Posted by ozstock on Jul 24th, 2008

PGL suspends its phase III trial for PI-88 today and the share price dropped more than $0.62 to close at $0.58, more than 50% drop. For a biotech to fail a trial at such late stage, it will no doubt bring on these dramatic fall in its share price.

I hinted at the more than likely possibility of failure of this drug back in my Feb 26 blog this year.
http://ozstock.blogspot.com/2008/02/analysis-pgl-progen-pharmaceuticals.html

In my analysis of PGL on 26 Feb, various of the indicators (financial, product pipeline, management) suggest that PGL is a very attractive stock trading at $1.62. However, it turned out to be a classic example of the case where even if every indicator is good, success is not guaranteed. I did point out caution on PGL and the likelihood that PI-88 may not succeed, even though it reached Ph III. It was after careful examination (beyond all the optimistic jargon) of the history of its product, in particular PI-88, it was found that the same compound had failed in previous applications. This was what raised my doubts on PI-88.

In conclusion, it pays to read between all the glossy annual report and get a real feeling of how the products are actually performing. I may do an update analysis later when the aftermath of this latest news has been properly digested.

This article is posted by Ozstock that runs a blog on equity analysis of Australian companies (particularly biotech companies) and an overall review of the Australian sharemarket.