The chief executive of Ista Pharmaceuticals Inc. thinks Wall Street can be swayed, despite a loss of more than half of the drug maker’s market value earlier this month on regulatory setbacks.
Vince Anido is pinning his company’s rebound on a new clinical trial the Federal Drug Administration is requiring for Xibrom QD, an updated version of its flagship drug to treat pain after cataract surgery.
“The big thing right now in getting the stability on Wall Street is to get the results out on the comparison trial that was requested by the FDA,” Anido said. “That’s the big issue.”
Ista earlier this month withdrew an FDA application for Xibrom QD after regulators said it first needed to do a comparison study of the drug with the original version, the patent for which expires next year.
“We’re the first company within the ophthalmology group that’s required to do that,” Anido said.
The company plans to release the comparison trial results and refile its Xibrom QD application in the second quarter, according to Anido.
Ista’s shares fell more than 20% on the March 7 news of the withdrawal and were down nearly 60% last week with a recent market value of $50 million.
The FDA also has asked Alcon Inc., which employs more than 500 people in Irvine, to do a second study on Retaane, a drug it’s developing to treat age-related degeneration of the eye’s inner lining.
Even though Ista isn’t alone in the comparison test requirements, being the first one singled out has caused some harm to the company, Anido said.
The regulatory disappointments and the stock drop,Ista had a fourth-quarter market value of $220 million, or more than four times what it is now,have overshadowed positives, according to Anido.
The company has seen rapid growth in the sales of its original Xibrom. The drug’s sales totaled $42 million in 2007, a 108% hike from the $20.2 million a year earlier. Xibrom accounted for 72% of Ista’s $58.9 million in revenue last year.
But investors are concerned that the company’s market share could be wiped out if Xibrom QD isn’t approved before the original patent expires, leaving it open to generic competition.
To help shore up its outlook, Ista is also planning a new study for T-Pred with an eye toward a 2009 launch.
In May, Ista’s stock price fell 41% after regulators sent Ista a “not approvable” letter for T-Pred.
Ista disagreed with that decision and has been in a dispute resolution process with FDA officials, Anido said.
After about eight months of “give and take,” Ista now believes it has a “reasonable path” to complete the development of T-Pred, he said.
Skeptics
But some on Wall Street doubt the future of both products.
“We do not agree with management’s contention that despite material reinvestment and reintroduced risk to both products, Xibrom QD and T-Pred will launch in late 2008 and 2009 respectively,” said analyst Megan Murphy of Lazard Capital Markets in a research note.
Lazard continues “to believe there is material regulatory risk around both of these assets and we would be surprised to see either reach the market,” Murphy said.
Jefferies & Co. analyst David Windley said he doesn’t anticipate that Ista will achieve profitability in 2009 “unless research and development expenses are cut.”
Ista spent $32.4 million, or 55% of its revenue, on research and development last year, compared with $23.8 million in 2006.
Positive Take
Not all are pessimistic.
“While the potential decline in the shares following the negative clinical news that Ista must re-file Xibrom QD and T-Pred may be warranted, there are few assets in ophthalmology that offer as many development programs,” Bank of America Securities’ Frank Pinkerton said in a research note.
Besides Xibrom and T-Pred, Ista’s pipeline includes Istalol for glaucoma and Vitrase, a spreading agent for other drugs that have already launched, and several drug candidates such as ecabet sodium for dry eye and Bepreve for treating eye allergies.
Ista’s research and development efforts must “shine,” Pinkerton said.
Banc of America believes Ista’s ability to achieve its 2009 profitability goal hinges on how development goes for Xibrom QD, T-Pred and Bepreve.
“Ista has now had two special situations at the FDA, and further delays would mean the company needs to undergo a leaner cost structure in the future,” Pinkerton said.
