Following a disappointing fourth quarter that included a not-approvable letter, Inex Pharmaceuticals Corp. was dealt another blow when its partner, Enzon Pharmaceuticals Inc., pulled out of a North American marketing agreement for the cancer drug Marqibo.

That announcement came two months after the companies received the not-approvable letter and more than three months after the FDA's Oncologic Drugs Advisory Committee unanimously voted to reject a new drug application seeking accelerated approval of Marqibo (vincristine sulfate liposomes injection) for relapsed, aggressive non-Hodgkin's lymphoma. As part of the termination agreement, Inex said it expects to receive $5 million from Enzon for shared development costs and certain development milestones.

Inex's shares (TSE:IEX) lost C24 cents - 32 percent - Thursday to close at C51 cents.

Initially signed in January 2004, the Marqibo agreement "was formed to capitalize on what both companies believed to be a near-term commercialization opportunity," said David Main, CEO of Inex, during the conference call to release the company's fourth-quarter and year-end earnings.

Marqibo was projected to hit the marketplace this year. Instead, the regulatory setbacks would add both time and money. After analyzing the FDA's recommendations, Enzon decided "it would be better off to redirect its investments," Main said.

"Enzon has been an excellent partner," he said, but it "concluded that Marqibo is no longer a strategic fit for their pipeline needs."

As for Inex, it maintains high hopes for Marqibo, despite undergoing a restructuring process last quarter to cut costs following the advisory panel's rejection.

"We have made considerable progress in a short period of time and under very difficult circumstances," Main said. "Most of those problems are now behind us."

When rejecting the original NDA, the panel said the submission should have been based on a randomized, comparative Phase III study of Marqibo vs. other chemotherapy regimens, rather than on data from a single-arm Phase II trial. Two weeks after the panel's vote, Inex cut nearly two-thirds of its employees - 103 of 165 - and decided to slow other research efforts to cut overall expenses by 40 percent. (See BioWorld Today, Dec. 15, 2004, and Jan. 20, 2005.)

Those reductions "enabled us to enter 2005 with working capital of just under C$30 million [US$24.9 million], with a projected average burn rate of C$1 million per month for this year," Main said. "That cash position gives us time to evaluate alternative clinical paths for Marqibo."

The company's burn rate for 2004 averaged between C$1.6 million and C$1.7 million per month.

Marqibo, developed from an off-patent cancer drug, vincristine, and encapsulated in Inex's sphingosomal drug delivery technology, is designed to provide prolonged blood circulation, tumor accumulation and extended drug release at the cancer site. In addition to relapsed, aggressive non-Hodgkin's lymphoma, Marqibo also is being evaluated as a possible combination therapy for the first-line treatment of non-Hodgkin's lymphoma and in relapsed Hodgkin's disease and relapsed acute lymphoblastic leukemia.

Main said the company has met with lymphoma and leukemia experts over the last few months, and is preparing to meet with the FDA next quarter to discuss submitting a special protocol assessment that details a Phase III development plan.

"This is a critical next step," Main said. "As we go down this path to determining the clinical and regulatory strategy for Marqibo, we will begin to actively look at strategic alternatives for the company."

Even with its recent cost-cutting measures, it is doubtful Inex could fund the late-stage trials and commercialize Marqibo itself. Main said the company would remain open to partnership discussions, or consider out-licensing Marqibo.

In the meantime, Inex has other products in its pipeline. Main said the company plans to file an investigational new drug application this year to begin clinical evaluation of INX-0125 (sphingosomal vinorelbine). The product, based on Inex's targeted chemotherapy technology platform, has shown to be a potential cancer therapy in preclinical studies.

Inex also is investigating INX-0076, another early stage product based on its chemotherapy platform, as well as two preclinical products, INX-0167 and INX-0204, based on the company's targeted immunotherapy platform.

For the quarter ending Dec. 31, the Vancouver, British Columbia-based company posted a net loss of C$14.7 million, or C38 cents per share. For the year, Inex's net loss totaled C$33.7 million.

At the end of December, the company had C$30 million in cash and cash equivalents.

Marqibo is the second cancer drug dismissed from Enzon's lineup during the last two months. The company previously announced it was halting trials of its own drug, Pegamotecan, following an interim analysis of a Phase IIb trial in gastric or gastroesophogeal cancers. The product is not expected to be pursued in any other indications. (See BioWorld Today, Feb. 7, 2005.)

Shares of Enzon (NASDAQ:ENZN) lost 22 cents Thursday to close at $10.89.