Ebb & Flow

With three Phase III setbacks, a high profile Phase II setback and more ImClone woes hitting the tape last week, Street watchers hope the industry is simply getting its blowups out of its system early. The news led to an 8.3% tumble in the BioCentury 100. The loss was nearly twice that of the NASDAQ Composite, which fell 4.6%. Last week's slide puts the BC100 down 12% on the year, while the NASDAQ is down only 1%.

Some were worried that the setbacks were prompting investors to take money off of the biotech table indiscriminately, especially from companies that are in late-stage development.

"There's a tenable downdraft," said Lori Rafield, general partner of Apax Partners. "The market is randomly hacking at companies that are in the clinic. It's almost like a binary outcome," similar to the massive selloffs of the early 90s when a single company hit a late-stage clinical snag.

She noted that Versicor (VERS) traded down $3.77 (16%) to $20.39 on the week on no news. Earlier this month VERS started a second Phase III trial with anidulafungin to treat invasive aspergillosis. The compound also is in a Phase III trial to treat esophageal candidiasis and a Phase II study for invasive candidiasis/candidemia.

The five companies in the news last week lost an aggregate of $3.2 billion in market cap.

Elan (ELN) shed $1.5 billion. Its stock fell $6.15 (14%) to $38.65 on 18.6 million shares on Friday after the company and partner American Home Products (AHP) temporarily suspended dosing in a Phase IIa study of their AN-1792 Alzheimer's vaccine after four patients treated with the vaccine showed signs of inflammation in the central nervous system (see B12). ELN was down $4.54 (11%) on the week, reducing its value to $12.5 billion.

ImClone (IMCL) wasn't far behind, as its market cap fell $849.3 million to $1.5 billion. IMCL tumbled $8.93 (30%) to $21.15 on 22.9 million shares on Friday's news that a congressional committee is investigating the controversy surrounding the development of the company's Erbitux cancer antibody, FDA's refusal to file a BLA for Erbitux, and stock transactions by company insiders (see Cover Story).

IMCL was off $11.65 (36%) last week, putting it down

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