Genelabs stock skyrockets on Novartis collaboration; Antigenics stock falls on phase 3 Oncophage data

By Sheri Kasprzak

New York, June 5 - Genelabs Technologies, Inc.'s stock soared through the roof on Monday after the company announced it has partnered with Novartis AG to develop Genelabs' hepatitis C virus non-nucleoside drug.

The stock shot up 202.63%, or $1.54, to close the session at $2.30 (Nasdaq: GNLB). Novartis' stock slipped on the day, losing 50 cents, or 0.9%, to close at $55.90 (NYSE: NVS).

Genelabs' stock began the climb in premarket, gaining 75%, or 57 cents, by 8 a.m. ET. By 9 a.m., the stock was up 44.74%, or 34 cents.

The volume of Genelabs' shares traded on Monday climbed to 24,107,761 from the average of 85,346.2 shares.

"I'm still a bit wary of them," said one buyside market source familiar with the name. "Their stock hasn't been that great and I'm wondering if this [increase] is just because they're hooked up with a big name, which is not to say that being hooked up with the big name won't be a long-term plus for them. I'd just approach with caution. I do think the volume you're seeing is coming from people buying in. That would make the most sense to me. You know, good for them. Maybe this is what they needed."

Under the terms of the collaboration, Genelabs, which will be responsible for drug discovery and research on Genelabs' NS5a for hepatitis C virus, will receive $20 million over a two-year research program, including initial up-front payments of $12.5 million. If all regulatory and sales milestones are met, Genelabs could expect to receive $175 million in additional payments.

In the collaboration, Novartis will be responsible for drug development and commercialization.

The Nasdaq Stock Market Inc. currently considers Genelabs to be in violation of listing requirements.

Genelabs is appealing a staff determination letter from the Nasdaq Stock Market that claims Genelabs does not meet Nasdaq listing standards for a minimum of $2.5 million in shareholder's equity or a market capitalization of $35 million, two of its requirements for listing.

Located in Redwood City, Calif., Genelabs is focused on treatments for hepatitis C and other viruses.

Elsewhere, Antigenics Inc.'s stock dropped by more than 13.6% after the company updated its finding on its phase 3 clinical trial of its investigational cancer vaccine Oncophage for metastatic melanoma at the American Society of Clinical Oncology annual meeting in Atlanta.

The stock slipped 13.65%, or 34 cents, to end at $2.15 (Nasdaq: AGEN).

According to the updated findings from the phase 3 trial, patients who received at least 10 doses of vaccine experienced an extension in median survival of 29%, compared to those who received a dose of the physician's choice.

The phase 3 trial randomized 322 patients with stage 4 melanoma to one of two treatment arms - Oncophage or a physician's choice of treatment in a 2:1 ratio favoring Oncophage. The physician's choice included interleukin 2, dacarbazine-/temozolomide-based therapy and/or a complete tumor resection.

Atlanta-based Antigenics develops treatments for cancers, infectious diseases and autoimmune disorders.

Biogen, Elan may reintroduce Tysabri

Biogen Idec and Elan Corp. have received the green light from the Food and Drug Administration to reintroduce Tysabri for multiple sclerosis.

The drug was yanked in 2004 after two patients in clinical trials died.

Tysabri is used to treat relapsing forms of multiple sclerosis to slow the progression of disability and reduce the frequency of clinical relapses.

The drug will be available for sale once Biogen, which develops the drug, completes risk-management processes, including revising safety warnings and implementing a plan to inform physicians and patients of the risks and benefits of the drug.

Elan distributes Tysabri.

On Monday, Biogen's stock dropped 4.86%, or $2.32, to close at $45.39 (Nasdaq: BIIB) and Elan's stock dropped 12.96%, or $2.46, to close at $16.52 (NYSE: ELN).

Cambridge, Mass.-based Biogen develops oncology, neurology and immunology drugs. Based in Dublin, Ireland, Elan distributes drugs.

Pharmacyclics releases Xcytrin data

Back to the gainers in the session, Pharmacyclics, Inc. saw its stock improve a bit after the company released new data to support its New Drug Application to the FDA for Xcytrin at the American Society of Clinical Oncology's 2006 annual meeting.

The stock climbed 7.45%, or 33 cents, to close at $4.76 (Nasdaq: PCYC).

According to a statement released Monday by Pharmacyclics, the new analyses show Xcytrin "appeared to significantly prolong time to neurologic progression, the primary endpoint of the study, in non-small cell lung cancer patients with brain metastases."

In the trial, the company enrolled 554 patients at 94 centers in North America, Europe and Australia and compared the safety and efficacy of whole-brain radiation therapy alone to whole-brain radiation therapy plus Xcytrin.

In the population of patients in the trial, the median time of neurologic progression was 15.4 months for those receiving whole-brain radiation therapy plus Xcytrin compared to 10 months for patients treated with whole-brain radiation therapy alone.

"Results from the trial indicated that there were substantial differences in the management of patients with brain metastases in North America versus Europe, particularly France," said the Pharmacyclics statement. "In some centers in France, there was a significant treatment delay between diagnosis and randomization on the trial Overall, mean time for brain metastases diagnosis to randomization for the Xcytrin arm was 4.3 weeks versus 3.3 weeks for the control arm, an imbalance that adversely affected the outcomes in the Xcytrin arm of the study."

Sunnyvale, Calif.-based Pharmacyclics develops treatments for cancer, atherosclerosis and other diseases.

AEterna's positive perifosine data

In Canada, AEterna Zentaris Inc. and its partner Keryx Biopharmaceuticals received positive data on their perifosine product for the treatment of patients with advanced renal cell carcinoma.

In the phase 2 study of perifosine, 43% of patients had a partial response and another 29% achieved long-term stability from the treatment. The study was conducted on 13 patients, and seven were evaluable for response.

The data were released Monday morning, and AEterna Zentaris's stock ended the day down 18 cents, or 2.33%, to close at C$7.55 (Toronto: AEZ). Keryx's stock lost 45 cents, or 3.07%, to close at $14.21 (Nasdaq: KERX).

"The Akt pathway is frequently activated in renal cell cancers," said I. Craig Henderson, Keryx's president, in a statement. "It follows that this tumor type may be particularly responsive to Akt inhibition, and we think these studies with perifosine may be providing early evidence of this. Therapy with perifosine could potentially provide an important advancement in the treatment of renal cell carcinoma, a disease that affects 39,000 new patients every year in the U.S."

Based in Quebec City, AEterna Zentaris develops treatments for cancer and endocrine disorders.

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