TorreyPines Therapeutics: Forget Morale, The Beatings Continue (TPTX)

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TorreyPines Therapeutics (NASDAQ: TPTX) has announced its strategic plan for 2008.  Unfortunately it doesn’t look or sound very promising.

The company will focus on clinical development activities to maximize the value of the company’s versatile lead compounds, which are AMPA/kainate receptor antagonists tezampanel and NGX426 and muscarinic agonist NGX267.  It will conduct a clinical guidance meeting with the FDA in the first half of the year to discuss the efficacy results from a recently completed Phase II trial for acute migraine headaches.

It will also initiate a Phase II trial of tezampanel in muscle spasticity and rigidity secondary to spinal cord trauma in the second half of the year; and it will complete the ongoing Phase I maximum tolerated dose trial of NGX426, the oral prodrug of tezampanel. Torry Pines will also initiate a Phase I single-dose trial of NGX426 in a capsaicin model for neuropathic pain in the first half of the year, and will initiate a Phase I multiple dose trial of NGX426 in the second half of this year. Lastly, it will follow-up on the muscarinic agonist by initiating a Phase II trial of NGX267 in xerostomia, or dry mouth, secondary to Sjogren’s syndrome in the first half of 2008.

After the conclusion of its collaboration with Eisai Co., Ltd. on February 28, 2008, the company "will streamline operations by reducing its work force."  President & CEO Neil Kurtz, M.D., will assume oversight of all clinical development programs. Its Chief Medical Officer, Michael Murphy, will leave the company at the end of the month to pursue other interests.  For whatever it is worth, biotech companies usually don’t fire people because business is about to boom and chief medical officers don’t usually leave on the eve of a breakthrough on the next potential blockbuster drug.

TorryPines has been public since 1999 and briefly in 2000 this used to be more than a $100 stock when it had hopes of offering a potential treatment for Alzheimer’s.  It now sits at $2.00+.  The 52-week trading range is $1.80 to $8.75.  As of yesterday’s close this one had a $33.8 million market cap and it had $39.7 million on the books in cash on September 30, 2007.  Unfortunately its cash burn has been roughly $7 million per quarter up until these "new initiatives."  As of last look, this one employed some 43 employees, although that number may have changed and is obviously going to be different.

Since this still has "lead compounds" to focus on we cannot yet call this one a biotech zombie.  But it is close.

Jon C. Ogg
February 14, 2008

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