Knobias Clip Report (11-07-2007)

Submitted By Knobias ClipReport

NSTK: Shares Tumble on Procter & Gamble Agreement Termination

Wednesday’s session saw the market tumble amid financial woes, the dollar dropping, surging oil, and General Motor’s largest ever quarterly loss. The culmination of the catalysts was the fifth largest down day of the year losing 360 points with each of the 30 Dow components ending in the red.

The dollar dropped following reports China was expected to diversify parts of its vast foreign currency holdings into other currencies such as the Euro, causing the dollar to drop to record levels against the Euro.

Crude hit highs of $98.62 in overnight trading before closing at $96.37 following data that displayed a lesser than expected drop in oil inventories. In other Nymex commodities trading, gold futures again surged to their highest level since 1980, as the sell-off in the dollar boosted the metal's appeal as an inflation hedge.

Small caps didn’t fare much better with one pharmaceutical seeing a disparaging piece of news for investors.

Nastech Pharmaceutical Company Inc. (NSTK) is a biopharmaceutical company developing innovative products based on proprietary molecular biology-based drug delivery technologies. Nastech and their collaboration partners are developing products for multiple therapeutic areas including osteoporosis, obesity, diabetes, autism, respiratory diseases and inflammatory conditions.

On Wednesday, the Company announced that it had reacquired the rights to teriparatide (Parathyroid Hormone; PTH1-34) nasal spray for the treatment of osteoporosis from its collaboration partner, Procter & Gamble Pharmaceuticals, Inc. The reacquisition follows notification on Nov. 6, 2007, of Procter & Gamble's decision to terminate the development and commercialization agreement for PTH1-34 Nasal Spray.

Nastech noted that it would immediately advance PTH1-34 Nasal Spray into a Phase 2 clinical study to evaluate the change in bone mineral density, which the FDA has previously indicated would be the primary endpoint for approval.

In February 2006, Nastech and P&G entered into a development and commercialization collaboration for teriparatide nasal spray as an investigational product. During the collaboration, P&G completed two clinical studies using teriparatide nasal spray: one evaluating the pharmacokinetic profile in healthy normal subjects, and the other demonstrating the response of bone turnover markers. These studies, in addition to the non-clinical work completed, demonstrate that Nastech's patented nasal spray formulation delivers teriparatide to the patient's blood, causes a response in bone turnover markers and was well-tolerated. Nastech believes that these data support the continued development of the product.

The Company noted that it expected to recognize $5.5 million in fourth quarter revenue from the termination agreement.

Following the announcement, share tumbled and analysts updated their ratings and price targets.

Friedman Billings Ramsey noted that the termination was the second major development agreement with a partner to have been scrapped in the past two years. Merck walked away from the PYY obesity program in the first quarter of 2006. The latest termination caused many to wonder if a significant product from the Company could reach the market.

With that in mind and shares tumbling 36% on over 2.2 million in volume, the name could be something to follow over the coming quarters as the Company pushes its PTH candidate through the testing phases without the help of any partner. Investors would be wise to watch.



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