Staff Writer

IntraBiotics Pharmaceuticals Inc. is stepping to the plate again with its iseganan hydrochloride oral solution.

But after significant setbacks last fall caused the Mountain View, Calif.-based company to drop the drug's development in treating oral mucositis, IntraBiotics is looking to take a swing at a new indication.

The company plans to launch a 500-patient Phase II/III study to investigate its anti-infective for the prevention of ventilator-associated pneumonia (VAP). Up to $3.5 million in new financing commitments could help offset trial costs.

"In oral mucositis there was always a question to what extent it was infectious in nature," Eric Bjerkholt, IntraBiotics' chief financial officer, told BioWorld Today. "But in ventilator-associated pneumonia, there is no question that it is infectious. We're pretty optimistic that this will work."

He said following FDA meetings IntraBiotics expects this trial to be the first of two required before filing for approval. Results generated in this trial would influence the design of a second trial. IntraBiotics said it expects data in the second quarter of next year - and the company's entire fortune could hinge on getting better results this time around.

"This is the only thing we're doing right now," Bjerkholt said. "Its success is of critical importance to the future of the company."

After the oral mucositis program was dropped, IntraBiotics followed with a 70 percent cutback in staff. The 27-employee layoff was designed to reduce cash operation expenses from $7.5 million per quarter to about $1.5 million per quarter this year. (See BioWorld Today, Oct. 15, 2002.)

The 509-patient trial for reducing the incidence and severity of oral mucositis in patients undergoing high-dose chemotherapy did not meet its primary endpoint. Data showed 43 percent of patients in the iseganan arm did not develop mucositis, while 37 percent of placebo patients also were free of severe oral mucositis (p=0.18).

The news sent the company's stock into a 70 percent plummet - a drop of $1.11. (See BioWorld Today, Oct. 1, 2002.)

IntraBiotics, which reported a quarterly net loss of $10.3 million for the period ended Dec. 31, and a loss of $34.5 million for the year, later lowered its headcount to six employees during the fourth quarter.

But IntraBiotics appears to be pinning its hopes on the cancer patients' tolerance of iseganan. Equally important in moving ahead in the new indication is iseganan's apparent ability to significantly reduce bacteria levels in the oral cavity of cancer patients as well as patients who require artificial ventilation.

IntraBiotics believes such properties of its antimicrobial peptide make it suitable for use in preventing VAP, a common infection found in intensive care patients who require artificial ventilation.

Such patients can become vulnerable to pneumonia because of the aspiration of bacteria-laden saliva. More than 30 prior clinical trials with other antibiotics have demonstrated that VAP can be prevented through prophylactic decontamination of the oral cavity. In a previous Phase I/II study completed by IntraBiotics in artificially ventilated patients, iseganan reduced the levels of oral bacteria by more than 100-fold compared to pre-treatment baseline levels after a single 9-mg topical dose.

"There are over 400,000 patients in the U.S. that are artificially ventilated for more than 48 hours each year," Bjerkholt said. "The incidence of ventilator-associated pneumonia in that population is probably in the 15 percent to 25 percent range."

IntraBiotics said no therapeutics are approved to prevent VAP, in large part because of fears of resistance being developed. But Bjerkholt said no resistance has been observed in studies of iseganan to date.

"That absolutely is going to be key in setting us apart," he said. "This is not to say that in vivo you will not see resistance over time, but we're pretty optimistic that it will not happen - at least not for a long time."

It could take IntraBiotics some time to tap its envisioned market, though. The company said it would subsist through the second half of next year on its current cash reserves of $13.3 million coupled with the recent financing, provided by company Chairman Ernest Mario, Tang Capital Partners LP, of San Diego, and Baker Brothers Investments, of New York. In return for the funding, IntraBiotics is issuing Series A convertible preferred stock as well as warrants to purchase shares of common stock.

The company must secure shareholder approval before the financing is complete. IntraBiotics also needs shareholder approval for a reverse split of its outstanding shares of between 1-for-8 and 1-for-12. The move is designed to support the $1 minimum bid price requirement for Nasdaq listing - a requirement the exchange notified IntraBiotics that it had violated. The company's stock remains on Nasdaq during a 90-day review period.

IntraBiotics' stock (NASDAQ:IBPI) fell 4 cents Friday, or 21 percent, to close at 15 cents.

Concurrent with the financing and trial news, Henry Fuchs was named CEO, replacing Mario. Fuchs had been the company's president and chief operating officer. Mario said he stepped aside in an effort to put the company in the hands of someone with more of a clinical background.