Editor

It's all about the enzymes. Strike that. More precisely, much drug development these days seems to be about the enzymes, as replacement therapies and as treatments.

Revise that to add: But the enzymes don't always work.

The shifting sands of biotechnology last week saw BioMarin Pharmaceuticals Inc. ending development of Neutralase, almost exactly a year after the company started Phase III trials - a move that followed by one year the acquisition of the heparinase drug (among others) from IBEX Technologies Inc.

Neutralase had failed once already in a Phase III trial, conducted by IBEX, in patients who had undergone coronary bypass surgery, but the problem was attributed to dosing. BioMarin also was testing Neutralase to reverse the anticoagulant action of heparin in CABG patients, but at a different dose.

Not any more. BioMarin said its decision to stop the study (and all development of Neutralase) resulted from a recommendation from an independent Data Safety Monitoring Board and was based on a review of data from enrolled patients, which "indicated with high probability that Neutralase would not demonstrate favorable safety and efficacy," the company said.

"I think it fizzled for safety reasons, though we don't really know," said Thomas Shrader, analyst with Harris Nesbitt Gerard.

That was the bad news. The good news was that reductions in spending related to the move led BioMarin to lower its projected net loss by $5 million for 2003 and by $13 million for 2004. Investors, though, might have been less than impressed.

Yaron Werber, analyst with SG Cowen, said in a research note that the "strong sell-off" on disclosure of the Neutralase news was "overdone." He pointed out that sales of Aldurazyme, the enzyme replacement therapy for mucopolysaccharidosis-I partnered with Genzyme General, are going well, and are expected to total between $10 million and $13 million by the end of this year.

What's more, BioMarin said in a conference call that data from a Phase III trial of Aryplase in the enzyme-shortage disease known as MPS-VI, or Maroteaux-Lamy syndrome, likely will be available in April or May of next year, with a regulatory filing in the fall of 2004. Werber projected Aryplase could be approved in the U.S. in the first half of next year and in Europe in the second half.

Meanwhile, 12-month follow-up data from the Phase I and Phase II studies with Aryplase will be offered in early November at the American Society of Human Genetics meeting in Los Angeles.

With Aldurazyme and the potential of Aryplase driving BioMarin's stock, the hit taken from the loss of Neutralase seems less harsh. Neutralase had to go, in any case, although the treatment arm involving the drug in the Phase III trial chalked up no deaths. BioMarin had begun with high hopes, enrolling patients in an effort to show the drug was not inferior to the heparin antagonist protamine, derived from fish sperm.

Another factor in Neutralase's development was Angiomax, a heparin substitute from The Medicines Co. that is approved for use in unstable angina patients undergoing coronary angioplasty - and is being tested for the same indication as Neutralase.

Angiomax "threw a great sense of uncertainty into the heparinase story," Shrader told BioWorld Financial Watch. "It wasn't clear how much of the market Angiomax was going to leave. We were waiting for clinical results in bypass."

BioMarin's Aldurazyme partner, Genzyme, had news last week, too. The company said it's expanding an existing deal with Cambridge Antibody Technology Group plc focused on monoclonal antibodies targeting transforming growth factor-beta, which is involved in various fibrotic diseases, including liver fibrosis and idiopathic pulmonary fibrosis.

CAT and Genzyme's lead product, CAT-192, is in a Phase I/II for the fibrotic disease known as diffuse systemic sclerosis, and the success of InterMune Inc.'s Actimmune (interferon gamma-1b), which sold $106 million last year for IPF, suggests more gold might await in that indication.

Perhaps just as intriguing for BioMarin with regard to Genzyme, though, is BioMarin's jettison of Neutralase, raising the possibility that the smaller company might now be an appealing acquisition candidate for Genzyme.

Why not? The pair already has a joint venture for Aldurazyme. BioMarin's Aryplase, along with its pipeline product for phenylketonuria (PKU), seems to fit Genzyme's development strategy. BioMarin expects to enter the clinic next year with the drug for PKU, which afflicts about 50,000 children in the Western world and is characterized by an inability to oxidize a metabolic product of phenylalanine and by severe mental retardation.

Genzyme has been in a buying mood. The company in August said it was taking over SangStat Medical Corp. for about $600 million in cash, or $22.50 per outstanding share, gaining in the deal the marketed anti-thymocyte globulin Thymoglobulin, a polyclonal antibody for organ rejection, as well as a pipeline in immune-mediated diseases. Specifically, in the latter area, SangStat has the anti-inflammatory peptide RDP58 for gastrointestinal diseases, which has yielded positive Phase II data. (See BioWorld Financial Watch, Aug. 11, 2003.)

If SangStat was an acquisition fit, might BioMarin be at least as good?

"It's something to think about," said Shrader, who pointed out the possibility in a research note. "Some of the investors appreciated the heads-up and others thought it was obvious."

Dropping Neutralase made the acquisition "a little more" likely, he said. Genzyme once almost bought Cell Genesys Inc. - which owned about 22 percent of Abgenix Inc. - in 1999, Shrader recalled, "and the reason they stopped is that they didn't want to pay for all the Abgenix stock." The mainstream cardiology product Neutralase might have been seen as a similar obstruction, he said.

Shrader still described a Genzyme/BioMarin merger as "not very likely," overall, even though the PKU product might be attractive "in the Genzyme kind of way" since it's targeting "a desperate indication," allowing the company to charge premium prices for the drug.

Other Genzyme products include Renagel (sevelamer hydrochloride), a phosphate binder for patients with end-stage renal disease on hemodialysis that sold $66 million in the most recent quarter; Cerezyme (imiglucerase for injection) for Type I Gaucher's disease, which pulled down $184.7 million last quarter; and Fabrazyme (agalsidase beta), which garnered $15.4 million.

"This [PKU] program has Genzyme written all over it," Shrader said.

"The fact of the matter is that, despite the unbelievably high price tag of Genzyme's products, things haven't always gone that well for the company," he added. "It's not like it's led to absurd opulence. It's allowed the company to survive."

Lately, of course, Genzyme has been doing plenty more than surviving - a truth that comforts investors whether or not something like a merger or added partnership with BioMarin comes to pass.

"It's almost unbelievable how well things are going" for Genzyme, Shrader said.

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