If there were a prize for the whiplash-inducing roller coaster story of the year in San Diego biotech, Anadys Pharmaceuticals would have to be a contender. But if CEO Steve Worland has his way, some of that stomach-turning drama of the past eight months will soon just be a memory.
“You might say we’ve been stabilized, but I’m not sure we were really unstable before,” Worland says. “We’ve turned an important corner.”
Anadys got to this position, talking about stability, after it dropped bombshells on investors twice this year—once in a good way, and once not so good. The positive one came in January, when the company (NASDAQ: [[ticker:ANDS]]) shocked Wall Street by dribbling out data from the first eight patients with hepatitis C who got the lowest dose of its experimental drug, ANA598. The patients had 99 percent of their virus wiped out within the first 72 hours, which was a far better anti-viral punch than any other drug in its class. The stock, which had been on practically no one’s trading screen the day before, with just 68,000 shares changing hands, rocketed on the news from $1.91 to $4.10 on volume of more than six million shares.
This was just the beginning. The preliminary results were from the lowest of three doses studied in a clinical trial, and Anadys suggested the data would only look better a couple months later, at a key research meeting, the European Association for the Study of the Liver. Anticipation was in the air: Anadys engaged in talks with potential partners about the data. The hepatitis C space was hot. Cambridge, MA-based Vertex Pharmaceuticals built a legion of fans on Wall Street for its industry-leading drug, and then Vertex paid more than $375 million in March to acquire another hepatitis C drug developer at a similar stage of development as Anadys. Shortly after, Worland talked about how his company and others were changing the paradigm for treating hepatitis C, following the cocktail-drug approach pioneered by HIV treatments.
Then came the plunge. Anadys presented full results from the clinical trial, which showed that, as predicted, the company’s ANA598 product had even stronger anti-viral activity at higher doses. There were no serious side effects, no signs of patients developing drug resistance, or of the virus bouncing back.
What was the problem? A separate study of 24 healthy volunteers showed that three patients dropped out of the study because they had developed Grade 2 rashes, measured on a scale of one to four, with four being the most severe. The price of Anadys shares fell, even though hepatitis C patients on the drug had no severe rashes, other drugs in the class have the same side effect, and healthy volunteers essentially have no reason to stay in a study if they see any side effects at all. Such nuances were lost on the fast-money crowd. Anadys shares fell 40 percent that day, making it the biggest decliner on the Nasdaq, and shares kept falling. “People thought the rash was more severe than it was,” Worland says. “It was an extreme reaction.”
Regardless of which interpretation you prefer to believe, Anadys had to deal with the consequences. It wasn’t able to find a partner to help take ANA598 through the next phases of clinical development on its preferred terms, and cash began to run low. By June, Worland had to act, by shedding
