By Lisa Seachrist

Washington Editor

Shares of Collateral Therapeutics Inc. surged Monday on news the company's lead angiogenic gene therapy product candidate, GENERX, produced positive results in a Phase I/II clinical study.

The San Diego-based company saw its shares (NASDAQ:CLTX) leap on Monday to $40.187, up $14.437, or 56 percent. The company plans to initiate a pivotal Phase II/III study testing GENERX's ability to treat patients with stable exertional angina.

"This trial gave us sufficient information to determine the dosage we will need to proceed," said Robert Engler, professor of medicine at the University of California in San Diego and the VA Medical Center, and a co-founder of the company. "We expect to move forward with a pivotal clinical trial in the fourth quarter. This is the first time a non-surgical cardiovascular gene therapy has been shown to be safe and well tolerated."

GENERX therapy is designed to enhance the growth of new blood vessels supplying the heart in order to alleviate the ischemia - lack of oxygen - associated with cardiovascular disease. The gene therapy approach, which is delivered during a standard heart catheterization, offers a non-surgical way to get more oxygen to heart muscle. GENEREX is an adenoviral gene therapy vector containing the human fibroblast growth factor-4.

The Angiogenic Gene Therapy (AGENT) trial included 67 patients who suffered from stable, chronic, exertional angina, or chest pain, caused by a lack of oxygen in the heart muscle triggered by emotional stress or physical exertion. The study was a placebo-controlled, double-blind trial testing four doses of GENERX. Patients received a one-time administration of one of four doses of GENERX. Patients were evaluated for four weeks following intracoronary administration of the gene therapy product.

In the end, GENERX proved safe and well tolerated at all dose levels evaluated. One dosage, not the highest, resulted in more than half the treated patients enjoying a 30 percent increase in the time they were able to remain on a treadmill. Such an improvement is similar to those achieved with coronary artery bypass and angioplasty.

Engler said the company would carry this dosage forward into pivotal trials. All decisions about the design and timing of a pivotal trial will be made in collaboration with development and marketing partner Schering AG, of Germany, and its U.S. subsidiaries Berlex Laboratories, of Wayne, N.J., and Berlex Biosciences, of Richmond, Calif. The companies also will consult with the FDA.

Adenoviral gene therapy vectors have been the topic of great discussion since a University of Pennsylvania gene therapy patient died as a result of being treated. Ever since, there has been much public hand-wringing over the safety of the vectors, which fail to provide a persistent source of new protein and can result in serious immune reactions. The fact that the adenovirus provides a transient fix, however, makes it the perfect vector for spurring angiogenesis, Engler said.

"We only need the gene therapy to augment the body's natural ability to create new blood vessels," Engler said. "It's a little like having the construction crew create the new highways. Once the routes are in place, the workers aren't needed any longer."

One patient receiving the gene therapy died in the AGENT trial, but after an evaluation by independent investigators, the company medical directors and an independent safety review panel determined the death wasn't caused by the gene therapy. Engler said the participant had died five months after treatment. He also noted the company had reported the death to both FDA and NIH.

The company is continuing the AGENT trial by expanding the entry criteria to include patients who already had a coronary bypass and those patients with more severe angina. Eventually, the company may explore using the gene therapy in combination with angioplasty. Collateral also is developing gene therapy products on myocardial signaling as a treatment for congestive heart failure and heart muscle regeneration, to improve cardiac function for patients who have suffered a heart attack.