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[DewDiligence]

Speedel Tumbles on Trial Halt

http://yahoo.reuters.com/news/articlehybrid.aspx?type=comktNews&storyID=urn:newsml:reuters.com:2...

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Dec 19, 2006 1:40 PM ET
By Sam Cage

ZURICH, Dec 19 (Reuters) - Swiss drug developer Speedel Holding AG <SPPN.S> halted a late-stage study of its treatment for diabetic kidney disease because of safety concerns, sending its shares tumbling more than 20 percent.

Speedel will stop administering the drug -- known as SPP301 or Avosentan -- to patients and evaluate data before looking at potential new trials, the company said on Tuesday.

Patients in the trial experienced a higher-than-expected rate of fluid retention. The drug was being studied in diabetic nephropathy, a complication of diabetes in which the kidneys are progressively damaged.

"We have made a conscious decision not to further expose these actually very fragile patients in the current study design and stopped the study yesterday," Speedel Chief Executive Officer Alice Huxley told Reuters.

The news sparked a swift sell-off of Speedel shares, which lost almost a quarter of their value before recovering some of the losses. The shares closed 14.4 percent lower at 165.30 Swiss francs.

Huxley was cautious about projecting when trials of the drug would resume. "At the moment I think we have to be a little bit careful, but I would say end Q3, beginning Q4 2007," Huxley said.

Bank Vontobel cut its price target on Speedel by some 20 percent to 158 francs a share to 198 francs a share.

Lehman Brothers said the trial's failure would remove a significant part of Speedel's long-term growth potential and it will review its forecasts and valuation.

The news was a boon to U.S. biotechnology company Keryx Biopharmaceuticals Inc. <KERX>, which is working on a competing product. Shares of Keryx rose more than 5 percent to $14.40 early Tuesday afternoon on Nasdaq.

Merrill Lunch analyst Tom McGahren, in a note to clients, said Keryx's rival drug Sulonex is completing enrollment in a 1,000 patient, late-stage study. He expects approval in 2008.

Keryx owns exclusive rights to Sulonex in diabetic nephropathy in North America, Japan and certain other markets outside of Europe.

SIGNIFICANT IMBALANCE

Kidney disease is a common complication of diabetes in which the kidney loses its ability to filter wastes from the body.

Speedel said a steering committee ended the trial of its drug because it noted a significant imbalance in fluid retention in patients between those taking Avosentan, a once-daily oral endothelin-A receptor antagonist, and those taking a dummy treatment.

Fluid retention is common among patients with severe diabetic kidney disease, but Speedel said it was taking a "prudent" measure to stop the trial because of the fragility of the patients involved.

"It is a setback in this particular design and in this particular indication, but we are hopeful that it still has potential in diabetic kidney disease and in other indications," said spokesman Nick Miles.

Avosentan is not in trials for any other indications, but this is something Speedel is "going to look at quite carefully," Miles said.
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