Biotech Values

[DewDiligence]

ANDS closed down only 7% despite dumping ANA773, one of the
company’s two HCV programs, and offering shares and warrants
that expand the fully-diluted share count by 28% (see separate PR
today for the detailed terms). To the extent that investors already
thought ANA773 was a dog, I suppose the program termination
combined with the workforce reduction that saves $4-5M per year
could be construed as positive. However, at an enterprise value of
about $40M, I don’t find ANDS especially appealing. The company
now has all its eggs in the ANA598 basket, and the basket may have
a few holes in it. (I’ll comment on the unusual phase-2 trial design
for ANA598 in a separate post.)

http://finance.yahoo.com/news/Anadys-Pharmaceuticals-Inc-prnews-15437790.html

›Anadys Pharmaceuticals, Inc. Announces Strategic Restructuring to Focus Operations on Continuing the Advancement of ANA598

Thursday June 4, 2009, 9:26 am EDT

SAN DIEGO, June 4 /PRNewswire-FirstCall/ -- Anadys Pharmaceuticals, Inc. (Nasdaq: ANDS - News) today announced a strategic restructuring to focus its operations on the development of ANA598, in particular a proposed Phase II study in hepatitis C patients of ANA598 in combination with pegylated interferon-alpha and ribavirin.

As part of this restructuring, the Company intends to suspend further development of ANA773 and is reducing its workforce by approximately 40%. Pending the outcome and analysis of data from current cohorts in ongoing studies in hepatitis C and oncology, Anadys intends to manage the ANA773 programs as potential out-licensing opportunities. [I doubt that anyone will want to license ANA773, although stranger things have happened.]

"We have now completed three Phase I studies of ANA598 and we have seen potent antiviral activity, as well as good tolerability," said Steve Worland, Ph.D., President and CEO of Anadys. "As we complete preparations for the first Phase II study of ANA598 in combination with interferon and ribavirin, we have decided to focus our future investments on this important asset and to take these cost-sparing measures which we expect to ensure our ability to complete the Phase II study with our expected cash resources. The proposed Phase II study is expected to provide important data at the end of this year and in the first two quarters of 2010."

The Company anticipates the reduction in force to generate annual cash expense savings of between approximately $4.0 million and $5.0 million. The Company estimates that it will incur one-time cash charges of approximately $1.1 million in severance costs and $0.2 million in continuation of benefits and outplacement services. The Company will retain the clinical development infrastructure required to conduct the Phase II study of ANA598, key capabilities directed toward pharmaceutical development and next-generation non-nucleosides, and a streamlined administrative staff.

Dr. Worland added, "I want to acknowledge the tremendous effort and commitment of all our Anadys colleagues, especially those whose positions have been impacted by this restructuring. The current status of ANA598, which now demands our focused investment, has been achieved as a result of each of their contributions."

Proposed ANA598 Phase II Trial Design

Anadys is preparing for the first Phase II trial in hepatitis C patients of ANA598 in combination with interferon-alpha and ribavirin (current standard of care, or SOC) and intends to submit a protocol to the U.S. Federal Drug Administration (FDA) containing the proposed trial design in July 2009. If the FDA allows this trial to proceed, Anadys intends to initiate the trial during the third quarter of 2009.

The current protocol design calls for 12 weeks of dosing ANA598 in naive genotype 1 patients in combination with SOC, compared to a control arm that will receive a placebo and SOC. After 12 weeks, patients are expected to continue to receive SOC alone. The primary endpoints of the study are designed to be safety, tolerability and the percentage of patients with undetectable virus at four weeks (defined as Rapid Virologic Response, or RVR) and 12 weeks (defined as Early Virologic Response, or EVR). For patients who achieve an RVR and EVR response, the duration of treatment with SOC after week 12 will be at the clinical investigator's discretion. Anadys expects that some patients who achieve RVR would stop receiving all treatment at 24 weeks. All patients who complete 24 or 48 weeks of treatment will be assessed for virus negativity 12 and 24 weeks after treatment is ended.

The proposed dose levels in this study are 200 mg and 400 mg, each dosed twice daily (bid). In order to maximize early viral suppression, each patient receiving ANA598 would receive two 800 mg doses on day one, known as a loading dose. The decision to initiate dosing of patients in the 400 mg dose group will be determined after assessing 28 day data from the 200 mg dose group. Anadys intends to enroll 90 patients in this study, in the proportions of 30 patients receiving ANA598 and 15 receiving placebo at each dose level. The study will be conducted at a number of clinical sites in the United States.

About Anadys

Anadys Pharmaceuticals, Inc. is a biopharmaceutical company dedicated to improving patient care by developing novel medicines for the treatment of hepatitis C. The Company believes hepatitis C represents a large unmet medical need in which meaningful improvements in treatment outcomes may be attainable with the introduction of new medicines. The Company is developing ANA598, a non-nucleoside polymerase inhibitor for the treatment of hepatitis C. The Company has also investigated the potential of ANA773, an oral, small-molecule inducer of endogenous interferons that acts via the Toll-like receptor 7, or TLR7, pathway in hepatitis C.‹