Dyax Corp. disclosed a slowdown in the development of its lead product candidate, DX-88, sending the company's stock into a nearly 25 percent tumble.

As part of its third-quarter earnings report for the period ended Sept. 30, in which the company posted an $8 million net loss, it also issued guidance from ongoing discussions with the FDA through which the agency is requiring additional clinical work before a biologics license application can be filed. As a result, Dyax and its partner in the product's development in hereditary angioedema (HAE), Genzyme Corp., said they expect to file for approval after next year.

That disclosure dropped Dyax's shares (NASDAQ:DYAX) to $6.08 Friday, a $1.99 fall. Genzyme's shares (NASDAQ:GENZ) fell 85 cents to $51.06.

"Because we are in ongoing dialogue with the agency as to what that plan may be," Dyax Chairman, President and CEO Henry Blair said during a conference call, "it is inappropriate for me to comment any further on clinical work and timelines at this juncture."

He conceded that additional clinical work could include an expansion of a current Phase II study, an ongoing, repeat-dosing trial called EDEMA2, or a pivotal Phase III study. But he also stressed that no such decision has been made. Nevertheless, the company expressed confidence in moving the program forward.

"Our discussions with the FDA are fluid right now and ongoing," Stephen Galliker, Dyax's executive vice president of finance and administration and chief financial officer, told BioWorld Today. "We're working with them to get to the quickest path to registration."

To date in EDEMA2, 50 HAE attacks have been treated in 28 patients. Half have been treated more than once, with no adverse effects.

"Clearly Dyax has already established a broad network of patients and physicians," Blair said. "This gives us a very significant advantage to being able to quickly enroll into any future or expanded clinical trials required for licensure."

The negative news is in contrast to a report disseminated two weeks ago when Dyax said it received word from the FDA that toxicology issues raised by the agency in May were resolved. The issues resulted in a partial clinical hold on DX-88 trials and related to findings in preclinical animal studies. The company first said the hold had been lifted in June. (See BioWorld Today, June 7, 2004.)

But when those questions first surfaced, Dyax's stock also paid a price. The shares lost nearly a third of their value when the agency placed a hold pending answers concerning rat toxicity studies. (See BioWorld Today, May 26, 2004.)

The partners, both headquartered in Cambridge, Mass., began their joint venture collaboration on DX-88 last summer. Since then, they have split development costs. Dyax would receive a milestone payment of $10 million if DX-88 is approved by the FDA in an initial indication, HAE, and up to $15 million for approvals of three other therapeutic indications being developed under the collaboration. They initially began an agreement on the compound six years ago. (See BioWorld Today, Dec. 2, 1998, and June 25, 2003.)

The latest delay could prove a boost to a company developing a competing product. Privately held Jerini AG, of Berlin, is planning to begin this quarter Phase III trials of Icatibant, expected to complete late next year or early 2006. But officers at Dyax expressed confidence that DX-88 would get commercialized sooner.

"We believe that we'll be to the market first with this product as a treatment for this indication," Galliker said. "We have an ongoing trial in place, and a drug that in trials has treated over 100 patients for this indication. And we have in place an investigator and clinical-site network that we think would give us a leg-up from a timing standpoint."

DX-88 is designed to treat HAE attacks that result in sudden swelling of the hands, feet, limbs, face, intestinal tract or airway (larynx or trachea).

"This is a chronic affliction in which patients generally suffer about one treatment per month, if they're untreated by steroids," Galliker said. He said the condition can resolve itself in three to five days, but use of DX-88 has generated an onset in symptom relief in four hours. The drug has been used to successfully treat 15 laryngeal attacks, which can be fatal.

As dialogue with the FDA continues, Dyax and Genzyme said they would continue to treat HAE patients in EDEMA2 and collect additional data from the study. An inhibitor of human plasma kallikrein, DX-88 has been named a fast-track product for HAE, and it also is an orphan drug in both the U.S. and Europe for the rare and life-threatening inflammatory disease.

Independent of its Genzyme collaboration, Dyax is advancing DX-88 into Phase II trials later this year in cardiac surgery, initially for its potential to reduce blood loss and related complications during on-pump coronary artery bypass grafting procedures. The company owns all rights to DX-88 for that indication, and while it might entertain partnering propositions, Blair said Dyax could be capable of a solo commercialization effort.

Elsewhere in its pipeline, DX-890 is in Phase II development for cystic fibrosis. The product is an inhibitor of human neutrophil elastase. The cystic fibrosis studies are being conducted by Dyax's collaborator, Debiopharm SA, of Lausanne, Switzerland.

Dyax ended its quarter with funding reserves of about $61.3 million in cash, cash equivalents and short-term investments.