Stocks to Watch: ARCA Biopharma (ABIO)

ARCA Biopharma Inc. (Nasdaq: ABIO) rose 92% yesterday, up $2.07 to $4.32, on news that the U.S. Food and Drug Administration has designated its GencaroTM as a Fast Track development program. In pre-market trading this morning, the stock rose as high as $4.50. ABIO is trading down 17% today.

Gencaro is an investigational, pharmacologically, unique beta-blocker and mild vasodilator the company is developing for heart failure. ARCA Biopharma has identified certain genetic variations in patients that can predict their responses to GencaroTM. According to the company, the program can potentially be the first genetically targeted heart failure treatment. The active ingredient in GencaroTM is bucindolol hydrochloride, which has been clinically tested in about 3,000 patients.

In recent months, ARCA has negotiated early property lease termination agreements which it says have significantly reduced the company’s financial obligations. ARCA ended the third quarter of 2009 with $10.6 million in cash and cash equivalents. Due to recent reductions in operating expenses and corporate liabilities, the company believes that its cash and cash equivalents are adequate to fund operations through at least the first quarter of 2010.

“Fast Track designation for the GencaroTM development program is an important acknowledgement of the need for advancements in the treatment of patients with chronic heart failure, a disease afflicting approximately 6 million people in the United States with approximately 550,000 new cases diagnosed each year," said Michael R. Bristow, President and Chief Executive Officer of ARCA. "If the SPA is approved by the FDA and the Company is able to obtain financing, this proposed clinical trial would be the first full sized cardiovascular trial performed in a genetically defined subpopulation to predict efficacy enhancement by the tested drug. As such, the proposed trial would be a landmark undertaking in pharmacogenetic drug development."

Due to the substantial costs anticipated for the proposed trial, ARCA is evaluating potential sources of funding including partnering or licensing GencaroTM and the company’s other product candidates, including NU-172 and rNAPc2. The Company is also evaluating other potential financing sources including equity capital and government grant funding.