Fool.com: Diatide Turning? (News) August 4, 1999

Diatide Turning?

August 4, 1999

The market may finally be getting behind New Hampshire specialty pharmaceutical company Diatide (Nasdaq: DITI), shares of which got a nifty boost on heavy trading volume today on news that the FDA gave it marketing approval for NeoTect, an agent used to locate suspected malignant tumors in the lung.

NeoTect, while not expected to be a replacement for the biopsy tissue sampling procedure, still may have commercial appeal as a non-invasive means of obtaining information about lung cancer, the most common malignancy in the U.S., through intravenous injection in the arm. Diatide is considering further trials to see whether NeoTect might be similarly useful for detecting skin and breast cancer (although a skin cancer test begun in 1996 was halted because of costs).

The NeoTect approval marks the second such federal OK for Diatide, which last October launched its AcuTect product for the imaging of blood clots in the legs, selling about $470,000 worth through March 31 -- the company's drugs bind to disease tissue, which when combined with radioisotopes become easily detectable. Both products earned priority review status from the FDA.

Diatide has a marketing and sales agreement with Nycomed Amersham's (NYSE: NYE) Imaging division for both of its first two products, but it's looking for corporate alliances for its cancer therapy products and other imaging products in its pipeline. Still, Nycomed -- now beholden to Diatide for a $2 million milestone payment because of the NeoTect approval -- is on board to co-promote overseas three others that target blood clots, inflammation due to infection, and artery blockage.

Diatide hopes to parlay its experience with imaging agents into success with therapeutic agents, and it has some interesting products in the mix. Among them are compounds that use the locating and binding properties of the company's radiolabelling drugs in combination with radioisotopes or enzymes, which may be able to kill cancer cells or break up blood clots.

The company doesn't have marketing partners for any of its therapeutic agents, however, and all of them still have several trials to pass before earning the FDA go-ahead.

Diatide has incurred heavy losses since its inception: nearly $60 million as of March 31, with the only revenues coming through its partnerships with Nycomed and other research partners and through government grants [except for the slim sales of AcuTect mentioned above].

But the company finally has some sales coming in and has the attention of the FDA. Further clinical success may make company executives hot properties at the bargaining tables of prospective partners looking to take some of Diatide's products off Nycomed's hands: investors might want to do a little scoping of their own.

By Dave Marino-Nachison (TMF Braden) (TMF Braden)

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