Washington Editor

Despite the immediate negative impact on its stock, Hollis-Eden Pharmaceuticals Inc. isn't terribly concerned about poor preliminary results from a Phase II trial of its immune regulating hormone (IRH) used to lower cholesterol.

HE2200 (also called Reversionex), like other IRHs, is designed to direct, through controlling gene expression, the production of key cytokines and enzymes that re-regulate immune and metabolic functions toward homeostasis, a profile that could be useful in a wide variety of diseases, the San Diego-based company said.

Hollis-Eden's stock (NASDAQ:HEPH) fell $3.33 Tuesday, or 19.2 percent, to close at $13.99.

The company started out studying HE2200 to improve the immune system of the elderly receiving a vaccine. Following Phase I safety studies, Hollis-Eden found evidence that the compound lowered cholesterol by 10 percent in healthy volunteers who were not on diets.

As a result, the company initiated the 66-patient Phase II based on two earlier 30-patient Phase I placebo-controlled studies in which cholesterol levels dropped after three days of subcutaneous dosing or five days of buccal dosing.

Preliminary results showed that the compound did not have a statistically significant effect on lipids in the patient population overall.

Bob Marsella, Hollis-Eden's vice president of business development, told BioWorld Today the culprit could be that Phase II patients were on a strict diet.

While that may be the case, Edward Nash, senior biotechnology analyst with Legg Mason Wood Walker Inc. in New York, told BioWorld Today the cholesterol indication was never incorporated into his models.

"At the end of the day, this is the same technology they are going after for metabolites and radiation protection," Nash said. "I've never been very strong on the technology, and I think this speaks to that point. Even if they had been successful here, we still think they would have had a lot of other hurdles to overcome; they would have had to get a partner, run a Phase III trial that would probably [require] several thousand patients to be able to have the data necessary [for approval], just like all the other statins have had to be able to show."

Nash said delivering the drug as a buccal formulation as opposed to an oral formulation may have contributed to the company's failure to replicate the Phase I results.

The jury is still out on whether Hollis-Eden will pursue cholesterol as an indication. Marsella said the company continues to study the preclinical models of HE2200 to understand the impacts on metabolism and lipids.

Separately, the company believes results of the Phase II using HE2200 as an immune enhancement in patients over 65 years of age will be complete in the first quarter.

The company's top priority remains the development of HE2100 (Neumune), a candidate for radiation protection and chemotherapy. In chemotherapy, Marsella explained, Hollis-Eden is going after the market currently served by Neupogen and Neulasta, made by Amgen Inc., of Thousand Oaks, Calif.

Hollis-Eden is co-developing HE2100 as radiation protectant with the U.S. military by way of a Cooperative Research and Development Agreement.

If President Bush's proposed Project BioShield is passed, Hollis-Eden hopes the government will order HE2100 to build a stockpile.

Project BioShield is the Bush administration's plan to speed development of bioterrorism countermeasures by streamlining government research, creating incentives for companies and giving the government the ability to make products widely available in a public emergency. The House passed the legislation, and the Senate is expected to follow suit soon. (See BioWorld Today, Oct. 27, 2003.)

Hollis-Eden will give an oral presentation on HE2100 at the American Society of Hematology meeting scheduled Dec. 6-9 in San Diego.

Preliminary results from a pilot study in nonhuman primates indicated that the administration of HE2100 two, four or 24 hours after radiation exposure resulted in a statistically significant reduction in the occurrence of severe neutropenia compared to control animals.

In late September, Hollis-Eden raised $62.5 million by selling 2.5 million shares at $25 each. Prior to that, in late June, the company raised $15 million in a private placement of 1.3 million shares at $11.42 each. (See BioWorld Today, June 23, 2003, and Sept. 29, 2003.)

Marsella said the company has about $90 million in cash and 18 million to 19 million outstanding shares. The company is burning $1 million per month.

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