Byron Capital’s Loe Downgrades AEterna Zentaris after Perifosine Disappoints

A trial that involved 468 patients in 65 sites in the United States was conducted by the company’s North American licensee partner, Keryx Biopharmaceuticals, and did not improve overall colorectal cancer survival rates versus a placebo.

Byron Capital’s Douglas Loe says that while the failure of the Perifosine trial does not affect the viability of AEterna’s other offerings, such as AEZ 108, which targets endometrial, ovarian, prostate and bladder cancer, or AEZS-130, a therapeutic treatment for severe chronic diseases such as cancer induced cachexia, he does believe the news is devastating. In a research update today, he reduced his rating on the company’s stock from BUY to HOLD and his one year target price to $.75 cents from $3.50.

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Today news instantly erases all the momentum AEterna Zentaris had been building since 2008, when the stock was slammed on losses of nearly $60 million. AEterna hoped Perifosine could take away the sting of some recent notable disappointments, including cetrorelix, a prostate treatment that failed to meet its primary endpoint and led to the termination of its partnership with Paris based pharmaceutical giant Sanofi-Aventis. AEterna has trimmed its losses, to just over $27-million in fiscal 2011, but its only source of revenue at present is non periodic milestone payments for Cetrotide, an in vitro fertilization drug that is currently the company’s only marketed product.

Loe says that while “It is not uncommon for experimental cancer therapies to show benefit in some indications and not others…” he also adds: “That said, Perifosine is proposed to work in both cancer firms by inhibiting Akt cell signalling pathways, which clearly did not manifest itself in survival benefit in X-PECT.” The Byron Capital Healthcare analyst is now modeling no revenue from perifosine, which means he now believes AEterna will earn $.03 cents a share in 2016, not the $.33 cents he previously expected.

Shares of AEterna Zentaris on the TSX closed today down 66.8% to $.71 cents.

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