I

wrote about

Protein Design Labs

(PDLI) - Get Report

in early November, stating that December would be a big month for the company, and it was. The company recently released clinical data on a couple of its drugs in progress; the data were mixed, and investors reacted by selling, causing its share price to fall about 19 percent.

Nonetheless, I think that PDLI is still worth owning, with the anticipation of other news that may help the company's share price rebound. Specifically, results on several clinical studies, including a Phase I/II study of the company's asthma drug and a Phase II study of PDLI's psoriasis drug, are expected shortly, and the asthma and psoriasis markets are both fairly large.

Therefore, my outlook for Protein Design Labs remains upbeat. In my book, it's still a buy below $35, despite the recent mixed news.

Specifically, the company said there would be delays in developing two of its new drugs, Zamyl for leukemia and Remitogen for non-Hodgkins lymphoma. The overall data results for Zamyl were favorable, showing that the drug was effective at slowing the disease's progression in a patient population that has failed initial treatments with other drugs.

Zamyl, however, did not send the disease into remission, and so the company needs to do some tweaking that will result in delays, and investors don't like that.

PDLI is planning to modify the dosage and timing of administration to see if the drug works better earlier than later, with hopes that the changes can put the disease into remission. If it works, and if the drug is approved by the Food and Drug Administration, Zamyl would become Protein Design Labs' first directly marketed product. The company is still hopeful it can file a biological-license application for Zamyl in the second half of 2003.

As for Remitogen, PDLI's humanized antibody for relapsed or refractory low-grade non-Hodgkin's lymphoma, the company reported preliminary data on its Phase II clinical trial that were not as good as those from the Phase I trial.

In the Phase I trial, tumors did get smaller than in the Phase II trials, in which the cancer continued to progress. As a result, the company plans to increase the dosage to see if the response to treatment will be better. So there is hope that Protein Design Labs can modify the drug design to produce better results.

Some of these patients had previously been treated with Rituxan,

IDEC's

(IDPH)

lymphoma drug, which did not help. Rituxan is considered to be the treatment of choice because of its high success rate. Therefore, treating these patients was very difficult, and the odds were slim that they would improve.

Despite these mixed results, there is still plenty of life in Protein Design Labs' product pipeline, and the recent pullback of its share price represents a good entry point. The markets reacted to the news on Zamyl and Remitogen because these two drugs are considered milestones for Protein Design Labs and because the company is developing them on its own.

Wall Street may be disappointed with the clinical results, but they should be viewed not as failures but as merely marks that the company can learn from to help it find better ways to treat patients.

Nadine Wong is the editor, publisher and co-founder of the

BioTech Sage Report

and contributes a weekly biotech column to this site. At the time of publication, Wong had no position in any of the securities mentioned in this column, although holdings can change at any time. Under no circumstances does the information in this column represent a recommendation to buy or sell stocks. While she cannot provide investment advice or recommendations, Wong invites you to send comments on her column to

Nadine Wong.

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