The only A.G.E Crosslink Breaker in the clinic and the lead product of Alteon Inc. did not fare well in its two Phase IIb trials, missing the primary endpoint and sending the company's stock down 75 percent.

Ramsey, N.J.-based Alteon's ALT-711 did not demonstrate statistical significance in the reduction of systolic blood pressure by office-cuff measurement when compared to placebo at the highest of four doses, 210 mg daily, in the company's Sapphire and Silver trials. Although there were pockets of positive data in the results and the analysis is not complete, investors took the news hard - Alteon's stock (AMEX:ALT) plummeted $5.18 Thursday, or 76.2 percent, to close at $1.72.

At least part of the problem, it seems, was a surprise placebo effect across the 768 patients in the first two weeks of the trial. Patients in all seven arms of the trials, including placebo, experienced a 6 to 10 mm Hg drop in systolic blood pressure in the early part of the study.

"We didn't see the prespecified blood-lowering effect in the high dose of the drug," said Kenneth Moch, Alteon CEO and president. "We had an unanticipated placebo effect in the trial, starting at the randomization visit and going for the first two weeks."

Moch called the placebo effect "unexpected, if not unprecedented" and it was made more so by the fact that prior to randomization and beginning treatment, all patients were given only placebo for two weeks as a means of shaking any placebo effect out of trial results.

The company said it is not clear what caused the drop. However, patients in both the Sapphire and Silver (Systolic Hypertension Interaction with Left Ventricular Remodeling) trials also were on their existing medication, so one theory (out of many) is perhaps patients were more diligent about taking their meds while enrolled in an official trial than they might be on their own.

Overall, patients were given doses of 35 mg, 70 mg, 140 mg and the 210-mg dose. The best news from the trial stemmed from the lower doses: Patients in the Sapphire (Systolic and Pulse Pressure Hemodynamic Improvement by Restoring Elasticity) trial intent-to-treat population demonstrated, net of placebo, a 2 to 3 mm Hg drop as measured by cuff pressure at the lower end of the dosing range. Patients who completed their dosing regimen in the Sapphire study had a drop of about 4 mm Hg, net of placebo, at lower doses, as shown by ambulatory blood pressure measurements.

So, while the primary endpoint was missed, "in terms of drug activity, we saw signs of efficacy and activity that were consistent with prior trials," Moch told BioWorld Today. "We are now planning a Phase II trial that will be a shorter, confirmatory study, prior to any Phase III."

The Phase II would attempt to address the placebo effect. "Clearly," Moch said, "we've already started working on that."

If things progress well, a Phase III program in systolic hypertension would begin in 2005, Moch said, which amounts to a delay of about a year. The drug is not yet partnered but the company said it was planning to have its potential partners "come look at the data" and didn't rule out partnering the drug before the planned confirmatory Phase II is complete.

At the end of the first half of the year, Alteon had about $16 million in cash, Moch said. It filed a $100 million shelf statement in June, but Moch said: "We've been good at marshaling our resources and we'll have a chance to continue to do that. We believe we have the capital to begin our next program - we don't believe the [confirmatory] Phase II will be that expensive or that long a trial."

A.G.E.s (advanced glycation end-products), when formed and cross-linked, can cause a loss of flexibility and function in body tissues, organs and vessels. Thus, they have potential use in many age-related diseases, including systolic hypertension. Alteon has built itself on the A.G.E. pathway with ALT-711, its A.G.E. crosslink breaker, and its preclinical product, ALT-4037, a glucose-lowering agent. So while the pipeline isn't empty, ALT-711 stood at the top. Moch acknowledged the action on the market and said he personally felt it was an overreaction, although he said he "learned a long time ago to never mistake the company for the stock."

As far as the clinical setback, he said it's par for biotechnology's course - these things happen in the drug development industry.

"This is part of the traditional drug development process," he said. "Would I have liked it to be a clearer path to Phase III? Yes. Am I surprised by the process we are going through? No.

"I think the key point is we've continued to see activity of ALT-711 that is consistent with a pharmaceutical agent that has broad and novel therapeutic potential," he added. "I'm no less confident in the potential [of ALT-711] than before we got the unblinded data."