On a day when an FDA advisory committee was voting on whether to bring the fallen multiple sclerosis drug Tysabri back on the market, another potential therapy for the disease failed to hit its endpoint and was dropped by developer Neurocrine Biosciences Inc.

The San Diego-based company discontinued its MS program for its altered peptide ligand (APL) technology.

The failure highlights the difficulties researchers face when trying to find better treatments for MS, which afflicts 250,000 to 350,000 people in the U.S. Neurocrine’s APL compound, NBI-5788, demonstrated an excellent safety profile in the Phase IIb study of 157 patients who were tested over a nine-month treatment period, but the study did not achieve statistical significance in efficacy.

"It is a very difficult disease, and this endpoint was a surrogate endpoint for efficacy," said Gary Lyons, president and CEO of Neurocrine. "Phase III trials would have required two-year dosing, and before we made that type of investment, we wanted to have more confidence that we had an active drug."

Despite the disappointing results in the MS trial, the company intends to continue its Phase II trial of the technology, which uses a different APL epitope, in Type I diabetes. Those results are expected in the third quarter.

Lyons said "there's no way of telling" whether the diabetes trial will have a better outcome, but he stressed that it is a controlled trial with more doses and a longer treatment regimen than the MS trial had.

Wall Street was indifferent. Neurocrine’s stock (NASDAQ:NBIX) rose 60 cents Wednesday to close at $69.30.

The company "didn't expect there would be much fallout," Lyons said. "I think investors are eager for us to re-direct our resources."

The company’s APL technology evolved from work by Larry Steinman, a Neurocrine co-founder and a professor at Stanford University, who identified with his colleagues one of the dominant immune cells that attacks the insulating sheath, myelin basic protein. In MS, the body’s own immune system targets healthy central nervous system cells and destroys the insulating sheath around nerves.

The discovery of myelin basic protein led to the APL therapeutic approach , which directly targets the autoreactive immune cells. The scientists modified a portion of the myelin basic protein so the antigen was no longer capable of activating the immune cells but could induce an immune response that would regulate the pathogenic cells.

In preclinical studies, it seemed to work. The APL reduced disease severity and progression for extended periods. Then, a Phase II study started in 2001 in 144 patients showed a hyperimmune response in the high doses of NBI-5788, but a shrinkage of lesions in patients taking the low dose (5 mg) on a weekly basis.

"In an effort to avoid any hyperimmune responses we went with the lower dose" in the most recent Phase II trial, Lyons said, but the company decreased the frequency of administration to monthly instead of weekly.

Not only did the 5-mg dose display no evidence of activity, but the placebo group improved by 50 percent. That led Neurocrine’s researchers to conclude that "either the drug is inactive or we under-dosed," Lyons said. "Maybe if we had done weekly [dosing] we may have seen something, but once monthly wasn’t enough in this trial."

The dropped program is another blow to the MS community, which is anxiously awaiting new therapies to battle the disease. Current treatments for MS include Avonex (Biogen Idec Inc.), Betaseron (Berlex Laboratories Inc.) and Rebif (Serono SA), as well a synthetic form of myelin basic protein, Copaxone (Teva Pharmaceuticals Inc.), for the relapsing-remitting form. Novantrone (Serono SA) is approved to treat the advanced or chronic form of MS.

But the therapies have their limitations. They do not eliminate the disease, only reducing its severity and progression, and beta interferons often are associated with flu-like side effects. All of the compounds are linked to injection-site irritation.

The most efficacious treatment to date, Tysabri (Biogen Idec Inc. and Elan Corp. plc), spent a short time on the market last year but was yanked when it appeared to be linked to a serious side effect, progressive multifocal encephalopathy. The FDA will decide later this month to determine whether it can return.

With the MS program now discontinued, Neurocrine intends to focus its attention on its other pipeline products, which include an oral, small-molecule GnRH antagonist to treat endometriosis and benign prostate hyperplasia; urocortin 2 for congestive heart failure; and a CRF antagonist for anxiety/depression and irritable bowel syndrome. Neurocrine also is advancing a back-up compound for GnRH and a back-up CRF antagonist, and it has started a Phase I trial of its H1 antagonist, NBI-75043, to treat insomnia.

The company is waiting to hear from the FDA in May in regards to its new drug applications for the capsule and tablet formulations of Indiplon for insomnia.

Lyons said the terminated MS program will have "no financial impact on the company," except that Neurocrine will not be spending any more money on it. "Cash flow-wise, it actually is positive," he said.

As of the end of 2005, Neurocrine had about $275 million in cash, cash equivalents and short-term investments. It expects to reach profitability this year, if Indiplon is approved and launched.

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