Pharmacopeia shares fall as Oppenheimer cuts price

Shares of Pharmacopeia Inc. fell Thursday as Oppenheimer & Co. slashed its price target on the biotechnology company, saying it will likely face a long road focusing its drug development efforts on a kidney disease condition caused by diabetes.

The stockfell 18 cents, or 7.8 percent, to $2.14. Shares, which have traded in a 52-week range of $2.31 to $6.10, tumbled to $2.02 earlier in the session, their lowest point in more than four years.

Oppenheimer & Co. analyst Brian Abrahams, in a note to investors, reaffirmed a "Outperform" rating but slashed his price target to $4 from $9. He said the company's move to refocus its drug development on diabetic nephropathy, or kidney disease caused by diabetes, could take time to pay off.

Earlier in August, the Cranbury, N.J., company said it would slash its work force for the second time in 2008, eliminating about 40 percent of its jobs to reduce costs. Meanwhile, it is considering strategic initiatives to develop its business while beginning a midstage clinical trial of a drug candidate aimed at treating diabetic nephropathy.

The company had previously been focusing on a range of drugs, including a high blood pressure treatment. Several of those programs are still ongoing.

"We conclude PS433540 (drug candidate) will likely be effective in diabetic nephropathy, and diabetic nephropathy may be an easier market to penetrate," Abrahams wrote in a note to investors. "However, proof of concept in diabetic nephropathy is likely far off."

That could delay a partnership, he said. Meanwhile, upcoming study data on another drug candidate is unlikely to provide a meaningful catalyst.