Early Pipeline for Metabasis

Metabasis Therapeutics, Inc. (MBRX - Snapshot Report) is a biopharmaceutical company that engages in the discovery and development of drugs for chronic diseases involving pathways in the liver. In July 2007, the company suffered two major setbacks when its lead drug, CS-917, failed to meet the primary endpoint in a phase IIb trial and Schering-Plough Corporation (SGP) terminated its agreement for the development of Pradefovir. Both products were in mid- to late-stage trials.

The shares plummeted 54% in response to the news and the company has yet to recover from these setbacks. Although Metabasis recently reported positive results on core pipeline candidate, MB07803, we believe that investor confidence is not likely to return until the company enters into suitable partnership deals for its candidates.

Despite some promising pipeline candidates, Metabasis' pipeline remains in very early-stages of development and we do not see the company achieving profitability anytime soon. The company did receive some positive news recently when it announced favorable results on MB07803. However, the main potential for Metabasis lies on its ability to sign partnership agreements for its core pipeline candidates as this would help resort investor confidence in the company’s NuMimetic and HepDirect technologies.

While we expect the company to announce a partner for MB07803 as well as the glucagon program in 2008, near-term investor focus will remain on the upcoming phase Ib results on MB07811 which should be available later this quarter. At this time we are continuing to maintain our Hold rating on the shares of Metabasis Therapeutics with a price target of $3.

Arpita Dutt, CA, contributed to this report.

Read the full analyst report on MBRX.

Read the full analyst report on SGP.