As David Cox tells it, SNYSORB Biotech is a healthier business now that it has concentrated its resources on one product instead of two.
But shareholders weren’t buying it.
In fact, they were selling it, driving the share price down 21 per cent on the Toronto Stock Exchange the day SNYSORB announced it was suspending development of its higher profile E. coli product, SYNSORB Pk, to focus on its SYNSORB Cd product for treating so-called antibiotic diarrhea.
“As a commentator on ROB TV put it, we’re putting our money on the winning horse,” said Cox, president and chief executive of the Calgary pharmaceutical company, which was in final-phase (Phase III) testing with both drugs.
Cox said SYNSORB Cd, a potential treatment for recurrent Clostridium-Difficile Associated Diarrhea, was considered more lucrative in terms of its market potential “and the decision to allocate all our our development resources to SYNSORB Cd will allow us to sharpen our focus still further on the more attractive drug.”
The share price of SYNSORB (SYB) tumbled from $2.42 to $1.92 on heavy volume of 322,355 shares on Dec. 14, the day of the news, and continued to drift lower the following day in tough market conditions. The stock, which also trades on Nasdaq under the symbol SYBB, is down about 85 per cent from its year high of $12.
“That is not a true reflection of the announcement,” said Cox. “I believe it was an element of the retail community thinking it can’t be good news, but I think that once they rationally look at it, they’ll see that our assets are way in excess of the market cap right now. The professional investment community — analysts and fund managers — recognize this as a rational, sensible, prudent business decision.”
Cox says his company has more than $100 million in cash and “semi-liquid assets,” namely its holdings of 6,750,000 shares of Oncolytics Biotech (ONC-TSE), a company that branched off from SYNSORB last year. Oncolytics is developing a potential cancer therapeutic and trades in the $11 range.
SYNSORB Pk made headlines across the country earlier this year when it was shipped as an emergency measure to victims of the Walkerton, Ont., E. coli tragedy that claimed seven lives earlier this year. “All 10 children who received the drug fully recovered,” said Cox, “but there is no way of telling if SYNSORB Pk was responsible for that.”
Asked if the development of the drug would be continued, Cox said: “It has not been killed, absolutely not. The situation will be reviewed at some point.”
SYNSORB said it based its decision on discussions with corporate partners and clinical advisers and an examination of internal resources. The company said validation of SYNSORB PK in a large pivotal study would be expensive and would slow development of SYNSORB Cd.
According to Cox, there are about 3.5 million people in the U.S. alone with Clostridium-Difficile Associated Diarrhea, which can be fatal in its severest forms.
“About 20 per cent of those can’t shake it. That’s 700,000 with chronic diarrhea. Of that number, about 400,000 will become seriously ill. That’s the population that we’ll be targeting if our drug is successful. That represents a $2-billion market in U.S. dollars (worldwide). We would get about 30 per cent of that.”
Last year, SYNSORB signed its first licensing agreement for Canadian marketing and distribution rights for SYNSORB Cd with Montreal’s Paladin Labs (PLB-CDNX) and Cox says discussions are continuing with “significant” U.S. companies for the U.S. rights.
SYNSORB’S target is to have a New Drug Application for SYNSORB Cd by late 2002 or early 2003. The drug has already been granted ‘fast-track’ designation from the U.S. Federal Drug Administration.
One other company — U.S. firm GelTex Pharmaceutical — is developing a product for treatment of chronic diarrhea. “We’re at least three years ahead of them,” said Cox.
