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DBL%20Hendrix%20small.png College chemistry, 1983

Derek Lowe The 2002 Model

Dbl%20new%20portrait%20B%26W.png After 10 years of blogging. . .

Derek Lowe, an Arkansan by birth, got his BA from Hendrix College and his PhD in organic chemistry from Duke before spending time in Germany on a Humboldt Fellowship on his post-doc. He's worked for several major pharmaceutical companies since 1989 on drug discovery projects against schizophrenia, Alzheimer's, diabetes, osteoporosis and other diseases. To contact Derek email him directly: Twitter: Dereklowe

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March 20, 2002

If It Were Easy. . .

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Posted by Derek

As I mentioned yesterday, Viropharma's compound Picovir (pleconaril) was turned down unanimously by an FDA panel. This could be the end for an interesting compound that's been kicking around for many years, going back to the days (1990 or so) when Sterling-Winthrop still existed as a drug company.

Kodak took over Sterling in 1988, looking to get into the high-margin drug industry (they already had a chemicals business, the Eastman side of things.) As it turned out, you couldn't have paid a gang of saboteurs to do a worse job running Sterling, and the whole deal was a costly disaster that lasted some six years. The pieces of Sterling were sold off (at a mighty loss) to the French firm Sanofi, among others. During the chaos, some of the Sterling people left to form Viropharma, negotiating with Sanofi for the rights to pleconaril.

It's an interesting compound, with a mechanism that (to my knowledge) isn't shared by any other antiviral candidate. It binds to a site on the surface of the virus, keeping it from infecting cells. Viropharma kept plugging away at it, trying it out for meningitis and respiratory infections, but without notable success.

The last couple of years were a particularly wild ride. If you go back and look at the stock chart, you can see a huge run-up, followed by an equally hair-frizzing decline. What happened was some media reports in December of 1999 convinced various clueless investors that VPHM had, yes, the cure for the common cold. That was indeed what Viropharma had started trying pleconaril against, the meningitis data having proven unimpressive. The compound was far from a miracle cure.

But try telling that to the notorious stock promoter Tokyo Joe. Remember Joe? Viropharma stock was one of his calls during this period, and his people piled into it hugely, followed by a swarm of tag-along momentum players. They had a real fiesta for a while there, but NASDAQ was in all-fiesta mode back then, anyway.

Momentum investing means, of course, buying stocks just because other people are buying them. It's the Bigger-Fool theory in action, and it's always struck me as similar to the way some jackrabbits dart in front of 18-wheel trucks. (This is coming from someone who shorted Imclone at what turned out to be their low point, so I'm no stranger to risk.) In this case, the 18-wheeler appeared in the form of new clinical data showing that pleconaril wasn't particularly effective against colds, which led to the roll-off-the-table section of the stock chart.

I'm happy to say that I was short VPHM when that happened. Of course, I'd shorted them at about 50 and promptly watched the stock jump like it had been hit with a cattle prod, right up over 100, and mighty quickly, too. Swallowing hard, I shorted some more. I just couldn't see the drug working that well based on the clinical data the company had already shown. Meanwhile, Tokyo Joe's people on the stock message boards were already making VPHM out to be the next Pfizer. That's a quote from some guy - another table-pounder kept going on about how you'd have liked to have bought into penicillin in 1940, wouldn't you? Right? Here's the chance of a lifetime, again! Some other maniac saw the compound as basically the savior of the human race. Then the bad news hit. I'd like to have a videotape of me trying to dial my broker right after I saw the stock quote that morning (down 43 5/8 or something like that.) I kept missing the buttons on my phone; it took three tries before I successfully dialed my broker to take my profits.

The data that came out of those studies helped keep the compound from being recommended yesterday. Pleconaril, taken three times a day, starting very early in the course of a cold, reduces the duration of cold symptoms by a day or two. And that's about it, and that's just not enough. That's an awful lot of drug to load your system with for a relatively minor disease, and it would presumably involve spending a fair amount of money that an HMO might not be keen on reimbursing.

Viropharma kept making their case, of course. One point was that dosing with the drug reduced what's descriptively called "virus shedding," which could make you less infectious to others. To the best of my knowledge, no clinical data was ever collected to put that idea to the test, though. They got a big company to buy into the compound, namely Aventis (known to longtime pharmaceutical people by its heritage, as Hoechst-Marion-Merrel Dow-Roussel-Rhone-Poulenc-Rohrer, which sounds like a white-shoe law firm.)

But, in the end, the combination of lackluster efficacy with some extra safety concerns (possible interactions with the menstrual cycle in a few women, for example) doomed the compound. The effects they saw would have meant nothing for a compound that treated, say, pancreatic cancer, which is otherwise a death sentence. But for a cold?

To their credit, you can see that Viropharma realized all this. That's why they started trials on viral meningitis. When that didn't work out, they went to serious respiratory infections. No dice. Finally, they were left with colds. They did the best with what they had, but it wasn't enough.

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