Cardiome's Phase II Trial Successful, But Not Enough

Investors had been hoping the Phase II trial of Cardiome Pharma Corp.'s (CRME) lead RSD1235 drug would show the same remarkable results as in previous studies.

But while the trial was clearly a success, the results weren't statistically different between the 600-milligram and 300-milligram levels. And given the stock has had a 32% runup so far this year, some investors voted with their feet.

On Nasdaq Wednesday, Cardiome is down $1.31, or 9.8%, to $12.00 on 1.9 million shares.

"People were just expecting the 600-milligram dose to be better," said one analyst. "Expectations were really high."

When Cardiome unveiled the interim study of RSD1235 in the 300 mg dose in July, the data showed the drug - a treatment for atrial fibrillation (irregular heartbeat) - was well-tolerated and had a significant efficacy.

The final Phase II trial data released Wednesday were from patients who received a higher 600 mg dose. Other Drugs in Phase II

Of the 49 patients who took the higher dose, 30, or 61% completed the study in normal heart rhythm, as compared to 43% of all patients receiving placebo.

Those percentages were statistically equal to the results obtained from patients taking the lower dose. Of the 54 patients who took the 300 mg dose, 61% completed the study in normal heart rhythm, compared to 43% receiving placebo.

"While we are disappointed that the high-dose group did not shoot the lights out, this study was a CLEAR success," Sprott Securities analyst David Dean said in a note.

The data from both groups show that oral RSD1235 reduced the risk of recurring atrial fibrillation by 32%, he noted, attributing the lack of statistical difference to the number of patients involved in the trial.

Dean said he doesn't believe the lack of dose response in the 600 mg group will present any issues moving forward. He said the beginning dose of 300 mg was likely "higher than typical because of the drug's safety profile."

Douglas Loe of Versant Partners said the trial result was positive. "However, the market was likely pricing in potential for an accelerated development path based on improved efficacy from the high dose," he wrote in a note. "This did not materialize and we expect COM (Cardiome) shares to be weak until Phase IIb clinical strategy is further defined."

Neither analyst owns Cardiome stock nor do their firms have investment-banking relationships with the company.

A Phase IIb study of RSD1235 is likely to take place in the first quarter of 2007.

"We are thrilled with the outcome of this study," Cardiome's chief executive, Robert Rieder, said on a conference call. "When we envisioned this study, it was to get a sense of the safety and efficacy."