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Executive Summary

Wall Street's perception of Synergen (up 2-1/4 to 49-1/2) as the next potential biotech pacesetter helped the stock hold its ground as the sector resumed its 1992 slide during the month of June. Synergen's Antril interleukin-1 receptor antagonist is emerging as the new "favorite" in the anti-sepsis field now that Centocor and Xoma have both tripped over hurdles at FDA. Robertson Stephens analyst Mark Simon predicted in a June 19 report that Synergen's IL-1ra "probably represents the next blockbuster in the biotechnology industry following G-CSF and EPO." Noting that the septic shock antibodies developed by Xoma and Centocor are "fading fast," Simon suggested that the "major near- term competition" for Antril will be from Chiron/Bayer's murine anti-tumor necrosis factor (TNF) monoclonal antibody, which is now in Phase III trials in the U.S. and Europe ("The Pink Sheet" May 11, T&G-8). Based on early clinical trial results, Simon speculated that IL-1 may be a better target than TNF in treating sepsis since IL-1 "appears to circulate more broadly in the blood stream" and for a longer period of time, thereby providing a "wider" therapeutic window. Simon pointed out that a recent presentation of efficacy data from a trial using CellTech's anti-TNF antibody showed "no mortality effect" between treated patients and historical controls, while Synergen's Phase II trials showed a near 50% mortality reduction and a clear dose-response curve with the highest dose tested achieving a 64% reduction in mortality versus placebo. He acknowledged, however, that the Bayer/Chiron monoclonal antibody "in all likelihood binds to a different region of TNF." * Synergen's O-T-C Index pharmaceutical group, which has fallen 28% since the end of January. However, Synergen has avoided the collapse experienced by many formerly high-flying biotech issues -- over one-third of the 64 pharmaceutical stocks followed on the "F-D-C" O-T-C Index have lost more than 50% of their value since the end of January. In June, declines outnumbered advances by five to one among the 64 pharmaceutical issues followed on the "F-D-C"' Monthly O-T- C Index as the group fell 4.5% for the month. Among the few on the upside were Aphton (up 4-1/4 to 18), Genetics Institute (up 2-1/2 to 31-3/4) and Value Health (up 2-1/4 to 36-1/4). After free-falling from a 1991 closing price of 53-1/2 to 12 at the end of May, Centocor (up 1 to 13) appears to have bottomed out. The company reported early in June at a Hambrecht & Quist conference that it soon planned to announce a Centoxin co- marketing deal covering the U.S. and Europe with a "major pharmaceutical company." The company is also moving ahead to conduct an additional clinical trial requested by FDA and has hired an outside contractor to manage the study in response to agency concerns regarding the clinical data submission in the PLA ("The Pink Sheet" June 29, p. 2). Xoma (off 6-3/4 to 13-1/2) reported in early June that FDA has suggested that another clinical trial with E5 may be necessary for approval; however, the company now says it will submit a reanalysis of the PLA data ("The Pink Sheet" June 15, In Brief).

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