Biotech Implosion: CombinatoRx (CRXX)

If having a difficult to say and spell name wasn’t bad enough, issuing poor study results will do it.

CombinatoRx, Inc. (CRXX-NASDAQ) just announced preliminary results of a Phase II clinical trial studying CRx-139 (combination of 3mg prednisolone and the antidepressant paroxetine) and 3mg prednisolone alone, in patients with rheumatoid arthritis (RA).  CRx-139 did not show statistical significance on the primary endpoint of the trial.  CRx-139 did show statistical significance on multiple other endpoints, requiring further analysis.

This trial served two important purposes. One purpose was to determine the effect of 3mg of prednisolone alone (a very low dose) in RA and to contrast this effect with the activity previously reported with CRx-102, a synergistic combination of very low dose prednisolone and dipyridamole. The results with 3mg prednisolone confirm that the anti-inflammatory benefits previously observed in three phase 2a clinical trials with CRx-102 are due to the synergistic activity of CRx-102’s components, as opposed to an effect derived from the prednisolone component alone. Another purpose of the trial was to evaluate the activity of CRx-139 vs. prednisolone alone.  Comparison of treatment outcomes for CRx-102 (from previously reported results in RA) versus very low dose prednisolone alone (from the study reported here) shows that CRx-102 is superior to the 3mg of prednisolone alone. Importantly, subjects in the two studies had the same demographics and similar baseline disease status, allowing for comparison of study results. The following table summarizes the ACR 20 scores for CRx-102 and low dose prednisolone, respectively, at 6 weeks, the duration of the CRx-102 RA study.

The company has other product candidates under various levels of Phase I and II studies, but this was a big hope because it was shown as an indication for Rheumatoid Arthritis.  Here is a link for their webcast and here is the press release.  Shares fell more than 20% before being haled and were at a new 52-week low of $5.28 ($5.50 to $12.55 52-week trading range).  This one has been public only about 17 months.  Before the drop its market cap was $209 million and it listed (on 12/31/06) cash and equivalents of $127 million, total assets (including cash) $138.3 million, and $51.285 million in total liabilities.

Jon C. Ogg
March 26, 2007

Jon Ogg can be reached at [email protected]; he does not own securities in the companies he covers.