Subject: Imreg's Surge Is Tied to Its AIDS Drug Tests Date: Published: 4/11/88 114 lines Source: WALL STREET JOURNAL. Copyright Dow Jones & Co. Inc. Heard on the Street: Imreg's Surge, Tied to Its AIDS Drug Tests, Is Viewed With Caution by Some Analysts --- By Udayan Gupta Imreg Inc.'s stock has soared the past year on excitement about its efforts to develop a drug to combat AIDS. But some medical and investment professionals see grounds for caution. Last month, Imreg announced it had completed the third and most comprehensive clinical trial of its drug Imreg-1, on 158 patients. In tests at medical centers, 102 patients received the drug and 56 received a placebo. The drug was "associated with a reduced risk of progression to AIDS," the company said. A New York physician connected with the trials further stated that the drug appeared to slow or prevent the development of pneumocystis carinii pneumonia, an infection most commonly connected with acquired immune deficiency syndrome. Researchers familiar with the drug say it is one of almost a half dozen drugs that hold promise for prolonging life in AIDS patients. However, it isn't designed to cure AIDS nor should it be perceived as a way to stop progress of the disease outright. Beyond a few carefully worded news releases, Imreg and its founder A. Arthur Gottlieb have refused to discuss the drug or provide detailed data about its three trials. Departing from common scientific practice, they haven't submitted papers to scientific journals for peer review. Officials at Bethesda, Md.'s National Institute of Allergy and Infectious Diseases said they are unable to determine the effectiveness of Imreg-1 because the company has failed to provide adequate data. At about $15 a share, Imreg has a market valuation of $160 million. While high valuations are not uncommon to the biotechnology business, the valuation is considered steep for Imreg, a one-product company with no revenue to date and losses totaling $8.7 million in its past six years. By contrast, Immunex, which plans to have 10 products in clinical trials by June, has a market valuation of only $90 million. GM-CSF, one of the products being tested by Immunex, is also viewed by the medical community as a possible treatment for AIDS patients. Still, Imreg has picked up a loyal, almost fanatical following. In January, when Imreg stock was at 6 3/8, biotechnology analyst David Garcia recommended buying it because "this is a single-digit stock that, in my opinion, has possibilities of evolving into a triple-digit stock." Mr. Garcia, who follows the company for Howard, Weil, Labouisse, Friedrichs Inc., in New Orleans, estimates that in full production Imreg-1 could easily generate gross profits in excess of $600 million a year or about $59 a share for the company. Shyamal Ghosh of Ivy Securities in Houston is more tempered in his optimism but is convinced the stock could easily reach $50 a share if the drug receives Food and Drug Administration approval. Both analysts expect FDA approval by year end, even as early as fall. Bears scoff at such optimism. The size of the tests and the nature of the results don't warrant immediate FDA approval, according to James McCamant, editor of the Medical Technology Stock Letter, who has often been short on the stock. He and others question how many actual AIDS patients were involved in the trial, as opposed to those with AIDS-related complex, a precursor to AIDS. Prudential-Bache analyst Stuart Weisbrod points out Imreg-1's latest trial involved only 158 patients -- in contrast to the 282 patients in Burroughs Wellcome Co. 's final, Phase III trials for its AZT drug. "It is inconceivable to us that Imreg -- a company without any track record -- would be accorded fast-track status with half the number of Phase III patients," Mr. Weisbrod says. The Prudential-Bache analyst is also bothered that Imreg has stonewalled analysts and the media about its drug and has refused to publish detailed reports about the trials. "The FDA likes to see articles on drugs it has to approve. In the Imreg case, it hasn't seen any," Mr. Weisbrod says. He contrasts the mystery surrounding Imreg-1 to the widespread publicity given to AZT. "In AZT, Burroughs was up front about it; we saw all the data. Here, we have to take Art Gottlieb's word for it," Mr. Weisbrod complains. Timothy Rice of Johnson, Rice & Co., a New Orleans brokerage firm, believes Imreg needs a licensing agreement with a major pharmaceutical company to establish credibility. "Such an agreement would also bring much-needed cash," Mr. Rice says. Although Dr. Gottlieb has mentioned ongoing discussions with pharmaceutical companies and others as steps to a possible joint venture or licensing agreement for the past three years, none has yet materialized. This isn't the first time controversy has surrounded a pharmaceutical company with a potential AIDS treatment. Last year, ICN Pharmaceuticals triumphantly announced that its Viratek affiliate had found that its drug ribavirin was effective in protecting patients with early AIDS symptoms. Later, however, the FDA didn't approve wider use of the drug because it didn't find the studies convincing. "We don't want to say anything that is incomplete or can be misconstrued in such a charged environment," says Dr. Gottlieb of Imreg. "We felt it was in the company's best interest not to disclose the components of the drug until patents were issued (in July 1987)," he explains. "We are committed to releasing information through appropriate scientific channels. We don't want to repeat the ICN-Viratek mistake." [This article is made available here by Dow Jones Co. for the personal and non-commercial use of callers to this bbs, in the hope that it will be of some help to those who are suffering from the disease and others who are seeking to help them.]