institutional investors, who purchased the 1.3 million of Elan's remaining 1.6 million shares of common stock as of that date.
These sales involved substantially all of the common stock held by the Elan subsidiary. The completion of those placements should have removed the substantial overhang on GLGS shares since Elan filed notification of its intention to sell near the beginning of 2004.
However, on April 26th, the Elan subsidiary filed for the conversion of 1.1 million Series C Preferred
shares, which had a conversion price equivalent to $1.31 per share.
Speculators are betting that Elan's deteriorated
financial position will force the sale of the shares at prices well below the conversion price.
We believe this uncertainty, coupled with typical arbitrage around such circumstances, to be the primary reason for the nearly 47% decline in GLGS
shares since mid-March.
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