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MAGAININ LEAP-FROGS AHEAD: MSI-78 PROGRESS, PRIVATE PLACEMENT SPUR GROWTH

Executive Summary

Magainin is gaining momentum on Wall Street as the fourth quarter begins. The firm closed September up 2 points to 11-1/2, its sixth consecutive monthly gain. Magainin's 1993 run-up has been based on clinical progress of the topical antibiotic peptide MSI-78. The firm initiated its first pivotal trial of the drug in June as a treatment for impetigo. During a Sept. 20 presentation to the Bear Steams health care conference in New York City, Magainin CEO Jay Moorin said the decision to move into Phase III was made in consultation with FDA based on results of the company's first Phase II study. Results of that trial will be presented at the ICAAC meeting in New Orleans Oct. 19, Moorin noted. By jumping into Phase III, Moorin said, the company's development schedule for MSI-78 "moved ahead about 12 months." The 280-patient, three-dose, placebo-controlled impetigo trial is expected to end this year. The company plans a second Phase III trial comparing the optimal dose of MSI-78 to SmithKline Beecham's Bactroban and systemic erythromycin. That trial should be completed in late-1994 with an NDA to follow in early 1995, Moorin predicted. MSI-78 is "the broadest spectrum antibiotic in anybody's pipeline today," Moorin declared. The compound is one of a class of antibiotics called magainins which occur naturally in the immune system of frogs. Magainin closed the month by replenishing its cash coffers with a $19.25 mil. private placement Sept. 27. The stock is now trading above its December 1991 initial public offering price of $9. Several other firms, including Neocrin, Affymetrix and Genta completed private placements late in the month, as private equity deals continue to provide a relatively plentiful source of funds in the absence of a strong public financing market. While the biotechnology industry has croaked that elements of the Clinton Administration health care reform plan would chill the market for biotech stocks, release of the plan's outline in September did not damp investor enthusiasm for companies tracked by the "F-D-C" index of O-T-C traded shares. The pharmaceutical component of the index jumped 6.7% in September after a 6.5% climb in August. The bellwether biotech firms led the way. Amgen was up 1-5/8 (4.4%), Biogen climbed 3-7/8 (17.2%) and Genetics Institute climbed 4 (10.7%). The strongest gain was turned in by Chiron (up 11-1/8 or 17.5%) as investors became enthusiastic about the commercial prospects of the multiple sclerosis treatment Betaseron.
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