Six months after the approval of Namenda, Neurobiological Technologies Inc. began a Phase III program for its second product xerecept, to treat swelling associated with brain tumors.

If all goes well, the orphan drug could reach the market in 2006.

"We're excited, but also real busy in setting up what's going to be a difficult trial," said Paul Freiman, president and CEO of Richmond, Calif.-based Neurobiological (NTI). "We're dealing with an orphan drug, and the pool of patients is limited. So we have spread the net to over 25 sites in the U.S. and Canada."

The company's stock (NASDAQ:NTII) dropped 21 cents Tuesday, to close at $4.33.

NTI plans to enroll 200 patients in the Phase III trial - the first of two. The second trial, which will enroll 120 patients, is expected to begin this summer. Both are estimated to complete in 18 months and be followed by an early 2006 new drug application filing. Since brain swelling associated with brain tumors - or peritumoral cerebral edema - represents a small market, Freiman said he hopes to gain a six-month priority review for the drug, meaning it could be on the market later that year.

The company estimates about 150,000 patients a year are diagnosed with brain cancers in the U.S. Freiman said the product in the U.S. has between a $50 million and $100 million market potential, with equal potential in Europe, and about half of that in Japan. Worldwide, xerecept could bring in sales of between $125 million and $250 million.

"It will be a relatively small drug given its orphan status, but it will be a big deal for our company because we intend to market it ourselves in the U.S.," Freiman told BioWorld Today. "We think that 10 to 12 sales reps can do it all."

In Europe, where the company expects to conduct another trial following the Phase III North American studies, NTI might attempt to replicate its own U.S. sales force, instead of partnering the product. However, it will seek to partner the product in Japan. The company plans to seek approval in those countries after the NDA filing in the U.S.

The first Phase III trial is designed to treat patients with peritumoral brain edema who require chronic treatment with a steroid called dexamethasone. The primary endpoint is a 50 percent reduction in steroid use at the end of the three-week treatment period. Physicians will try to maintain that reduced dose through the fifth week, then reduce it further or eliminate dexamethasone through the 12th week.

The second Phase III trial will treat na ve patients who are in an acute setting and require increasing steroid treatment.

"What we're trying to do is reduce the dose of steroids or to eliminate steroids completely," Freiman said.

High-dose corticosteroids (dexamethasone) are effective in treating the swelling, but they are associated with the side effects of muscle wasting, osteoporosis, vision impairment and psychosis.

NTI developed xerecept after attaining a license to the product from the Salk Institute in 1988. It is a synthetic mimic of the naturally occurring human neuroendocrine hormone corticotropin-releasing factor, or CRF, which is thought to be a key hormone involved in regulating the release of natural corticosteroids by the pituitary and adrenal glands. Xerecept appears to block vascular permeability by inducing upregulation of blood-brain barrier specific structural proteins.

NTI has sponsored five clinical studies of xerecept in symptomatic brain tumor patients, who have reported neurological improvement when receiving a stabilized dose of dexamethasone or none at all.

If xerecept reaches the market, it would be NTI's second product to gain approval. Namenda (memantine HCL) received FDA approval last October for Alzheimer's disease. (See BioWorld Today, Oct. 20, 2003.)

Marketed in the U.S. by New York-based Forest Laboratories Inc., Namenda has an estimated $1 billion peak market potential. Merz Pharmaceuticals GmbH, of Frankfurt, Germany, co-markets Namenda for Alzheimer's disease in German-speaking countries, and H. Lundbeck A/S, of Copenhagen, Denmark, markets the product in most of Europe. The drug brought in $34 million in U.S. sales for Forest Labs in the first quarter of this year, representing a 25 percent market share in new prescriptions, which Freiman called a "remarkable number."

"[Forest] also announced they are moving ahead for the same product for neuropathic pain, where we enjoy a larger royalty percent," he said.

With only Namenda and xerecept on its list of products, NTI raised $19.4 million in a private placement in March to acquire products or attain partnerships in order to build its pipeline. (See BioWorld Today, March 3, 2004.)

The company has about $23 million in cash and a burn rate of about $4 million a year. Freiman estimated the Phase III trials would run the company about $4 million total over three fiscal years.

"So we're in great shape financially," he said.