Anadys study results show little difference between hepatitis C drug, placebo; shares slide

Ahead of the Bell: Anadys hepatitis C drug

NEW YORK — Development-stage drug developer Anadys Pharmaceuticals Inc. said late Wednesday its developing hepatitis C drug was only slightly more effective at treating the virus than placebo in a midstage study.

The company’s shares plunged 46 cents, or 20 percent, to $1.85 in premarket trading.

After 12 weeks, 73 percent of patients on the drug candidate ANA598 achieved undetectable levels of the virus, compared with 71 percent of patients on placebo. Meanwhile, the drug met safety goals in the study and was more effective than placebo in earlier time intervals.

The study involves 26 people. Smaller studies, such as early and midstage clinical trials, often focus more on safety than effectiveness. Often, there are too few people to determine effectiveness.

Oppenheimer analyst Dr. Brian Abrahams cut his investment rating on the company’s shares to “Perform” from “Outperform” and removed his $8 price target on the stock. He said the more rapid effectiveness suggest that the drug candidate has some activity, but the 12-week data is concerning.

“The fact that ‘598’s magnitude of benefit was not sufficient to overcome this anomalous placebo response is concerning (and unusual in HCV trials) and makes interpreting ‘598’s contribution to efficacy challenging which could complicate partnership discussions,” he said, in a note to investors Thursday.

The company has called the Phase II clinical study results preliminary.

Leerink Swann Research analyst Howard Liang reaffirmed his “Outperform” rating on the stock and said his key focus is on the study’s safety results. Despite one case of severe rash, he said, there is no sign that indicates it is any worse than current treatments.

Meanwhile, Anadys Pharmaceuticals Inc. said its fourth-quarter loss narrowed on lower operating expenses.

The San Diego company lost $4.2 million, or 11 cents per share, compared with a loss of $8.5 million or 30 cents per share, during the same period a year prior. There was no revenue in either period. Operating expenses fell to $5.6 million from $8.9 million.

Analysts polled by Thomson Reuters expected a loss of 17 cents per share.

For the full year, the company lost $27.3 million, or 81 cents per share, compared with a loss of $32.4 million, or $1.13 per share, in 2008.