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Shares of Renovo plc tumbled 51 percent after its anti-scarring product, Juvista, missed its endpoint in a Phase II trial in patients undergoing breast augmentation surgery, leading investors to worry about the product's chances for broad label approval.

Despite positive results from a separate scar revision Phase II trial that tested two doses Juvista (human recombinant transforming growth factor beta 3) - one given at the time of surgery and the second dosed 24 hours later - most of the attention on Renovo was concentrated on the second unsuccessful study, which evaluated Juvista, administered only once, at the time of breast augmentation surgery. In that 63-patient study, Juvista failed to meet the primary endpoint, which was measured using standardized photographs of the scars by a lay panel 12 months after surgery using a visual analogue scale (VAS).

Renovo's interpretation of those results is that "Juvista's efficacy is greater when given twice," CEO Mark Ferguson said during an analyst briefing, maintaining that the study was designed to provide "appropriate learning and confirming opportunities" for planning the upcoming Phase III program and that the results should not be seen as indicative of Juvista's overall regulatory and commercial potential.

The London-based firm has conducted nine Phase II trials, of which seven yielded positive results and two, including the breast augmentation surgery trial and a late 2007 mole removal study, missed their endpoints. But the point of those studies, Ferguson said, was to evaluate varying doses and dosing schedules to determine which generates the best results "and, there, I think we've been quite successful."

But, based on the stock's activity Monday, investors tended to disagree. Shares of Renovo (LSE:RNVO) fell 68 pence to close at 66 pence.

On the call, several analysts questioned whether the results of the breast augmentation surgery trial might impair Renovo's ability to get broad label approval for Juvista in anti-scarring applications. In his responses, Ferguson acknowledged that the trial data "being negative does not help" the broad label approach, but said the company remained optimistic, citing positive data from the scar revision study.

It found that patients in the first 30-patient phase of the study showed statistically significant improvement in scar reduction when treated with Juvista compared to placebo, as measured by VAS.

That trial used a within-patient comparison, meaning that patients undergoing scar revision surgical procedures had their scars divided into three segments - one segment treated with intradermal injections of Juvista and one treated with placebo, with the middle section remaining untreated. In addition to meeting its endpoint, results of that study also demonstrated Juvista's activity "for the first time in poorer scars," Ferguson said.

Earlier studies had demonstrated the drug's effect in smaller, less severe scars.

A second phase of that same trial, evaluating Juvista vs. placebo in 30 patients undergoing scar revision surgery in two separate procedures, is continuing, with results anticipated in the second half of this year. But based on results of the first phase, in combination with previous data, Renovo is moving forward with the first of two anticipated Phase III trials, slated to start in Europe in the second half of 2008.

That study is expected to be a scar revision trial, likely testing two doses, 200 ng and 500 ng, vs. placebo, again using a within-patient design. Ferguson declined to offer more specific information, pending results of a meeting with European regulators.

Renovo's partner, Basingstoke, UK-based Shire plc, which has rights to Juvista in the U.S., said it plans to request a similar meeting with the FDA later this year to determine the regulatory path forward.

Under the companies' June 2007 deal, Shire paid $75 million up front for rights to Juvista worldwide, except for European Union states, and made a $50 million equity investment.

In addition, the collaboration includes up to $700 million in potential milestones, which include a $25 million payment upon the FDA's acceptance of a biologics license application and between $50 million and $150 million upon approval, depending on the scope of the product's labeling.

Shire will bear the cost of trials for U.S. approval, while Renovo will handle the costs for European trials.

As of Dec. 31, Renovo had a cash position of £93.8 million (US$186.1 million).

Beyond Juvista, the company has Zesteem, a formulation of 17 beta estradiol for acute skin healing that is in Phase III testing, with results expected in the second half of this year. Juvidex, a formulation of mannose-6-phosphate, recently started a Phase II trial in accelerated re-epithelialization in split thickness skin graft donor sites, and, Prevascar, is set to start Phase II later this year in nerve repair.