12:00 AM
Feb 25, 2008
 |  BioCentury  |  Finance

Ebb & Flow

Encysive (NASDAQ:ENCY) has never disclosed exactly what the FDA doesn't like about the company's Phase III data on Thelin sitaxsentan, which has received three FDA approvable letters for pulmonary arterial hypertension (PAH) despite already being on the market in Europe, Canada and Australia. But Pfizer (NYSE:PFE) obviously thinks it can fix the problem with another trial, which would make it the only company with two PAH products that work via different mechanisms.

The pharma is acquiring Encysive for only $195 million, or $2.35 per share, a 118% premium to the stock's $1.08 close on Tuesday, before the deal was announced.

Pfizer's PAH product is Revatio sildenafil, the phosphodiesterase-5 (PDE-5) inhibitor also marketed as Viagra to treat erectile dysfunction (ED).

Thelin is a small molecule endothelin A receptor antagonist similar to two marketed PAH products: Letairis ambrisentan from Gilead (NASDAQ: GILD) and Tracleer bosentan from Actelion (SWX:ATLN).

Letairis was approved in June 2007 and Tracleer had more than $1 billion in sales last year. Letairis targets the endothelin A receptor, while Tracleer hits both A and B.

In December 2007, Encysive said it expected $40-$50 million in 2008 sales of Thelin. It also said it expected $10.5-$11.5 million in 2007 sales. At Sept. 30, the company had $54 million in cash with a 3Q operating loss of $17 million.

In the most recent approvable letter in July 2007, FDA said Encysive had not demonstrated substantial evidence of effectiveness needed to approve Thelin and suggested ENCY conduct an additional study to demonstrate its effectiveness in exercise capacity as measured by change in six-minute walk distance.

Pfizer said it plans to conduct a Phase III trial to support registration of Thelin in the U.S. Based on previous Phase III trials in the indication, it should take at least a year to run.

The deal is expected to close next quarter. Lazard advised Pfizer while Morgan Stanley advised Encysive.

On the week, Encysive gained $1.41 (166%) to $2.26.

Shares of both Gilead and Actelion dropped on the news, closing the week down $1.70 to $42.92 and CHF1.15 to CHF51.85, respectively.

Gilead also had PAH news last week; EMEA's CHMP issued a positive opinion on an MAA from GlaxoSmithKline(LSE:GSK; NYSE:GSK) for ambrisentan, which it will market as Volibris to treat PAH. The pharma obtained rights from Myogen, now part of Gilead.

Nixing Nexavar

Onyx(NASDAQ:ONXX) last week lost all its gains from the last six months after it and partner Bayer (FSE:BAY) discontinued the Phase III ESCAPE trial of Nexavar sorafenib to treat non-small cell lung cancer (NSCLC).

The decision followed a planned interim analysis in which the IDMC concluded the study would not meet its primary endpoint of improved overall survival.

Onyx began its latest upswing in August when the company reported positive Phase III data for Nexavar to treat advanced hepatocellular carcinoma (HCC). That led to Nexavar's inclusion in the National Comprehensive Cancer Network's guidelines for treatment of liver cancer in October and FDA approved the drug for HCC in November (see BioCentury, Nov. 12, 2007).

Nexavar also is marketed to treat advanced renal cell carcinoma (RCC).

The partners plan to review the ESCAPE findings to...

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