A STOCK SOARS AND STALLS ON HOPE OF SARS CURE
by Joe Shea
American Reporter Correspondent
LOS ANGELES, May 3, 2003 -- Depending on who was asked, the chief scientist of a widely held drug development firm that has released a potential cure for SARS was flying back Friday to Portland, Ore., from a business trip to Las Vegas, or at the company's labs in Corvallis, Ore., or at corporate headquarters in Portland, Ore. Back in New York, though, shares of his company, AVI BioPharma, were falling 11 percent on the Nasdaq stock exchange, and tight-lipped company officials and government media personnel were unable to say yet whether the firm's anti-SARS drug, which is reportedly being tested at U.S. Army facilities at Ft. Detrick in Frederick, Md., is effective against the new disease.
The wait for test results is apparently taking a toll. An unidentified company official who took the phone from a temporary worker in its research facility in Corvallis said Dr. Patrick Iversen was in Portland and would return shortly, but said "I'm busy!" and abruptly hung up when asked about the tests. A secretary in Portland said he was en route by air back from Las Vegas. The firm's outside investor relations agents in Beverly Hills were involved in lengthy conference calls, an receptionist at their offices said.
The company's anti-SARS drug, "NeuGene antisense drug against SARS," known as AVII-4179, was developed in the space of several weeks after the genetic code of the novel coronavirus thought to cause SARS was sequenced in several nations and published on the Internet. Using proprietary technology that basically tests various compounds against its databases and a computer model, the company said it had developed a compound that it believed would be effective against SARS by destroying the ability of the viral RNA, or replication template, to reproduce itself, thus halting spread of the infection. In an article by reporter Justin Gillis published Wednesday, April 30, the Washington Post said that the firm's drug was a "Hail Mary pass" - an attempt against long odds that it would prove effective.
"In what amounts to a Hail Mary pass to try to create a rapid and effective SARS drug, a company called AVI BioPharma Inc. of Portland, Ore., has designed a compound the company says may be capable of gumming up the virus's genetic machinery. Drugs like this are known as antisense compounds, and scientists have had big technical problems getting the approach to work, but Patrick Iversen, senior vice president of research and development at AVI, contends that his company has largely resolved them," Gillis said.
"If by wild chance the AVI drug or another like it proves to work, the era of 'Star Trek' medicine will have arrived, for antisense is a remarkably rapid approach. Yesterday, just 13 days after a newly recognized virus was proven to be the cause of SARS, AVI shipped a drug designed to block that specific virus to U.S. Army laboratories in Frederick for testing," the Post reported.
Buoyed by the mention, the firm's stock soared about 17 percent in the space of a day, closing at $.6.28 after hitting a high of $6.89; some 6,449,000 shares changed hands. It was a remarkable testament to the power of hope, the influence of the Post and the fear generated around the world by SARS. It is unclear why the stock then proceeded to fall back over the next two days, giving back all of its gains.
But the real action in AVII, the company's symbol on Nasdaq, had taken place long before the anti-SARS drug was announced. The stock traded as low as $1.88 on March 19, when the company announced that tests of its antiviral and anti-cancer drugs had shown them to be effective against several varieties of cancer and cardiovascular problems. On that day, too, as AVI BioPharma announced that clinical results for its three principal drug compounds had proven them effective and safe, the stock opened at 2.03 and closed at 3.01 on 922,100 shares of volume.
That 48 percent jump should have alerted investors something big was happening, but nothing the company said indicated any interest in SARS. In fact, the only "hot" disease the company's new compounds were aimed at was West Nile Virus, which has caused far less anxiety this year than last. "The company is also planning to bring three new antisense drugs targeting West Nile virus, cholesterol lowering and prostate cancer into the initial phases of clinical development this year," a press release on PR Newswire announced that day.
Anyone who bought the stock at its $2.03 opening price on March 19 has already seen their money triple, and any who bought it at its $1.88 March 19 low and sold it at the $7.05 closing price on April 25 - when some 7,264,800 shares traded - have gained $5.17 per share, a handsome profit in just six weeks. Those who bought it at its high have not been so lucky: AVII closed at $5.41 on Friday, May 2, down $1.84 from a week earlier. Since February 26, just 21,000 shares traded, volume climbed 375 times higher. Someone has taken notice of the stream of press releases flowing out of the company, which have been uniformly complex and responsible, although unusually frequent and uniformly positive. That may have as much to do with the pace of discovery as the eagerness of paper-pushers in a investors relations firm, though.
What is this all about? Fundamentally, it signals - as the Post's Justin Gillis noted - a revolution in the way drugs are created to attack new diseases. The sequencing of the human genome has made it possible, using huge gene family databases, to search for disease antagonists merely by targeting the known activity of one drug against the sequenced DNA of the virus or cancer that is targeted. It has become a matter of mathematics, in other words, as opposed to a matter of hit-or-miss testing and lengthy animal trials. Those are still necessary before it can be sold, of course, but the computers don't really lie. If a company's data is sufficiently broad and deep, and a gene sequence is known, the rest is a problem for the lightning-fast calculations a household Pentium IV processor can do in seconds.
And what that means is that new drugs against vast numbers of human infirmities can be created virtually overnight. As evidenced by its March 19 press release, AVI BioPharma wasn't even working on a SARS cure then, and yet by April 30, it had shipped one to government laboratories for testing. In fact, it may take far longer to test than it took to develop, and chances are it will sell for far more than its research and development cost, a problem that slowed drug development in the last century.
AVI BioPharma is just one company working on a SARS product. Others, such as the privately held EraGen Biosciences have aimed at developing a diagnostic test. EraGen has already shipped what it called a rapid and and reliable test for SARS to WHO and U.S.AMRIID A small Tulsa, Okla., company, called Centrex (CNEX), is also trying to develop a test for SARS, and a firm called Medarex (MEDX, on the Nasdaq), has a deal with Massachussetts Biologic Laboratories, a partner of Massachussets General Hospital, to develop a SARS cure.
And what about then NIH testing labs? If a drug or test kit from one of the multibillion-dollar pharmaceutical conglomerates comes through the door after AVII-4179, will political or corporate influence help get that drug or test evaluated ahead of AVI BioPharma's or EraGen's? Or is someone standing at the door of NIAID and U.S.AMRIID clocking in the arrival of new compounds and strictly testing them in that order? Will President Bush get to make the first announcement of a cure? Anyone looking at the stock market on the day a responsible party announces a cure for SARS will see huge losses among pharmaceutical stocks that didn't make the cut, and a vast improvement in the one that does. A drug that proves effective against SARS may reap billions for its makers, and even a diagnostic test that is highly accurate is likely to generate hundreds of millions of dollars in profits.
Human testing is forbidden in the United States without approval of test protocols by the U.S. Food and Drug Administration, or FDA, but some European nations have less stringent procedures that can rush a new drug into use before testing is complete. The same can occur in the United States under special "fast track" procedures the FDA might apply to a promising SARS drug while the epidemic is still spreading out of control in China and Taiwan.
But the virus has mutated in many small ways since it was first identified in the blood of an infected physician. Scientists were surprised by the SARS virus at least three times on Friday, first by at least 12 relapses among Hong Kong patients, and then by the discovery of a small quantity of the virus in blood samples taken from patients whom doctors believed were cured and had recovered from the deadly disease, and then by gene mutations in four different blood samples taken from Hong Kong SARS patients.
It was not known whether AVI BioPharma's patented computer modeling - or any of the so-called "bioinformatics" platforms other pharmaceutical company scientists use to develop new drugs based on genetic information - can take such mutations into account. Some of the genetic variations that were termed "significant" in a Washington Post story last week were called "minor" in some news reports May 2, but also on Friday, Reuters again reported "that Hong Kong scientists were despairing of any cure for a disease that mutates so quickly. "Such a quick mutation means that even if there is a cure it may become ineffective. Even a diagnostic test may not be able to detect it if it has undergone change," Reuters quoted Hong Kong microbiologist Dennis Lo, one of the discoverers of the mutations, as saying.
The company's stock plummeted $0.67, or 11 percent on Friday after opening at $6.15 and falling as low as $5.30, recovering slightly to close at $5.41 (it rose another 2 cents in after-hours trading), on volume of 2,197,400 shares. AVI warrants (AVIIW) closed at $0.60, up about $.08. In a conversation with The American Reporter, media official Jeff Minerd of the National Institute of Allergy and Infectious Diseases (NIAID), a division of NIH that works with U.S.AMRIID, could not confirm that the drug is being tested at its Maryland facilities. Minerd did say NIH has heard about the AVII-4179 compound, and that a number of compounds proposed by private sector firms are under evaluation by the Institute, but declined to specify any. He said he could not say whether AVII-4179 was one of them until Monday at the earliest. Such drugs would be tested on virus samples at NIAID, Minerd said. But with the genetic mutations, who knows?
Jody Cain, a spokesperson for AVI BioPharma at Los Angeles investor relations agency Lipper/Heilshorn & Associates, reiterated that NIH is testing the drug but said that there was "no news" today about the company that might have moved the stock. She did say the stock is always "volatile." She was not available for comment later on Dr. Iversen's visit to Las Vegas.
While the United States has yet to suffer any deaths from the disease, it has hit hardest in Los Angeles and San Francisco, with California's total number of confirmed cases, 21, now standing 420 percent higher than any other state's. The next highest is New York, with 5 confirmed cases.
The entire country has 237 suspect and 54 probable cases of SARS, the U.S. Centers for Disease Control reported to the World Health Organization May 1.
China reported 96 new cases on Friday and another 181 cases and nine deaths on Saturday, May 3, bringing the total there to nearly 4,000, with 190 deaths.
Hong Kong, where it has infected 1,611 people and killed 170, reported a fall in the pace of new infections but a rise in deaths.