Development and regulatory challenges have prompted NeoRx Corp. to drop development of its lead cancer program, close a Texas manufacturing facility and reduce its work force by 40 percent, all in an effort to focus its resources on the chemotherapeutic agent Picoplatin.

Since starting a Phase III trial last year of Skeletal Targeted Radiotherapy (STR) in multiple myeloma patients, the Seattle-based company has struggled with enrollment. NeoRx talked with the FDA about revising patient eligibility criteria, but after those discussions, the agency wanteed to renegotiate the special protocol assessment for the current trial.

"The considerations that the FDA suggested would have increased the total cost and the total time to bring this product to the market," said Jerry McMahon, NeoRx's chairman and CEO. "We were projecting 2008, and this would have delayed it substantially."

With an uncertain regulatory situation, as well as a changing landscape due to two competing drugs, Revlimid and Velcade, it seems unlikely that NeoRx will find a funding partner for STR. The company's stock (NASDAQ:NERX) dropped 18.2 percent Monday, or 12 cents, to close at 54 cents.

Celgene Corp., of San Diego, intends to file a new drug application for Revlimid in multiple myeloma in the third quarter, while Cambridge, Mass.-based Millennium Pharmaceuticals Inc. received approval for Velcade to treat the disease in May 2003.

STR is designed to deliver high doses of radiation to tumor sites in the skeleton with minimal damage to organs outside the bone. It combines the small-molecule DOTMP with the radionuclide holmium-166.

NeoRx stopped its Phase III STR program in November 2000 when four patients treated at a Phase I/II study site developed delayed toxicity of thrombotic thrombocytopenic purpura/hemolytic uremic syndrome. The FDA lifted the hold in April 2003, and formed a SPA with the company later in the year. Another Phase III trial began in March 2004. (See BioWorld Today, Nov. 9, 2000, and Oct. 2, 2003.)

NeoRx was having trouble enrolling the 240 patients needed for the new Phase III STR trial because the patient eligibility criteria limited enrollment to those who were refractory to initial treatment prior to moving into a transplant setting. Some of those patients, however, were excluded from the trial because they moved from the first treatment to therapies such as Revlimid and Velcade before transplantation. NeoRx tried to amend the SPA to include those patients, as well, but the FDA did not support the change without extending the endpoints of the trial and increasing the number of patients and the length of follow up.

NeoRx does not plan on contributing any more resources to the development of STR, but it would consider out-licensing the product if there was interest, McMahon said.

"The probability is the program will be shelved," he told BioWorld Today.

As a result, the company is shutting down its STR manufacturing facility in Denton, Texas, laying off 12 employees there, and another nine in its Seattle office, leaving it with a 29-person work force.

Resources will be redirected to the clinical development of Picoplatin (NX 473, formerly AMD473), a compound acquired last year from Vancouver, British Columbia-based AnorMed Inc. (See BioWorld Today, April 6, 2004.)

NeoRx holds an exclusive license in Europe and North America to develop, manufacture and commercialize the product, which AnorMed sold for strategic reasons.

"It's more of a bona fide oncology chemotherapy, which was quite different from the other products that AnorMed develops," McMahon said. "I think they felt that NeoRx would really provide the focus in order to bring this product forward."

Earlier last week, NeoRx signed a manufacturing and supply agreement with Hyaluron Inc., of Burlington, Mass., to produce the drug for clinical trials. The company intends to start a Phase II trial of Picoplatin in small-cell lung cancer in the middle of the year. The randomized trial will evaluate it as a single agent. There are no approved treatments for patients with platinum-refractory/resistant small-cell lung cancer, although platinum therapies are the preferred treatment.

In early 2006, NeoRx plans on starting a Phase I/II program on Picoplatin in colorectal cancer, based on clinical data showing the agent is safe with other chemotherapeutics and preclinical data showing activity in the disease. Development in other indications will follow the lung and colorectal cancer programs.

"Cumulatively, we're talking about a product that could be making several hundred-million dollars either in single or multiple indications at product launch," McMahon said. "It's quite a different product than STR in terms of relative ease of development, as well as commercial opportunity."

Picoplatin is a next-generation intravenous platinum chemotherapeutic agent designed to improve on the safety and efficacy of existing platinum cancer therapeutics. It has been evaluated in more than 500 patients to date in Phase I and II studies conducted by AstraZeneca plc, of London. The compound demonstrated antitumor activity in a variety of solid tumors, including lung, ovarian and hormone-refractory prostate cancer.

With the success of platinum agents such as oxaliplatin and carboplatin, an approval pathway exists for that class of drug. And problems of platinum-resisistance and toxicities to the peripheral nervous system and kidneys highlight the need for new therapies such as Picoplatin that might overcome those barriers, McMahon said.

Recent data also have shown the promise of platinums in combination with targeted cancer agents. NeoRx hopes to in-license an additional product by the end of the year, possibly a targeted therapy that would complement Picoplatin.

NeoRx expects to incur restructuring charges of about $2 million in 2005 and 2006 associated with the layoffs, termination of contracts and other obligations related to the STR program. As of March 31, the company had cash and investments of about $16.1 million, enough to fund operations this year.

"We'll be exploring various mechanisms to provide additional cash into the company by the end of the year," McMahon said.