Danish biopharmaceutical firm NeuroSearch A/S lost 38 percent of its market capitalization Thursday on news that it and partner Glaxo Wellcome plc would temporarily suspend Phase II clinical studies of the anti-depressant NS2389, NeuroSearch's lead compound.

The company's stock plunged from its opening price of DKK 600 to a low of DKK 325 per share during trading on the Copenhagen stock exchange, but later inched back to close at DKK 370.

Last January, Ballerup-based NeuroSearch and Glaxo Wellcome, of London, signed a deal potentially worth US$57 million plus royalties to the Danish firm to develop NS2389, which blocks reuptake of the neurotransmitters serotonin, noradrenaline and dopamine. (See BioWorld International, Jan. 26, 2000, p. 7.)

The companies last week said they would take six months to complete additional animal toxicology studies on NS2389 following a review of data that showed "some inconsistency from previous results." NeuroSearch spokesman Henrik Moltke told BioWorld International that the concern is based on observations of the stimulatory effect of high dosages of NS2389 on the endocrine system of animals that had been engaged in a cardiovascular study.

Up-regulation of the endocrine system is a recognized side effect of anti-depressants, he said, and the company already had undertaken an earlier study in a smaller species to demonstrate this. Withdrawal of the treatment eliminated the effect. The cardiovascular study concerned a larger species, which NeuroSearch has not identified. Endocrine data were not recorded during this experiment, in order to preserve the quality of the cardiovascular data. A similar effect on the endocrine system was observed at the end of this experiment also, but the partners decided to initiate a separate study to confirm that the same mechanism was involved.

The side effect only is apparent at levels that are orders of magnitude higher than those received by humans. "This is a high-dose phenomenon," Moltke said. So far, 213 people - both healthy volunteers and patients with depression - have taken NS2389 in Phase I and Phase IIa studies. "It was well tolerated at all doses," he said.

The current delay will not affect NeuroSearch's cash outlook for the year, as it has already received an up-front payment of US$10 million from its partner. Moltke said the deal is based on fixed annual fees plus milestone payments. It had not expected its first milestone payment to kick in until next year in any case.

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