Altus Shares Plummet on Drug Trial

Altus Pharmaceutical (ALTU Quote) shares plummeted Tuesday after the company reported good -- but maybe not good enough - top-line results from a late stage trial for its Cystic Fibrosis candidate Trizytek.

Shares fell 50%, to $2.47 as investors wondered whether the drug's most recent performance is up to the Food and Drug Administration's standards.

Trizytek is an enzyme replacement therapy designed to improve fat, protein and carbohydrate absorption in patients with insufficient pancreatic function.

The study's primary endpoint or main goal was for the drug to result in improvement of fat absorption over placebo in patients. The companies said the trial met that goal, using a metric called the coefficient of fat absorption (CFA).

In patients with severe malabsorption, a CFA of less than 40, Altus' drug resulted in a mean improvement of 15 points compared to placebo. However, the FDA appears to have requested a 20- to 30-point improvement, noted Morgan Stanley analyst Steven Harr. Thus, the drug's approvability now seems in doubt.

Not helping matters, the majority of the carbohydrate absorption benefit of the drug was in U.S. patients, and no benefit was seen in patients from three of six other countries, points out Harr.

The company said detailed results will be presented at the North American Cystic Fibrosis Conference in October. It will likely discuss the complete data with the FDA in the fourth quarter. A favorable meeting there could support a new drug application filing in the first half of 2009, writes Cowen and Co. analyst Eric Schmidt, who downgraded the stock to neutral.