Pain Therapeutics falls on poor trial data; Sinovac off of profit taking; Point Therapeutics rises

By Ronda Fears

Nashville, Nov. 22 - Pain Therapeutics, Inc. took a sharp dive after reporting disappointing trial data for its Oxytrex in terms of physical dependency compared to an equivalent dose of the highly addictive pain drug oxycodone. The news does not affect a collaboration agreement with King Pharmaceuticals Inc. announced earlier this month for another painkiller, but King took a slight hit as well.

"Management [of Pain Therapeutics] really dropped the ball by not anticipating high drop out rates and not enrolling enough patients. Does King renegotiate now? I think so. If results are bad, you are looking at a $4 buck stock and then it's dead money for another year or two," said a sellside trader.

"Nonetheless, this trial clearly showed that Oxytrex has at least comparable pain relief as Oxycontin [branded oxycodone] and probably fewer symptoms of physical dependence, so Oxytrex will eventually be approved. It's just that every delay means shareholders must wait that much longer."

Patience was not a virtue for many biotech players Tuesday as jitters about holding long potions over the long holiday weekend outweighed good news, the sellsider said.

Sinovac lower, Clarient higher

Beijing-based Sinovac Biotech Ltd., for example, dropped more than 5% after announcing it had received approval from China medical authorities to begin human clinical trials for a pandemic avian influenza vaccine. A buyside market source called the Sinovac move a normal pullback in an uptrend, but the above-mentioned sellsider said it was an exit door for many players who wanted to get out of the story.

Sinovac shares in the United States lost 37 cents, or 5.29%, to $6.63.

"There are too many unknowns" with regard to Sinovac, the sellsider added. "Nobody knows how much capacity they have. Nobody knows if all this is propaganda. Nobody knows where the financials are. Nobody knows anything. It seems like today all the people in on the rumor dumped for a nice 30% to 60% gain."

Clarient, Inc., however, added more than 10% after announcing a research services agreement with Eli Lilly & Co. although financial terms were not disclosed. San Juan Capistrano, Calif.-based Clarient provides fee-based services to companies involved in drug discovery, particularly for cancer drugs. The stock rose 13 cents, or 10.32%, to $1.39.

In general, the sellside trader said biotech players are more risk averse ahead of the Thanksgiving holiday and somewhat hesitant about further gains during December. Rather, he said, more people are expecting additional sell-offs ahead of year-end.

"Thinking the market will continue as it has is real flawed. There are always risks that have not appeared recently," he said. "It will be the markets over-reaching, as always, to news that may or may not effect the earnings of a company. As soon as selling starts, the lemmings will jump off also. Probably a good buying opportunity, but it will take a lot more research."

Point Therapeutics up 12%

On the heels of its revived follow-on stock sale, Point Therapeutics, Inc. got a nice bounce Tuesday. Buyside market sources said the deal getting upsized - to 8 million shares from 6 million - with placements at only a slight discount provided enthusiasm throughout the session.

The deal, which had been put on hold in the last week of October due to difficult market conditions, priced at $3.00 each, discounted from Monday's closing level of $3.15.

Boston-based Point Therapeutics pocketed $22.2 million in net proceeds from the deal and said the funds were earmarked for further clinical development of its lead drug candidate, talabostat, and for general corporate purposes, including research and development and general and administrative expenses.

Last week, Point Therapeutics presented preclinical data on talabostat, demonstrating anti-tumor activity when combined with either pemetrexed or erlotinib in a non-small lung cancer xenograft model in immunodeficient mice. The company develops a family of dipeptidyl peptidase inhibitors for use in cancer, Type 2 diabetes and as vaccine adjuvants.

On Oct. 21, when the deal was announced, proceeds were estimated at $27.3 million with the greenshoe, based on an offering price of $4.30 per share. The company had raised $16.4 million in a direct placement of 3.65 million shares at $4.50 each in March.

Pain Therapeutics drops 19%

Pain Therapeutics reported that its Oxytrex study exceeded a 25% target improvement in physical dependency, but a high drop-out rate among the study's 775 participants skewed the results. While the company expected a dropout rate of up to 40%, up to 60% of the participants ended up dropping out of a major segment of the trial.

South San Francisco, Calif.-based Pain Therapeutics said it would discuss the trial's methodology with Food and Drug Administration officials early next year and stressed that the news would not affect its recently announced collaboration with Bristol, Tenn.-based King Pharma. Earlier this month, King announced it would invest up to $400 million in Pain Therapeutics' late-stage drug candidate Remoxy, a version of oxycodone that's harder for users to abuse.

King shares, however, slipped 3 cents, or 0.19%, to $15.98.

The pain was greater for Pain Therapeutics, though, with that stock falling as much as 22% before clawing back to close off by $1.61, to 18.92%, at $6.90.

Pain Therapeutics said that a phase 3 clinical trial for Oxytrex failed to show the drug was significantly less addictive statistically than Oxycontin, known generically as oxycodone. The study was testing the drug on patients suffering from pain caused by osteoarthritis.

"The announcement states that 'the trial did report statistical significance in a sub-group analysis: Oxytrex reduced physical dependency by 75% in patients over 50 years of age,'" said a buyside market source. But, he added, "The problem is that the FDA is not going to approve any drug without every I dotted and T crossed, given the scrutiny they are under."

Teva up 3%, Ranbaxy adds 2%

Even though Teva Pharmaceutical Industries Ltd. and Ranbaxy Laboratories Ltd. were knocked down in an appeal to the verdict against them regarding a patent dispute over their generic Quinapril versus Pfizer Inc. over its blood pressure medication Accupril, shares of Teva and Ranbaxy gains while Pfizer stock was lower.

Generic drug makers are more frequently selling generic versions in what has come to be called "at risk" launches ahead of an anticipated patent dispute, which has fueled what one sellside market source described as "lop-sided" interest in the stocks that seem out of synch with the news flow.

A U.S. federal appeals court on Tuesday upheld a ruling blocking sales of generic alternatives to Pfizer's Accupril blood pressure drug. The appeals court affirmed a decision in March by a federal court in New Jersey that granted Pfizer's request for a preliminary injunction against generic versions of the drug made by Israel-based Teva and India-based Ranbaxy.

Pfizer is seeking damages from the two companies for lost revenue from the drug that had U.S. sales of $387 million in 2004.

Pfizer shares Tuesday slipped 34 cents, or 1.56%, to $21.40.

Meanwhile, Teva shares rose $1.29, or 3.17%, to $41.98 and on the Xetra, Ranbaxy shares gained €0.15, or 2.22%, to €6.90.

"For now, the management of the company [Teva] has produced results," said the sellside source. "They are still near a mid cap, and history might seem to indicate they can make superior earnings in what they do."

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