San Diego Business Journal Biotech: FDA Panel Indicates Maxim's Tests
Did Not Follow Guidelines

Two analysts criticized San Diego-based biotech firm Maxim Pharmaceuticals' management team for misleading investors by not following the drug testing guidelines dictated by the Food and Drug Administration.

The criticism follows the Dec. 13 rejection by an FDA advisory panel of the firm's lead drug Maxamine to be used in patients with advanced skin cancer that has spread to the liver.

Shares of Maxim fell to $9.50 on Dec. 14, the day after the FDA's advisory committee rejected Maxamine.

The FDA usually follows the advice of the panel, so it is unlikely that the drug will be approved.

John McCamant, editor of the Berkeley-based Medical Technology Stock Letter, said Maxim told the public it agreed with the FDA on two endpoints, or criteria, to support approval.

"(But) there seems to have been miscommunication and (Maxim) was not on board," McCamant said.

Robert Toth, an analyst with Prudential Vector in San Francisco, cut his rating of Maxim stock to "hold" from "strong buy" late Dec. 12 after the FDA posted its analysis of the Maxamine data on its Web sites.

Maxamine was tested in combination with cytotoxic drug interleukin-2 in advanced skin cancer in a 305-patient trial.

No Statistical Significance

The FDA decided the trial failed to show "statistical significance."

The firm added a subgroup analysis of 129 patients whose cancer had spread to the liver, which the FDA never accepted as a primary endpoint, McCamant said.

Consequently, the FDA rejected the subgroup analysis, saying the measures didn't add enough validity to approve a drug.

According to published reports, Toth said Maxim had assured Prudential analysts and investors at public forums that the FDA had agreed the subgroup analysis was valid.

In a company statement, Maxim Chairman and CEO Larry G. Stambaugh called the FDA decision "disappointing."

He said the company "plans to work with the FDA to develop a strategy to support the approvability of this drug in this patient population."

He didn't say which strategies Maxim would consider.

He also did not say whether the firm plans to initiate another Phase III trial to test Maxamine in patients with advanced metastatic melanoma.

Another Test Trial Expected

McCamant speculated the FDA will require Maxim to initiate another trial.

He said this time, he would hope Maxim has a "better interaction with the FDA."

Though Maxim is financially in a strong position with more than $190 million in cash, the firm's abilities are in question.

"Maxim has a credibility gap with the Street (now)," McCamant said.

As a result, investors are leery of the firm's published positive results of a Phase II trial testing Maxamine in patients with hepatitis C, he said.

"Investors are discounting all of their technology," McCamant said. The company is now selling just above cash, discounting the rest of the firm's business, he said.

A company official could not be reached for comment as of Dec. 14.

Maxim's stock has taken a dive since Dec. 12, failling 44 percent after the medical reviewers' report was posted on the FDA's Web site.

On Dec. 13, shares of Maxim closed at $13.13.

McCamant speculated if the stock continues to plummet, Maxim's board will take action.