- The Washington Times - Monday, August 8, 2005

Shares of the Germantown pharmaceutical company Advancis Pharmaceutical Corp. yesterday continued to hover near record lows.

Advancis, which specializes in treatments for infectious diseases, last week lost a lucrative deal with Par Pharmaceutical Cos. Inc. after reporting poorer-than-expected clinical results for a drug it was developing.

The company’s stock on Nasdaq yesterday closed at $1.32, down 7 cents from $1.39 a week earlier. The stock had hit a one-year low last week at $1.31.

The drug, Amoxicillin Pulsys, was in the last development stages for market approval from the Food and Drug Administration. It was being developed to treat infections in the tonsils and throat for adults and children.

Advancis had teamed up with Par Pharmaceutical, a Spring Valley, N.Y.-based maker of generic drugs, in June 2004 to commercialize the drug. Par Pharmaceutical agreed to pay all future development costs in exchange for the right to jointly sell the drug.

But Par Pharmaceutical ended its deal with Advancis when the drug’s clinical trials in adults and children failed to beat the effectiveness rate of penicillin, the common drug to treat pharyngitis/tonsillitis.

“We’ve been very surprised and disappointed with the results of the Amoxicillin Pulsys phase three trials that were received over the past several weeks,” said Edward Rudnic, Advancis chairman, chief executive and president.

The break in the deal will cost Advancis at least $4.75 million in an unmet payment.

In addition, if Advancis succeeds in developing Amoxicillin, Par Pharmaceutical will be entitled to up to half of its $23.2 million investment in the drug’s development.

The fate of the drug is uncertain. Mr. Rudnic said the company is reviewing its options and will announce a development plan next month.

The company, which slashed 33 jobs last month, has $40.3 million in cash on hand.

Despite the setback, analyst Gregory Wade maintained his “equal weight” or in-line rating for Advancis.

“We continue to believe that the Pulsys technology may still hold promise,” said Mr. Wade, with San Francisco investment bank Pacific Growth Equities LLC. Mr. Wade does not own any Advancis stock, but Pacific Growth made a market in the company’s stock.

Two other analysts, who would not discuss the company or release their latest reports covering Advancis, held an “overweight/neutral” and in-line rating for the company.

Advancis last week reported a wider second-quarter loss ended June 30 of $9.31 million (34 cents per share) from $8.49 million (37 cents) a year earlier.

Revenue for the quarter, which included sales for the company’s only marketed drug, Keflex, more than tripled to $3.2 million from $854,454 last year.

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