Karo Bio AB said Bristol-Myers Squibb Co. discontinued development of the lead compound the companies were jointly working on to treat obesity.

The compound, a thyroid hormone receptor modulator, was in Phase I trials when continuing toxicology studies in animals revealed previously uncharacterized toxic metabolites in those given high doses of the compound, the company said.

Karo Bio’s stock, which trades on the Stockholm Stock Exchange (SSW:KARO), fell SEK48.5 (US$4.69), or about 14.5 percent, on the day of the announcement.

“It was disappointing news,” said Björn Nilsson, president of Karo Bio, of Huddinge, Sweden. “On the other hand, we have strengthened the concept of using the receptor for obesity.”

Although the lead compound is no longer being studied in obesity, the companies will continue to study that indication through their collaboration.

Tracy Furey, director, corporate affairs, for Bristol-Myers, told BioWorld Today, “The program, in terms of discovering and developing programs in the area of obesity, will continue, and we continue to be very enthusiastic about the partnership.”

The overall program, begun in 1997, will continue until the end of September, when the research and development funding is scheduled to end. The companies are in discussions now regarding whether the collaboration should be extended, Nilsson said.

“It’s a very broad program,” he said, noting that it is focused on other undisclosed metabolic indications in addition to obesity.

Nilsson would not disclose the amount of money Karo Bio has received from Bristol-Myers to date, but reported the company did receive one preclinical milestone and the first clinical milestone payment, as well as an up-front payment and research and development funding.

Nilsson said Kara Bio “definitely” wants to continue working with Bristol-Myers, of New York, but if BSM decides to end the relationship, Karo Bio would seek another global pharmaceutical partner for the program.

“We’re presently [in discussions], in light of this recent finding, to determine how to continue completing the program,” Nilsson said.

Karo Bio has collaborative agreements with other large pharmaceutical companies, including Wyeth (formerly American Home Products Corp.), of Madison, N.J., for artherosclerosis focused on the liver X receptor; Merck & Co. Inc., of Whitehouse Station, N.J., focused on estrogen receptors and related diseases; and Abbott Laboratories, of Abbott Park, Ill., focused on glucocorticoid receptors and Type II diabetes and inflammatory diseases. (See BioWorld Today, Sept. 5, 2001.)

“These are all very big and active programs,” Nilsson said.

Karo Bio’s technology platform rests on four components: high-throughput screening, structural biology, medicinal and computational chemistry, and lead compound-selection systems.