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Ebb & Flow

When FDA grants Fast Track designation or an SPA, investors need to remember that the FDA action is related to an indication where there's unmet need on the one hand, or to a trial design on the other - not to the compound being tested.

A case in point is IntraBiotics (IBPI), whose stock had more than tripled from $3.72 since it received Fast Track designation last September for its iseganan to prevent ventilator-associated pneumonia (see "IBPI's Round Trip").

IBPI jumped 106% the week it received Fast Track designation for the compound, and shortly popped an additional 89% on the week when it received an SPA. Not surprisingly, IBPI dove $9.45 (69%) to $4.23 last Wednesday when a Phase II/III trial in VAP was halted after an independent data monitoring committee saw higher rates of both VAP and mortality in patients receiving iseganan compared to placebo. The stock closed Friday at $3.95, down $9.81 (71%) on the week(see B10).

IBPI isn't the only company to have enjoyed a pop on SPA news. Six of seven biotech companies that received SPAs last year traded up, and three enjoyed a double-digit percent gain. This year, the responses have been more subdued (see "SPA Movers").

On a conference call, IBPI President and CEO Henry Fuchs called the VAP result a "complete surprise." The company said it wants to meet with the DSMB and discuss the results of the trial. IBPI said it hasn't seen the committee's analysis and won't undertake any more clinical studies of iseganan until it completes an internal analysis.

Iseganan previously failed in two Phase III trials to prevent oral mucositis in radiotherapy and chemotherapy patients.

Indeed, iseganan is the company's only clinical compound. The good news for IBPI is that it has cash. During the run-up, the company raised $58.2 million in

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