Amigos y Amigas - Report on Biotech Company ALTEON - ALTN - A collaborative effort by David J and Jose.
ALTEON - ALTN
ALTN is a biotech company that has been around for around 13 years. Sometimes to understand where a stock might go we have to know how it got there. Here is the last three months along with the stock price.
Nov 9th, 1998 - Stock goes from 3.5 to 5.5 on this press release.
"Alteon Compound(ALT-711) found to reduce Arterial Stiffness in Old Primates"
Nov 16th, 1998 - Stock goes from 4 to 1 on this press release.
"Alteon Announces that Preliminary Analysis of Phase III Trial of Pimagedine Demonstrates Mixed Results in Type I Diabetic Patients with Progressive Kidney Disease"
Dec 18th, 1998 - Stock sinks below a dollar on this announcement about management.
"Alteon Chairman/CEO resigns"
Drug developer Alteon Inc. said on Friday James Mauzey has resigned as chairman and chief executive officer and Jere Goyan, the company's president and chief operating officer, has retired. Both will stay on as consultants.
Tax loss selling continued in earnest from Mid December until just recently.
Alteon has been developing three different biotech products, Pimagedine, ALT-711,GLA(Glucose Lowering Agents).
Pimagedine - Teamed with corporate partner, Genentech, announced preliminary results from its phase III Action I trial in Type I diabetic patients with overt nephropathy(progressive kidney disease). The goal of the study was to reduce the risk by 50% of the doubling of serum creatinine in Type I patients. The 50% reduction was not met but preliminary analysis does suggest a 20% risk reduction. The data does suggest that the response was dose related, patients on a higher dose had greater response. The bottom line is that these are only preliminary results. The stock price has taken into account that this drug is a dead issue where in fact it just might have a life after-all. Any positive news on this drug will boost the stock. Negative news has already been taken into account.
ALT-711 is a compound based on its A.G.E. technology. A.G.E. crosslink breaker is a class of compounds being developed by Alteon alone, have the ability to break existing protein bonds and crosslinks, potentially leading to a reversal in pathologies associated with aging and diabetes. It has been in Phase I trials since June and Phase II trials are expected to start mid year 99. The initial indication for this product will be cardiovascular,
as evidence has been seen in preclinical trials of the drugs ability to restore elasticity,reducing arterial stiffness. I expect some news on the Phase I results in the new year. Expect some type of paper or presentation at one of the major conferences. If the results
are as good as expected watch out as this drug will have many applications.
GLA - Glucose Lowering Agents - A class of orally available compounds that have demonstrated in preclinical models of diabetes an ability to lower blood glucose and free fatty acids by a potentially new mechanism of action(involving inhibition of lipoloysis).
They are looking for possible corporate partners to take this to the clinical development stage.
Financial Statistics
Revenues - $1M/year
Shares 18.8M
Float 14.5M
Volume averaging around 400K
LTD = 0
Cash $16M. Burn rate is about $1.5M/month. Financial partner Genentech has been financing much of the recent development. They have an option to change their current agreement on Pigamedine to any of the other development stage drugs including the A.G.E. compounds if they choose.
Tax Losses $100M
Funding information from latest 10Q.
"In December 1997, Genentech purchased Common Stock and Series G Preferred Stock for an aggregate purchase price of $15,000,000. The use of these funds is unrestricted to the Company. Genentech has agreed to fund continued development of pimagedine and
support possible additional clinical trials for expanded indications of the drug through the periodic purchase of up to $48,000,000 in Series H Preferred Stock. The first such purchase, in the amount of $8,000,000, occurred on July 27, 1998, and on October 1,
1998, a second purchase occurred in the amount of $14,544,000. Genentech will also fund agreed-upon development costs for second-generation A.G.E.-formation inhibitors. Genentech may terminate the license agreement upon six months' notice to the Company."
Summary:
There are three major events that could happen in early 99 to move the stock.
1) Final analysis of Pimagedine. Since there are currently very few treatments available for Type I diabetic patients with overt nephropathy the results are being reviewed very closely. Hard to say which way this will go but I think the bad news is in the stock. Every
Biotech I have followed always seems to come out with a negative release and two months later it turns back around.
2) Some preliminary results of the ALT-711 Phase I safety trials. There already has been seen some evidence in preclinical trials of this drugs ability to restore vascular elasticity, reducing arterial stiffness.
3) Glucose Lowering Agents(GLA). This compound may make some noise if it starts preclinical studies this year.
Technical Analysis by David J.
ALTN is a PEGDCB play via the 56 point TA. These plays are high % plays with good risk/reward outlook.
ALTN magnets: .36 downtrend, .8125 experimental magnet downtrend, 1.59 quarter zone, 3.05 downtrend, 3.1875 neutral zone, 3.9375 flat trendline.
Via magnet rules target is 3.1875 unless a new magnet is signaled under 5.50 which is likely. When this signal occurs I will be better able to handle a target, currently looking at mid to upper 1s. |
