When a development-stage drugmaker's one clinical-stage compound looks like it might fail, expect bad things to happen to that company's share price. SGX Pharmaceuticals
SGX's shares fell more than 60% last week after its phase 1 solid tumor MET kinase inhibitor drug candidate had to be discontinued from dosing in one study, and reverted to a lower (and presumably less efficacious) dose in another study. This drug, dubbed SGX523, was SGX's only clinical-stage compound; the company does expect to bring two other oncology-targeted drugs into the clinic later this year, with another two planned in 2009.
SGX523 would be one of SGX's first chances to show the productivity of its drug-discovery platform. Much like Exelixis
True, SGX523 isn't finished yet, since SGX is still testing the drug in solid-tumor patients. Other drugmakers, including Exelixis, have made comebacks after their lead drugs failed in clinical testing, but even finding a proper dosage of its first compound in phase 1 testing won't instill greater confidence in SGX investors.
SGX does have another, similar MET inhibitor set for phase 1 testing later this year; perhaps it will scrap SGX523 in favor of this other compound. With its share price in the gutter, an expected burn rate around $20 million this year, and cash and investments of less than $40 million, SGX doesn't have much time left to produce promising data.
Exelixis is an active pick of our market-beating Rule Breakers newsletter. You can check out all our other recommendations as well as get access to our message boards and exclusive content with a 30-day free trial.