Development partners QLT Inc. and Xenova Group plc are going through a letdown after halting pivotal trials of tariquidar in non-small-cell lung cancer.

Vancouver, British Columbia-based QLT's decision followed the recommendation of an independent safety committee that reviewed interim data from two Phase III trials. Toxicity issues arising from the trials played a dominant role in the final outcome, reported after the market closed Monday.

QLT's shares (NASDAQ:QLTI) fell $1.22 Tuesday, or 9.5 percent, to close at $11.68. Xenova's stock (NASDAQ:XNVA) fell $1.42, or 42.1 percent, to close at $1.95.

And though both QLT and Slough, UK-based Xenova said they remain committed to the P-glycoprotein membrane inhibitor, QLT President and CEO Paul Hastings said during a conference call that the decision was a "substantial setback in the clinical development of tariquidar." More specific details regarding toxicity issues were not released, but the trials have a bit of a checkered past.

About three months ago, the safety committee called a temporary halt to enrollment, but said at the time the data were to remain blinded to preserve the integrity of the trial. Existing patients continued to be treated. (See BioWorld Today, Feb. 24, 2003.)

QLT said it would decide how to take the compound forward after analysis of the unblinded data from the 304 patients enrolled in the two studies.

Enrollment began almost a year ago to study tariquidar as an adjunctive treatment for non-small-cell lung cancer in combination with first-line chemotherapy, paclitaxel and carboplatin or vinorelbine alone. About 1,000 patients were due to be enrolled at 100 centers in North America and Europe in the randomized, multicenter, placebo-controlled trials whose primary endpoints were overall survival. (See BioWorld Today, July 1, 2002.)

But those plans began to unravel over the weekend as QLT received the safety committee's recommendations Saturday and had a first look at the unblinded data Sunday. Findings indicated an increase in toxic side effects in the treatment arm vs. the control arm. Tariquidar is designed to control multidrug resistance by preventing chemotherapeutic agents from being pumped out of cancer cells. While that could be expected to result in an increase in toxicity, there was no evidence of associated benefits.

Hastings said he is "keeping an open mind," as QLT reviews the data to get an idea about safety and efficacy. "We may do more conservative trials in Phase II in other cancers, or we may drop it altogether." He added that the "silver lining" is that QLT now has access to what is the largest collection of safety and efficacy data in the world on a third-generation P-glycoprotein pump inhibitor. "We will exploit the value of the database."

QLT also noted that stopping the trials would positively impact this year's earnings per share to the sum of $10 million. But in the immediate aftermath, Hastings said QLT would hold to its prior earnings guidance of 43 cents to 53 cents per share.

A Phase IIb open-label trial in chemorefractory breast cancer patients continues under the watch of investigators at the M.D. Anderson Cancer Center in Houston. To date, no increases in toxicity have been reported in the 15 patients enrolled in that trial, said Mohammad Azab, QLT's chief medical officer. But the study does not have a comparator arm. QLT said it would report initial data at the American Society of Clinical Oncology meeting that begins at the end of this month in Chicago.

The decision has serious implications for Xenova, which has £12.9 million (US$20.7 million), or about one year of cash. The company said it would take immediate steps to substantially reduce its operating costs.

Early Tuesday, Xenova CEO David Oxlade said, "Although we didn't expect this outcome, we did have contingency plans in place. In the last hour or so we have started talking to employees, and there will be a substantial reduction in costs and cash burn."

As well as the cut in headcount, there will be a reduction in overhead expenses, though Oxlade said that did not mean the closure of the facilities in Cambridge, UK, that Xenova acquired when it took over Cantab Pharmaceuticals plc. Xenova also said it would prioritize its portfolio to focus on products in clinical development and look for partners for early stage clinical programs.

Oxlade would not forecast how long Xenova's cash would last following the cuts, but said the plan would give the company a significant extension. The immediate financial impact of halting the trials is neutral for Xenova, as QLT was funding them. But as development slows, the company misses out on future payments.

Two summers ago, QLT paid $10 million up front for North American development and licensing rights, with potential milestone payments worth up to $50 million. Xenova, which retained rights in Europe and the rest of the world, would benefit from royalties ranging from 15 percent to 22 percent. (See BioWorld Today, Aug. 15, 2001.)

Hastings said QLT would continue to focus on expanding uses of its Visudyne (verteporfin), a product already marketed for the wet form of age-related macular degeneration. The company is continuing a Phase III study in multiple basal cell carcinoma. QLT's development of Visudyne is partnered with Novartis Ophthalmics, the eye health unit of Basel, Switzerland-based Novartis AG.

Other programs moving forward include studies of QLT 0074 in benign prostatic hyperplasia and alopecia, or male pattern baldness.