Dyax plunges on rivalry concerns
By Val Brickates Kennedy, CBS.MarketWatch.com
Last Update: 2:50 PM ET Oct. 22, 2004
BOSTON (CBS.MW) -- Dyax shares plunged more than 26 percent on Friday on concerns that a rival company, Jerini AG, may end up being the first to win U.S. regulatory approval for a drug to treat hereditary angioedema.
Dyax shares were down 30 percent to $5.65 amid a generally negative trading session for the biotechnology sector.
As part of its third-quarter earnings release on Friday, Dyax (DYAX: news, chart, profile) noted it still is in negotiations with the Food and Drug Administration over whether a Phase III clinical trial will be needed in order for the company to win regulatory approval for its drug DX-88, a treatment for hereditary angioedema.
The disorder is a rare but life-threatening inflammatory disease that can cause painful swelling of the extremities. It is classified as an autoimmune disorder. Dyax's DX-88 currently is wrapping up Phase II clinical trials and an application for approval. It now is not expected to be filed until 2006.
Meanwhile, privately held German biotechnology concern Jerini is beginning Phase III clinical trials for a similar drug and could be ready to file for U.S. approval also in early 2006.
"People were expecting that Dyax would be filing in 2005. Now they're saying that's not possible," said SG Cowen analyst Philip Nadeau. "Dyax's has lost some lead time."
Analyst Bennett Weintraub, of Hibernia Southcoast Capital, agreed.
"People were hoping that the FDA would take the existing data, but the FDA has said, 'No, do another trial'," said Weintraub. "Now they're in a horse race with Jerini."
Both Jerini and Dyax have received "orphan drug status" for their respective treatments for angioedema. The designation generally means that first drug approved for a specific condition would enjoy a seven year period of market exclusivity.
The orphan drug designation was created by the FDA to encourage companies to develop drugs for rare diseases for which there are few, if any, treatments
Because of desperate patient need, the FDA will sometimes approve an orphan drug based on strong Phase II clinical data, a scenario that the analysts said many investors had been anticipating.
"People were hopeful they wouldn't need to do a Phase III clinical trial. And it is still possible that maybe they can just extend the Phase II trial underway," said Nadeau.
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Hereditary angioedema fits into the orphan drug category as only about 3,500 people have been diagnosed with the condition in the U.S. alone, according to Weintraub.
While being the first to win U.S. regulatory approval obviously gives a company a marketing advantage, Jerini's and Dyax's drugs are apparently differ enough medically that they could both receive approval even though they are targeted at the same condition, according to Weintraub.
Dyax has been developing DX-88 for angioedema with biotechnology leader Genzyme Corp. (GENZ: news, chart, profile), which has had considerable success in conducting clinical trials for orphan drugs. That fact, said Weintraub, will likely work to Dyax's advantage in gaining FDA approval for DX-88.
Dyax is also developing DX-88 for use in minimizing complications during coronary artery by-pass surgery. The drug is currently in Phase 1/II trials for that indication.
In related news, Dyax (DYAX: news, chart, profile) also reported a third-quarter net loss of $8 million, or 25 cents a share, compared with a loss of $6 million, or 25 cents a share, for the same quarter last year.
Dyax said revenue shrank to $3 million from $6 million for the third quarter of 2003, primarily due to reduced funding from its pharmaceutical development partner Debiopharm S.A. for the drug DX-890.
DX-890 is just beginning Phase II trials to treat cystic fibrosis.
Nadeau said that the funding of DX-890 was "no big deal" as the drug "is much farther out, developmentally."... |
