Neurobiological Technologies Inc. acquired its third product, a treatment for acute ischemic stroke, through the purchase of a small biotech firm called Empire Pharmaceuticals Inc.

"This, all of a sudden, puts us in a new category as a company, not only one that generates excitement, but we're going to help a lot of people in need," NTI's CEO and president, Paul Freiman, said in a conference call. "I'm so excited right now. I'm pumped."

NTI raised $19.4 million in a March private placement to expand its pipeline with later-stage products. The acquisition of Greenville, N.Y.-based Empire represents the first such expansion, giving NTI a product called Viprinex (ancrod), which is expected to move into a pivotal Phase III program for acute ischemic stroke, involving two trials and 1,000 patients, in the second half of 2005.

The company made the Empire acquisition through a stock and cash transaction valued at a total of $22.8 million, half of which it paid now through 2.4 million NTI shares and $2 million in cash. The other 2.4 million shares and $2 million in cash would be paid if Viprinex's Phase III trials begin as planned.

NTI's stock (NASDAQ:NTII) rose 21 cents Thursday to close at $4.15.

Richmond, Calif.-based NTI gains exclusive worldwide rights to Viprinex and Empire's research team. Empire President and CEO Steven Petti will join NTI as vice president of product development. Viprinex could reach the market in 2007 and bring NTI worldwide sales of between $200 million and $500 million, Freiman said. The company intends to market the drug itself to 200 stroke centers in the U.S., or to co-market it with another company in order to also call on emergency rooms. It would partner the Japanese and European marketing rights.

Viprinex will become the third product in NTI's pipeline, which also boasts the already approved Namenda for Alzheimer's disease and the Phase III product xerecept for peritumoral brain edema. Namenda also is being studied in neuropathic pain.

Viprinex, a thrombin-like enzyme that is highly specific to fibrinogen, is derived from the venom of the Malayan pit viper. While the drug still requires another 12- to 18-month trial to support a regulatory filing in the U.S., Petti remained positive that it would benefit a patient population that has few options.

"The Viprinex clinical overview is quite an interesting story in itself," Petti said. "This is a drug that basically works by removing a substance in the blood called fibrinogen."

The protein fibrinogen is involved in blood clotting, which might impede blood flow to critical regions of the brain. A primary goal of treating stroke is improving blood flow through a blocked vessel so that the flow of oxygen and nutrient supply to brain tissue is not interrupted or compromised.

In clinical studies, Viprinex has demonstrated an ability to deplete plasma fibrinogen when administered systemically. In patients receiving Viprinex within six hours of stroke, blood viscosity is reduced by 20 percent to 30 percent from pretreatment levels. Upon stopping Viprinex therapy, the levels appear to return to where they were pretreatment within 10 days.

A randomized, double-blind, placebo-controlled U.S. Phase III trial completed in 1998 showed Viprinex was effective in preserving neurological function. The trial included 500 patients with acute ischemic stroke who were treated within three hours of the episode. Another randomized, double-blind, placebo-controlled Phase III trial completed in Europe in 2000 enrolled patients within six hours of stroke onset. However, that trial failed when a planned interim analysis indicated lack of efficacy and increased incidence of intracranial hemorrhage.

Petti said they might never fully know what went wrong, but researchers believe the failure was due to higher dosing levels given over five days and the fact that the European trial enrolled patients with a higher risk of hemorrhage. Upcoming Phase III trials would provide the drug to patients in one infusion over a few hours, allowing their fibrinogen levels to be restored to normal.

"We're convinced enough to lay our money on the line that these dosing patterns will have a tremendous effect in putting out a safe and effective drug," Freiman said.

The main competition for Viprinex would be South San Francisco-based Genentech Inc.'s Activase (tissue-plasminogen activator, t-PA), which received approval for acute ischemic stroke in 1996. But that product must be given to patients within three hours of the episode, so its population of patients is smaller than Viprinex's would be. Stroke affects more than 600,000 U.S. patients annually.

"You're actually getting less than 2 percent of the patients treated with t-PA, so there's a huge unmet need in this marketplace," Freiman said.

Viprinex has shown its ability to offer a benefit up to six hours following a stroke.

Another potential competitor would be desmoteplase, a Phase II product in-licensed by New York-based Forest Laboratories Inc. from Aachen, Germany-based Paion GmbH. Forest considered in-licensing Viprinex, just as NTI considered desmoteplase. But Freiman said the decision came down to risk assessment. Forest's drug has been tested in a little more than 100 patients, while Viprinex has data in more than 2,000 patients.

"For a company like NTI, I don't want to take chances. I want to limit the risk," Freiman said, adding that "Forest is in a different position than we are."

As for the history of Viprinex, Empire acquired exclusive worldwide rights to the product in March 2002 from Abbott Park, Ill.-based Abbott Laboratories, which acquired it through the 2001 purchase of Knoll AG, of Ludwigshafen, Germany. Knoll invested about $150 million into the product.

Freiman said it could cost NTI about $20 million to $25 million more to get the product to market. He expects the company's burn rate to rise in the near term from about $1 million a quarter to between $1.5 million and $2 million a quarter. As of March 31, NTI had cash, cash equivalents and investments of about $22.2 million and no long-term debt.

Merriman Curhan Ford & Co. acted as financial adviser.

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