Washington Editor

Inspire Pharmaceuticals Inc. said it’s not likely that the first Phase III trial of its lead product for dry eye will reach its endpoints. The negative news sent Inspire’s stock tumbling 73 percent.

Since preliminary results of the first Phase III study of INS365 Ophthalmic failed to meet the primary efficacy objective, Christy Shaffer, president and CEO of Durham, N.C.-based Inspire, told BioWorld Today that it’s not probable that final results will be much different. She expects those results in the next month or so.

Inspire’s stock (NASDAQ:ISPH) closed Wednesday at $4.15, down $11.36.

A second Phase III study is ongoing, and efficacy results are expected in the second quarter.

“We’re not trying to make more out of this study than it is, but clearly we thought it was material to announce that we did not met the primary efficacy endpoints,” Shaffer said. “We certainly are looking forward to receiving the next study results that will be available in the next two months.”

She anticipates a decision on the future of INS365 Ophthalmic sometime around June.

Both Shaffer and Greg Mossinghoff, Inspire’s chief business office, agreed that financially, Inspire will have to do some cost cutting in 2002.

“I believe that we will be able to make a budget reduction in the order of 10 percent to 20 percent in 2002 based on prioritization and just general belt tightening,” Mossinghoff said during a conference call Wednesday with investors and analysts. “We will not make a dramatic structural change in the company based on this Phase III information. It is prudent to go ahead and complete the second trial. The vast majority of expenditures have already been made.”

He continued by saying Inspire has “a serious and significant amount of cash on hand.” As of Sept. 30, the company had about $65 million in available cash.

Since learning of the poor results, Shaffer said she’s contacted Inspire’s partner, Irvine, Calif.-based Allergan Inc., and “they are looking forward to the next results as well.”

She wouldn’t comment on the amount of money Allergan has paid out in the collaboration to develop the dry-eye product, except to say Inspire received an up-front fee. Santen Pharmaceutical Co. Ltd., of Osaka, Japan, is the Asian partner.

The companies entered a licensing, development and marketing deal potentially worth $39 million for both INS365 Ophthalmic and Allergan’s dry-eye product, Restasis, also in Phase III. (See BioWorld Today, June 28, 2001.)

INS365 Ophthalmic, an eye drop, works by activating the P2Y receptor, a specific receptor on the surface of the eye. The P2Y receptor is believed to be a physiological regulator of a number of processes in the eye, including natural cleansing and protective mechanisms in the eye as well as hydration on the surface, Shaffer said.

In Phase II trials, INS365 Ophthalmic was shown to be very well tolerated and demonstrated a statistically significant improvement over placebo on the efficacy endpoint, corneal staining, according to the company.

The first Phase III trial enrolled 558 patients in 35 U.S. sites. The trial was a placebo-controlled, double-masked comparison of the safety and efficacy of INS365 Ophthalmic to placebo at concentrations of 1 percent and 2 percent.

Shaffer said Inspire has not publicly stated the endpoints of the Phase III study.

Nevertheless, she said, the patients taking both 1 percent and 2 percent solutions did improve from objective and subjective standpoints. Also, the magnitude of the changes in Phase III were comparable to Phase II. “That’s the good news,” she said. “The bad news is that unlike Phase II, we saw a very strong placebo effect, so we can’t differentiate placebo and the drug.

“We’re still looking at the data, but the bottom line is, in the preliminary analysis, we did not meet the primary efficacy measures, but now the more important question is: What about the second study?” Shaffer said.

Aside from INS365, Inspire has several other products in development. Just behind INS365 in the pipeline, INS316, a diagnostic product, is being developed to facilitate the diagnosis of lung cancer. Shaffer said the company expects Phase III enrollment to be completed by the end of the year. Other products include: INS365 respiratory in Phase II for chronic bronchitis; INS37217 in Phase I/II for cystic fibrosis; INS37217 ophthalmic in Phase I/II for retinal detachment; INS37217 in Phase I for sinusitis; and the company expects to file an investigational new drug application for a vaginal dryness product.