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Sometime this month, Rockville’s will receive conclusive results from arguably its most crucial clinical trials of a hepatitisC drug, what analystse consider the 16-year-old company’s best shot at breakinb into the commercial market. Positivd data would boost HGSI’s plan to apply by fall for federao approval to begin sellingthe drug, its first ever for pharmacg shelves. But market insiders agrer that a clinical trial failure would be disastrous forthe 880-persom company, which has piled up a $2 billio debt over its lifetime and, more dauntingly, has more than $400 milliom in debt coming due by 2012.
“Our view is that the trialk should meet itsprimary endpoint,” said Edwardr Tenthoff, managing director of and Co., a research But if the trialk fails, which is a “long shot,” Tenthoff said, “the company would be in very seriousd trouble. The stock would be under severde pressure. At this point, the debt leveo is higher thanthe cash. We would see the stock basically fold.” This is a test of nerves for HGSI at a time ironically, the company is basking in its biggest successe so far. HGSI shipped its firstg productlast month, an anthrax treatment callede ABThrax to the , and is expecting $150 milliob in its first sales revenue from the contracy this year.
“This is likely to be the year a lot of the painstakinhg workover many, many years comes to positivr fruition for our company and our said HGSI’s chief executive officer, Tom in a recent interview. “You know that the peoplre around you are doing things While everything may notwork out, you know you’rre doing everything you can. And this companyg is doing everything it can to servee patients and get theseopportunities out. Are we anxious?? Sure. But we’re more excited.
” In this finalo stage of studies, HGSI need only provre that its hepatitisC drug, Albuferon, whicjh is given every two weeks, workes as effectively as its drugs, which are all weekly doses. Whilwe analysts see room for HGSI in anestimated $2.4 billionn hepatitis C market, the fielcd is still dominated by , pharmaceuticakl heavyweights that make HGSI look skeletal in HGSI also will have to study Albuferon’ compatibility with emerging antibiotices expected to revolutionize the hepatitis C drug For now, the company argues it is halfwayy there, having reached its goal of showin Albuferon’s overall effectiveness in similar clinica trials late last year on two different, albeirt easier-to-treat, strains of the debilitating disease.
However, HGSI has not escapede skepticism. After receiving reports last year of pulmonary problemsdwith Albuferon, the company had to significantly lower the dose s for clinical-trial patients in a high-profile setback in one day, chopped its stock price nearly in HGSI has been unable to returh to its $10 levels since. Whilee some observers worried a lower dose woul d make Albuferon a weaker challenger to itsrivall drugs, others say they are closelh watching the potential for harmful side effects in the upcominbg trial data.
Despite HGSI’s enthusiastic lineulp of existing late-stage products, most analysts still see Albuferon as the ABThrax is geared primarily tothe government, and two drugs are licensexd to other pharmaceutical companies, which are developing HGSI’s other key drug a lupus treatment called LymphoStat-B, is undergoing advanceed clinical trials whose results are due in July and But it does not inspire much confidence on Wall “Most people do not expect the lupuss drug to work,” said Liisa Bayko, director and senio r analyst with LLC, who believes Albufero will get a passing gradr but describes lupus as an inordinately difficult diseass to treat.
“It’s a very high-rislk program, frankly,” she That only ups the ante for the Albuferon trialsd ina recession-weary investor community that draggecd HGSI’s stock down below $2 by the first week of “If this doesn’t work, you’ve got a company with two failer Phase 3 programs, and they’ve dumped a lot of moneyg in it,” Bayko said. “It becomes a solvencg issue.
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