By Lisa Seachrist

Washington Editor

Hemosol Inc.'s stock dropped 32 percent Monday following the release of preliminary Phase III results for the blood substitute Hemolink and a statement that filing for Canadian approval probably will be delayed. A regulatory filing had been expected by the end of June.

The Toronto-based company said a preliminary look at results of a Phase III study unveiled no safety problems, but it also didn't provide statistically significant proof of Hemolink's benefits. The company will continue to analyze the data. Hemosol's shares (TSE:HML) closed Monday at C$17 (US$11.56), down C$7.90 (US$5.356.)

"It's not a question of not beating placebo," company spokesman Jason Hogan said. "The statisticians haven't been able to determine clean numbers on the efficacy. We will have a full data release within four weeks."

The Phase III study of Hemolink, a human hemoglobin-based blood substitute, was intended to show the blood substitute used in combination with an autologous transfusion procedure could reduce the need for the transfusion of donor red blood cells during coronary bypass graft (CABG) surgery. The autologous transfusion procedure involved removing approximately three units of blood from the patient on the day of surgery.

In the Phase III trial, Hemolink and a volume expander were added to the patient's blood, which was reinfused as needed during the surgery. Patients in the placebo arm also underwent the autologous transfusion procedure but only had the volume expander added to their blood.

What the investigators found after an initial look at the data was an unexpectedly high degree of avoidance of transfusion among patients in the placebo arm. Hogan said more patients in the Hemolink arm definitely avoided transfusion than in the placebo arm, but it just isn't clear whether it's a statistically significant difference.

"We haven't been able to determine a p-value yet," Hogan said. "From a disclosure standpoint, we really needed to let investors know that filing for Canadian approval before the end of June is going to be very difficult."

This study will be used to establish safety in any U.S. filings. However, the company has an ongoing Phase III study involving 40 centers. The company expects a U.S. filing in mid-2001.

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