Altus Pharma shares tank as drug deal with Genentech ends

BANGALORE, Dec 20 (Reuters) - Shares of Altus Pharmaceuticals Inc (ALTU.O) lost almost half of their value and hit their lifetime low Thursday, a day after a major collaborator Genentech Inc DNA.N returned certain rights on a product candidate.

On Wednesday, Altus had said it reacquired the developing and marketing rights for its experimental growth hormone treatment in North America from Genentech.

"We disagreed with Altus on proposed development plans and other issues which were critical to the development of the molecule," said Caroline Pecquet, a Genentech spokeswoman.

In a conference call with analysts, Altus said its goal was to resume clinical trials of the product by mid-2008. George Farmer, an analyst with Wachovia Securities, downgraded the stock to "market perform" from "outperform," citing uncertainty over the future of the drug, codenamed ALTU-238. Farmer, in a note to clients, said the reacquisition was "highly unexpected," widened his 2008 loss forecast for Altus to $3.33 a share from $2.41. Shares of Altus fell as much as 51 percent to $4.80 in afternoon trade on the Nasdaq. Genentech shares were up 57 cents at $67.90 in afternoon trade on the New York Stock Exchange.

GENENTECH STAKE STAYS In December 2006, Altus signed an exclusive North American collaboration with Genentech to develop and market its drug candidate ALTU-238, for the treatment of hormone disorders in both pediatric and adult populations.

According to the terms, Genentech had to make a $15 million upfront payment to Altus, with the potential for additional payments of about $140 million, pending completion of certain milestones.

In the first-quarter, Altus received $30 million from Genentech, comprised of a $15 million equity investment and $15 million upfront payment.

Genentech will continue to have the equities stake in Altus, the spokeswoman said.

(Reporting by Esha Dey in Bangalore; Editing by Gopakumar Warrier)

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