Metabolic keen to clear up doubtsBy Rebecca UrbanDecember 17,...

Metabolic keen to clear up doubts
By Rebecca Urban
December 17, 2004

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Metabolic Pharmaceuticals will today try to reverse the damage to its share price, which has been heading south since the results of its obesity drug trial came out earlier this week.

Facing a barrage of questions from the financial analysts about the company's claim that the drug worked, managing director Chris Belyea had planned to make a clarifying statement to the market late yesterday but decided it would be "more strategic" to issue it this morning.

While the company's shares rallied to $2.50 immediately after the trial results were released on Monday, they have since fallen 51 per cent to $1.21 on concerns that the drug - despite producing an average 2.8 kilogram weight loss in obese patients over 12 weeks - was not as effective as had been claimed.

The Age reported on Tuesday that analysts had questioned the interpretation of the data, given that some patients taking the placebo had achieved weight loss of four kilograms or more. They were also concerned about a lack of statistical evidence that the drug, and not random events, was the catalyst for weight loss.

AdvertisementDr Belyea said yesterday he was becoming increasingly concerned about misinformation in the market.

He said he was particularly concerned about a research report from stockbroker eG Capital, which he said contained lies.

He said he was also seeking legal advice about an article that appeared yesterday in The Australian Financial Review.

Asked why he was waiting four days to clarify these issues, Dr Belyea said: "We don't normally comment on these things, but it gets to a ridiculous point where the market is no longer informed.

"There's so much confusion out there, it has to be addressed."

Dianne Glenn, associate director of research at eG Capital, said she had produced a report that was balanced and based on Metabolic's own data.

"The company reported weight loss in the one-milligram dose group that was not significantly different to the placebo. That's their own data," she said.

Analysts have also raised concerns about inconsistency of the dose results in the phase IIa trial compared with the phase IIb trial.

The first trial showed the 10milligram and 30milligram doses were more effective in producing weight loss, while the second trial suggested that it was the 1milligram dose.

Tolhurst Noall analyst Martin Ashdown said it was not surprising that the smallest dose had been found to be effective, because hormones worked better in small concentrations.

"That's something that Metabolic should have clarified to the market, and they haven't," he said.

George Mihaly, the managing director of biotechnology consultancy Kendle Australia, said it would be a travesty if the results, while they were complicated and not clear-cut, were misconstrued as being negative.

"Unfortunately market expectation varies from the reality of clinical development," he said.