Biotech Values

[rstor1]

Garren

Biotech Insight Alert 11/2/04


Over the last few days I received a number of requests to comment on Genaera (GENR). I did talk with their CEO yesterday—of course I had no idea that they would announce a $13 million financing today (about 3.8 million registered shares at $3.45/share), which tanked the stock. I don’t have a problem with doing a financing—the timing leaves open some questions. There has been some concern about the quality of early data from the small 18 patient Phase II 207 trial, which was recently released. The trial design was four weekly doses and a 4 month follow-up without further treatment. If patients did well they could continue therapy as needed in a continuation trial. Three different dose levels were investigated. The company recently reported interim data at the lowest dose level (10mg) with two month followup. At the end of 5 weeks the average increase in letters read was 2.5. At two months (therapy stopped after the 4th week) the average visual loss was 1.5 letters. GENR management points up that this is a better result than with Visudyne (an approved treatment for AMD). However many investors saw these results as rather anemic but remember this is at a very low dose (the successful Phase I trial used a 40mg and 80mg dose). The 207 trial has two other dosing arms at 20 mg and 40 mg which are yet to report. I am not surprised that the efficacy was not dramatic at 10 mg. I would expect better efficacy at the higher doses. According to the company they added the 10mg dose to this trial to get PK (pharmacokinetic) data. PK data is also being collected at the other 2 dose levels. Also they claim that the 10 mg dose can be reformulated in a manner that can be given without an IV infusion (subcutaneous injection, nasal spray, etc.). The concept would be more frequent but easier dosing—if it works. This could be a huge upside if the 10mg dose works. Some investors are concerned that the company has had problems with the higher doses and speculate that is why they put in the lower dose. I don’t think that is true—and the company says there is no problem at higher doses. It is true that if any major problem turned up at the 20 and 40 mg dose levels the data safety monitoring board would have stepped in and stopped the study. We should see the 2 month data on the 20mg and 40mg arms by year-end—and 4 month data early next year. I guess the bottom line is that we won’t know much more about efficacy until the study fully reports. We will also have to wait till next year for some data on the 208 and 209 studies (the 10mg dose was also added to the 208 study but not the 209 since it would have significantly slowed down that study). I am not sensing a major problem but I could be wrong. I am holding my GENR.