Germantown biotechnology company Advancis Pharmaceutical Corp. yesterday said it has lost its partnership to develop an antibiotic with British drugmaker GlaxoSmithKline PLC.
The loss of Advancis's most prestigious partnership sent its stock price plummeting. Shares dropped $4.53 -- or 62 percent -- to close at $2.75.
GlaxoSmithKline's decision represents a blow to the five-year-old company, which is redeveloping a wide range of commonly prescribed oral antibiotics in an effort to make them perform more efficiently in the body.
"Their validating partnership with a major pharmaceutical company has gone away," said Gregory R. Wade, an analyst at Pacific Growth Equities. "It has created some concern on Wall Street that there is a problem with the company's core technology."
Advancis chief executive and president Edward M. Rudnic said GlaxoSmithKline terminated its partnership for financial reasons, and he vigorously defended his company's technology.
"Everything we heard from [Glaxo] has been exceedingly positive," he said. "This is not a pronouncement on the scientific or commercial prospects of the technology."
A spokeswoman for GlaxoSmithKline was unavailable for comment yesterday. According to Advancis, the collaboration will end Dec. 15.
Advancis and GlaxoSmithKline had agreed to develop a new version of an antibiotic called Augmentin that is designed to treat pneumonia and bronchitis.
The drug would have employed Advancis's patented slow-release drug technology, which the company says improves an antibiotic's performance by repeatedly assaulting bacteria between oral doses.
Traditional antibiotics, by contrast, deliver a single burst of medicine, which can taper off and allow bacteria to regroup before a follow-up pill enters the body hours later, the company says.
GlaxoSmithKline paid Advancis $8 million in 2003. Advancis said $3.5 million of that sum has yet to be recognized. But Glaxo could have forked over substantially more in royalties if the two companies had jointly developed a commercial medicine, analysts said.
Advancis will now have to make do without revenue from GlaxoSmithKline. The company raised $60 million when it went public in November. But it is not profitable. It lost $21 million on revenue of $3.6 million in 2003.
The company yesterday released third-quarter financial results. For the three months ended Sept. 30, it lost $9.2 million, compared with $8.2 million during the same period a year ago. Revenue rose to $3 million, up from $312,500. It is scheduled to hold a conference call this morning to discuss the results.
The company also said yesterday it will stop developing a generic version of Biaxin, an Abbott Laboratories antibiotic. Advancis was developing the medicine with Par Pharmaceuticals Cos.
Rudnic said two versions of the drug have failed to meet federal requirements for performance. Neither drug used Advancis's slow-release dosing technology.
Advancis has one drug on the market, an antibiotic called Keflex, prescribed for skin infections. It acquired U.S. rights for the medicine from Eli Lilly and Co. in July.
Advancis is conducting advanced human tests on a slow-release version of the antibiotic amoxicillin, which the company said could reach the market by 2006.
Wade of Pacific Growth Equities said "a lot is hinging on that test."
"Clearly they are going to need to have success there to reinforce the value of the technology," he said.