BioWorld International Correspondent

NeuroSearch's shares crashed more than 40 percent Aug. 10 on news that its lead drug candidate, NS2330, failed to achieve efficacy in two Phase IIb trials for Parkinson's disease and a third Phase IIb trial for Alzheimer's disease, dashing hopes that the compound would move into Phase III.

Boehringer Ingelheim, of Ingelheim, Germany, which licensed the compound in a deal valued at up to $80 million, decided to terminate further development in Alzheimer's. The companies are considering their options for Parkinson's disease. Another Phase II trial, possibly involving a combination therapy, still might be pursued, Jørgen Buus Lassen, president and CEO of Ballerup, Denmark based-Neurosearch, told BioWorld International. The companies also are considering initiating clinical development in a third, unnamed indication.

The three studies involved 945 patients, and the compound has been administered to more than 1,000 patients in total. Boehringer Ingelheim remains committed to the program, Buus Lassen said. "They are highly motivated to see can we utilize the good safety package we have today in a meaningful way," he said.

Its failure in both indications was "a strong negative," said Morten Larsen, analyst at Standard and Poor's in Stockholm, Sweden, as rumors emanating from the program had been positive.

"If it only made it in one of the indications I would have been happy," he told BioWorld International. He is no longer attaching any value to the compound.

NeuroSearch closed at DKK157 on the Copenhagen Stock Exchange Aug. 10, down from DKK290.50, its lowest closing price since Nov. 19, 2003. But even that level of correction might not be sufficient.

"Fundamentally, I like the company, but the valuation might be looking a bit stretched at the moment," Larsen said. The problem, he said, is that there is likely to be little positive news flow during the next six to nine months. NS2359, its candidate for depression, which is partnered with London-based GlaxoSmithKline plc, is undergoing a Phase II trial but the program is unlikely to yield any news for another year.

"History is beginning to count against the company, unfortunately," Larsen said. NS2330 is its fourth lead molecule to have failed to reach pivotal trials. Although founded in 1989, NeuroSearch has yet to progress a clinical program to the Phase III stage. However, the company has a reputation for scientific innovation, Larsen said, evidenced by its large portfolio of spinout companies, while its management has a successful development track record. While at Danish venture Ferrosan, Buus Lassen led the development of GSK's anti-depression blockbuster paroxetine, which is marketed as Seroxat in Europe and Paxil in the U.S.

NeuroSearch's own activities will not be affected by the setback, Buus Lassen said. The company, which already has booked $30 million from Boehringer, had \78 million (US$96.4 million) cash as of June 30, with \24 million due in guaranteed income, primarily from its wide-ranging alliance with GSK, and also from a third big pharma partner, Abbott Laboratories, of Abbott Park, Ill., which is developing the Phase I compound NS1209 in pain.