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Strategies & Market Trends : Roger's 1998 Short Picks -- Ignore unavailable to you. Want to Upgrade?

To: Bill Wexler who wrote (7767)	4/24/1998 8:36:00 AM
From: Lazlo Pierce	Read Replies (1) \| Respond to of 18691

The street.com has a piece on ZONA ********************************** Top Stories: Zonagen Impotence Drug Abstract at Odds with Reported Numbers By Jesse Eisinger Staff Reporter 4/24/98 6:00 AM ET Data from an abstract for the upcoming American Urological Association meeting show different numbers for one of Zonagen's (ZONA:Nasdaq) two Phase III trials of its impotence drug than what the company has made public. The numbers were still statistically significant, according to the abstract, and not dramatically different. When researchers apply different statistical analyses to the same data, they can get different results. Still, such statistical differences for late-stage trials aren't common, and can be a worrisome sign. Stock of The Woodlands, Texas-based Zonagen has been on a tear, drafting behind Pfizer's (PFE:NYSE) explosive launch of the impotence pill and cultural phenom Viagra. Meantime, Zonagen has also drawn a passel of short-sellers who contend that the Vasomax trials were poorly designed and still didn't show strong efficacy. Zonagen bears also cite the fact that the approval filing with the Food and Drug Administration has been delayed. Originally it was supposed to be filed by the end of last year. Bulls counter that the New Drug Application filing will happen this quarter and point to a recently struck marketing agreement with Schering-Plough (SGP:NYSE) as confirmation of the drug's potential. To the consternation of the shorts, Oppenheimer picked up research of the company with a buy on Tax Day, engendering a bit of a short squeeze by juicing the stock even more. ZONA's stock is up 44% since April 8, and since April 15 the stock has gained 37%. As of the last filing, 2.84 million shares were short on a base of 12.35 million shares outstanding on a fully diluted basis. Thursday the stock fell 1 5/8, or 5.6%, at 27 1/2. In the abstract, obtained by TSC, the ZON 301 study's numbers don't correlate with the company's. The 301 study of 459 patients had three arms: a high-dose, a low-dose and a placebo. The company previously said in two press releases, the first of which was put out on May 27, 1997, that the high dose had an efficacy rate of 48%, the middle dose had a rate of 40% and the placebo had a rate of 17%. In the abstract, written by widely quoted urologist and impotence specialist Dr. Irwin Goldstein of Boston University, the numbers are different. The high dose had a rate of 45%, the middle dose had a rate of 37% and the placebo rate was 16%. The scoring was based on a survey given to patients with a series of questions concerning erections and sexual activity. Dr. David Ferguson, an outside consultant for Zonagen, says the difference may be that Goldstein, the lead investigator on the trials, did his own analysis. Ferguson speculated that "Irwin may have done his own analysis to get it into the AUA as soon as possible." Often abstracts are prepared quickly, under deadlines, before a scientific meeting. The doctor adds: "The data to be presented at the AUA are a result of analysis done by Schering-Plough and they are not 16, 37 and 45. They are a little bit higher than that." He says the numbers don't perfectly match that of the preliminary analysis made public in May and June of last year in press releases from Zonagen either, but they are substantially the same. "The numbers from the first cut seem to be holding up pretty accurately going into the NDA. Schering-Plough has been all over these numbers." More importantly, says Ferguson, is that new analysis suggests that if Vasomax is analyzed for successful attempts, rather than the survey, the number approaches 50% efficacy. That means men were successful half of the time they attempted to have sex, which correlates to Pfizer's Viagra. "When you looked at successful attempts, it far exceeded what we expected," says the consultant. "Viagra data were no different. It's improvement in our understanding of Vasomax. It appears that Vasomax is not as weak relative to Viagra as previously thought." He cautioned that there have been no head-to-head studies of the two impotence drugs. Goldstein was not immediately available for comment. This isn't the first time that questions about Zonagen's studies have come up. Short-sellers have criticized the fact that the ZON 301 study dropped patients before completing the analysis. The analysis was done on only 459 patients, while an initial 575 patients were brought in to the study and given test doses. One-hundred and sixteen of the patients were excluded or discontinued before being randomized into one of the three arms. Excluding patients usually raises eyebrows because of the potential for such exclusions to influence results. According to one version of the Oppenheimer report, of the 116, 44 discontinued due to "test dose failures at 80 mg. Only 2 dropped out due to serious adverse events" of high blood pressure and chest pain. Others dropped out because they didn't attempt to have enough sex in a month (four times). Maybe they were monks. Oddly, another version of the OpCo report circulated to investors excludes the explanation of the 44 discontinuations. Matthew Geller, author of the study, did not return a call seeking comment. Another issue with the study is whether it was truly "double-blinded." Double-blinding means that neither the patient nor the doctor knows who is getting the drug and who is getting the placebo. Zonagen and the abstract describe the trial as "double-blinded." If however, the investigators gave 80-mg test doses of the drug to all patients and then continued with only 459 of 575 patients, that means the study wasn't double-blinded for the first phase, at least.