For those investors who have held or are currently holding shares of PolyMedix, Inc. (OTCBB: PYMX) the old proverb “Fool me once shame on you. Fool me twice shame on me” may serve as a valuable reminder that the biotechnology company has had some problems with disclosure in the past, problems that have led many to simply take the company’s word with a grain of salt.
Bolstering that attitude is the likelihood of an impending class action suit against PYMX alleging that the company issued a series of materially false statements to investors regarding the commercial viability, safety, and market potential of their lead drug PMX-60056.
While PYMX distributed press releases lauding PMX-60056, a synthetic small-molecule anticoagulant reversing agent active against both heparin and low molecule weight heparin (LMWH), for its ability to reverse heparin in patients undergoing Percutaneous Coronary Intervention (PCI) procedures, they allegedly failed to inform investors of some significant problems with the drug that led to the company halting patient enrollment in their Phase II trial.
According to complaints PYMX failed to disclose that the clinical patients experienced hypotension more often and at lower doses than disclosed; that varying the dose did not eliminate adverse side effects on blood pressure; and that as a result, the commercial prospects for these compounds were doubtful. It goes without saying these are some pretty serious omissions and would have likely served as a warning sign to investors before they put their money in the company.
Instead of disclosing this information when they allegedly knew PYMX simply distributed a press release on May 12, 2012 announcing patient enrollment had been halted due to clinical trial participants experiencing reductions in blood pressure. Needless to say shares plummeted, falling form a high of 0.6000 down to as low as 0.2500 within 24 hours, and it’s been a struggle to say the least to get that share price higher.
In fact, shares actually sank to a 52-week low of 0.2050 last month and while they are currently moving around the 0.3000 level the trading activity in the company has been limited.
Not to be overlooked in this debacle is the fact that the company had recently priced an underwritten offering of 25 million units and said the net proceeds of this offering, about $18.6 million, would be used primarily to continue the clinical development of their lead drugs, including PMX-60056. So not only did shareholders see considerable dilution but did so without the benefit of the lead drug being advanced.
Now PYMX is high on their other lead drug, brilacidin (PMX-30063), informing investors in their second quarter financial results that they had “significantly advanced the development of our novel defensin-mimetic antibiotic brilacidin, with positive results from our Phase 2 clinical trial in patients with acute bacterial skin and skin structure infections (ABSSSI).”
After completing and announcing positive Phase II results with brilacidin as an intravenous treatment in patients with ABSSSI the company announced plans to conduct a Phase IIb study with brilacidin in ABSSSI to examine both shorter courses of therapy and lower total amounts of drug than were used in the previous Phase II trial. PYMX has stated they expect to enroll approximately 100-200 patients with a start date later this year and results being delivered in the first half of 2013.
That may be putting the cart before the horse as PYMX also stated that they intend to discuss their clinical development plans for brilacidin with the FDA prior to this Phase IIb study and “pending the outcome of these discussions and availability of adequate cash resources” they will determine their course of action.
It goes without saying PYMX’s cash resources are limited at the moment, reporting to have $12.3 million in cash, cash equivalents and investments following the second quarter ended June 30, 2012. This is down significantly from the $21.3 million they had December 31, 2011 and while that’s to be expected given the clinical trials underway it does shareholders no good knowing that one of those trials, PMX-60056, ended with nothing.
PYMX may be on to something with their continued development of brilacidin and their belief that “Based on analysis of clinical and preclinical data to date, PolyMedix believes brilacidin may be safe and effective when administered as a single dose or once daily for three days, courses of therapy that are shorter than the approved regimens for all marketed antibiotics indicated for ABSSSI” things sound positive but for many investors, they have heard this song before.