Encysive ( ENCY) investors are hoping to get some good news along with the bad. All week, Wall Street has been waiting for the biotech to report that its new pulmonary arterial hypertension drug Thelin has finally won approval from the Food and Drug Administration. But late Thursday, the Bellaire, Texas, company shared some unexpected bad news instead. Rather than announcing Thelin's approval, Encysive said the FDA has stalled clinical trials of TBC3711 -- a next-generation drug that's even more potent than Thelin -- due to problems in a recent animal study. Specifically, Encysive said that human trials of TBC3711 have been placed on hold due to "an unusual finding following dosing with intravenous TBC3711 in a single rat that had displayed abnormalities at baseline." Encysive hopes to test both IV and oral versions of TBC3711 for the treatment of resistant hypertension. Unlike PAH, which Thelin aims to address, resistant hypertension afflicts a large population of patients. Encysive has portrayed development of its new resistant hypertension drug as a "top priority" for the company. The company's stock slid 17 cents Friday to $9.28.
Encysive CEO Bruce Given suggested as much during a conference call last month. "What I heard was that their study was only 12 weeks," Given said. "If they're only recording 12-week data ... it's kind of uninterpretable. Our experience with these Tracleer relapses is, again, many or most of them occur beyond 12 weeks." Tracleer, manufactured by Swiss drug maker Actelion, ranks as the best-selling oral medication for PAH currently on the market. It generated $500 million in revenue for Actelion last year and, if the company achieves its goals, will become an even bigger seller going forward.
"We find it unlikely that physicians will add Thelin to patients who are well controlled on Revatio," wrote Flanigan, who has a hold recommendation on Encysive's stock. So "absent Tracleer failures, Thelin is left to compete against Revatio for treatment-naive patients -- a population where physician response is overwhelmingly positive for Revatio use." Actually, doctors could choose to use both drugs together instead. Actelion has laid out plans to test its own PAH drug with Revatio as an effective treatment for the disease. Moreover, many believe, biotechs like Encysive and Myogen will spend far more energy marketing their PAH drugs than will pharmaceutical giants, like Pfizer, which have much broader focuses.