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Biotech / Medical : Agouron Pharmaceuticals (AGPH) -- Ignore unavailable to you. Want to Upgrade?

To: Steve Fancy who wrote (4702)	7/2/1998 3:19:00 PM
From: Steve Fancy	Read Replies (1) \| Respond to of 6136

PaineWebber Morning Notes July 2, 1988 Agouron: Preliminary, promising data on Remune KEY POINTS 1. Phase II data on Reumne Released at 12th World AIDS Conference. Yesterday, at the 12th World AIDS Conference in Geneva, preliminary results were released of a binded, controlled Phase II clinical trial on Reumne, an HIV therapeutic vaccine that Agouron recently licensed from Immune Response. These data will also be the subject of an oral presentation in a late-breaker session on Friday, July 3. As a reminder, Remune is made from an inactivated HIV depleted of its viral envelope protein (gp120) and combined with an adjuvant (IFA-incomplete Freund's adjuvant) that serves as a potent stimulator of the immune system. - Design of the trial: A total of 43 HIV-infected patients (median viral load of 8159 copies/ml, median CD4+ T cells of 493 cells/mm) who had not been treated with 3TC or protease inhibitors before were enrolled in the trial and randomized into two groups. Both groups were initially treated with AZT, 3TC and Crixivan for 4 weeks. After this period, one group (22 patients) had Remune added to their anti-retroviral regimen, while the other group (control group, 21 patients) had placebo (adjuvant) added to their anti)viral regimen. Remune was administered every 12 weeks through intra-muscular injection. These data represent an interim analysis at 20 weeks (16 weeks after the first immunization with Remune). Patients Will be followed for a total of 32 weeks. Key measurements include viral load, CD4+ cells and lymphocyte proliferative response (LPR) to several HIV-related antigens. Preliminary results: In the interim analysis, 18 of the 21 measurable patients (86%) in the Remune group had viral load below the level of detection (<40 copies/ml using the Roche ultra-sensitive assay) whereas 12 of the 18 measurable patients (67%) in the control group had viral load below the level of detection. The mean increase in CD4+ cell counts of the Remune group (137 cells/mm) was slightly higher than that of the control group (109 cells/mm). The Remune group showed statistically significant higher lymphocyte proliferative response to HIV-related antigens than the control group. These antigens include the gp-120 depleted HIV used in Remune, whole HIV of a different viral strain, and native and recombinant versions of an HIV core protein (p24). in addition, patients in the Remune group experienced significant increases in the production of MIP-1 beta (a chemokine associated with viral suppression) as compared to the control group. Conclusion: In our opinion, there are preliminary yet promising data from a relatively small trial. Although the difference in viral load reduction was not yet statistically significant between the Remune group and the control group, there is an obvious trend in favor of Remune (an improvement of nearly 20%). Most promisingly, the immunological measurements indicate that Remune induced cell-mediated immune response specifically against HIV. The lead investigator of this trial, Dr, Fred Valentine, Professor of Medicine at New York University Medical Center, noted that the immune response in patients receiving Remune is comparable to that seen in some HIV-infected individuals who did not develop AIDS (non-progressors). We believe that these observations lend support to the possibility that Remune potentiates anti-retroviral therapy and helps reconstitute the immune system. The final results of this trial should be available in the second half of this year. In the meantime, Agouron and Immune Response are planning a larger Phase II trial (expected to enroll more than 300 patients) which will use Remune in conjunction with a combination anti~retroviral therapy that includes Viracept. 2. Reaffirming Buy (1) rating. With the licensing of three HIV therapeutics in the three weeks, Agouron has significantly expanded its anti-HIV portfolio and filled a gap in its product pipeline. In our opinion, Viracept continues to be viewed as the optimal first line protease inhibitor given its oombination of durability and potency of effect, ease of use, mild side effect profile, and favorable cross resistance profile. We continue to believe the market underestimates the capabilities of Agouron's management team and the potential of the company's product pipeline. Our 12-month target remains $65-70 based on our fiscal 2000 EPS estimate of $3.43 using a 25-30% discount rate and a 30 multiple. The stock is currently trading at a P/E multiple of 11.7x bur 1999 calendar year estimate of $2.56 per share. RISKS: -Stock volatility and speculative nature of biotechnology investment -Competition in the HIV protease inhibitor market -Potential for resistance and cross resistance among HIV protease inhibitors -Potential for manufacturing shortfalls -Loss of major corporate collaborations (UPCOMING MILESTONES -Marketing approval for Viracept in other countries - Q2 1998 -Clinical results of Phase I dose ranging study for GART inhibitor (AG2034) - mid-1998 -Initiation of clinical studies for MMP inhibitor in acute macular degeration - H2 1998 -Announcement of product licenses/aquisitions