By Brady Huggett

When Gliatech Inc. submitted to the FDA its manufacturing corrective action plan for Adcon-L for lumbar surgeries, it was halfway toward its goal of relaunching the drug in the United States. All that remained was a successful reread of patient magnetic resonance imaging data from its U.S. pivotal trial ¿ MRIs that were used to support the product¿s initial approval.

That didn¿t happen.

Gliatech, of Cleveland, said the independent re-evaluation of the MRIs found no significant difference in the maximum scar scores between the treatment group and the untreated control group, effectively barring Adcon-L from re-entering the U.S. market on the guidelines previously laid out by the FDA. Wall Street hammered Gliatech¿s historically unstable stock (NASDAQ:GLIA) on the news Monday, wringing $2.25 of value out of it, or about 69 percent. The stock closed at $1.02.

¿Obviously, the results did not show what we had expected and we are clearly shocked in what we saw,¿ said Adam Gridley, investor relations manager at Gliatech. ¿We saw a lot of variability in the results.¿

The MRI films from the pivotal trial that originally gave Adcon-L its U.S. marketability in May 1998 were re-evaluated by two neuroradiologists to score the amount of post-operative scarring evident for each patient six months after their surgery. The inter-reader and intrareader reliability analyses in the reread indicated variability in the MRI scar score measurements. (See BioWorld Today, May 29, 1998.)

¿MRIs never change, but what we did was a clean read of them,¿ Gridley said. ¿[The neuroradiologists] were looking at the same MRI ¿ how did one score it vs. the other? Also, how did the same neuroradiologist read [the MRI] the first time vs. the second time? And we saw some variance.¿

Adcon-L, although a revenue-generating product, has been troubling to Gliatech for some time. FDA questions in May 2000 about clinical trials that called into doubt trial results foiled a proposed $203 million merger between Gliatech and Baltimore-based Guilford Pharmaceuticals Inc. in August 2000. The news of the nixed merger sent Gliatech¿s stock crashing 60 percent. (See BioWorld Today, Aug. 30, 2000.)

In January, Gliatech voluntarily discontinued distribution of Adcon-L and its product for tendon and nerve surgery scarring, Adcon-T/N, due to a recall by the supplier of the raw material used in the production of the gels. That bit of disheartening news dropped Gliatech¿s stock by $2.31, or 38 percent, and it closed the day at $3.75.

Gliatech never re-launched Adcon-T/N, sending just Adcon-L back into non-U.S. markets, where it is sold in 39 countries. Gridley said Adcon-L generates about $4 million per year abroad, and has brought Gliatech as much as $25 million to $30 million annually worldwide, including U.S. markets.

That sizable slice of revenue Gliatech wants back, but how that might occur now simply isn¿t known.

¿That¿s the million-dollar question,¿ Gridley said. ¿We couldn¿t speculate at this point. We are trying to set up meetings [with the FDA]. We are looking at all of our options across the board ¿ we¿re trying to get our hands around it as we speak.¿

Also, Gliatech has Adcon Solution, a liquid form of the product designed for pelvic and abdominal surgeries that still is in late-stage development, but at this point its future is as uncertain as Adcon-L gel.

However, if the bell tolls for Adcon-L in the States, that does not signify the death knell for Gliatech.

¿Our goal is to create value for both sides of the business,¿ Gridley said. ¿We¿ve got a pharmaceutical side of the business, too.¿

The company has GT-2331, a product for attention deficit hyperactivity disorder, in Phase II trials. It is based on histamine receptor technology. Gridley said it may have other applications, including activity against sleep disorders and dementia.

It is collaborating with Abgenix Inc., of Fremont, Calif., for a monoclonal antibody that may have acute applications in cardiopulmonary bypass surgeries and myocardial infarctions, as well as uses for such chronic afflictions as rheumatoid arthritis. The work is in the preclinical stage.

¿There is much more to us than Adcon-L,¿ Gridley said. ¿Our goal over the next year or so will be to move those products forward as quickly as possible. We have a long road ahead of us and we are working on both Adcon and our pharmaceutical side.¿

The company had about $11.3 million in cash and equivalents on June 30, and a net loss of about that amount for the first six months of the year. It had 9.7 million shares outstanding. Revenue for the first six months of 2001 was $1.1 million, down from $14.4 million in the comparable 2000 period.

Gliatech said it is considering its available strategic and other alternatives.