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Glycomed Isn't Just Another Shooting Star

Inside Wall Street


Like a bevy of other biotechs, Glycomed has ridden the Wall Street roller coaster. The company went public last June at 7 a share. Then the stock caught fire, zooming to 25 by early January. A month later it was down to 13. Is Glycomed one of those flash-in-the-pan biotechs?

"I wouldn't count Glycomed out. It's in the process of exploiting a yet-untapped source of new drugs," says investment manager Walter Channing of CW Group, which oversees assets of $200 million. The company is developing therapeutics derived from complex carbohydrates, or chains of sugar molecules, which could be used to control cell proliferation, blood clotting, and inflammation. Several other big investors have started buying shares in recent weeks, pushing the stock to 15. Although they expect the company to stay unprofitable for several years, they are betting on the potential of Glycomed's carbohydrate technology.

"The company should continue to make significant progress in commercializing its products," says analyst Jacqueline Siegel of Hambrecht & Quist. One big source of encouragement: Eli Lilly and Genentech have taken early equity stakes in Glycomed and have been funding some of its research and development projects.

Lilly, which now owns 7.9% of the stock, signed a collaborative pact with the company on the production and worldwide marketing of carbohydrate-derived products. The drugs would treat vascular restenosis, a narrowing of a blood vessel triggered by angioplasty or cardiovascular surgery, and atherosclerosis, a disease that narrows artery vessels. The pact signed by Genentech, which owns a 6% stake, relates to the development of carbohydrate-derived products that would treat certain inflammatory and immune disorders.

TRIAL RUN. "Six of Glycomed's drug candidates are already in preclinical evaluation," says Channing. The two most advanced: a chemically derived compound called GM1-077, which would prevent restenosis, and a compound called GM6-001, which would prevent corneal ulceration. Other carbohydrate-based products being developed by the company seek to treat clotting disorders, viral infections, and wounds.

Channing believes Glycomed will file with the Food & Drug Administration fairly soon its first IND (investigational new drug) application on GM6-001 to pave the way for clinical trials.

The company's stock is very undervalued, says Channing, and will be "a definite home run." He sees the stock hitting new highs in a year.

One big investor links the recent move in the stock to new whispers that Glycomed will shortly announce a new pact with two big drug companies. He says the new pacts will be similar to the Lilly and Genentech deals and will also include equity stakes in Glycomed.Gene G. Marcial

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