By Mary Welch

Ergo Science Corp. gained new life following receipt of an approvable letter from the FDA for Ergoset, its product for Type II diabetes. The company, however, still must address safety issues.

"After we got the non-approvable letter, we appealed the decision and went back to the committee to provide them with more information," said Lisa DeScenza, director of corporate planning and communications for the Boston company. "They agreed that Ergoset was effective but they still had safety concerns."

Ergo's stock (NASDAQ:ERGO) rebounded Friday, gaining 40.62 cents, or 39 percent, to close at $1.437. The stock, however, took its first big hit in May 1998 - falling 55 percent to $6.25 - when an advisory panel recommended against approval. It fell further following ensuing negative news.

Now the FDA sent an approvable letter for Ergoset tablets as adjunctive therapy with sulfonylureas. Two out of the three Phase III trials involved Ergoset as adjunctive therapy; the third was as a single therapy. But, before receiving final approval, the company must address FDA concerns over the clinical safety of Ergoset tablets and other issues, such as biopharmaceutics, pharmacology and toxicology.

The FDA recommended that Ergo conduct a "large, simple" placebo-controlled study to evaluate whether the tablets are associated with an increase in the specified serious adverse event. The FDA did not provide specifics about the size and scope of a trial. However, the safety concern must be addressed to support approval in light of a treatment effect on blood sugar, which the FDA characterized as small, the company said.

"It's hard to say what will happen," DeScenza said. "We don't know what the FDA means about the trial. We don't know what they're looking for. We hope to meet with the Division of Metabolic and Endocrine Drug Products by the end of the year and flush it out. When we know more of the particulars, we'll know what our next course of action would be."

Among the company's options would be conducting the trial alone or seeking a partner, she said.

In May 1998, an FDA advisory panel said it had insufficient evidence to recommend approval of Ergoset, saying it wanted longer-term efficacy and that it was concerned about the mechanism of action. In November of that year the FDA said the drug shouldn't be approved citing an unfavorable risk-benefit ratio. Days after that decision, Ergo's partner in a $40 million deal, Johnson & Johnson, of New Brunswick, N.J., pulled out of the collaboration. (See BioWorld Today, May 19, 1998, p. 1; Nov. 24, 1998, p. 1; and Dec. 8, 1998, p. 1.)

That partnership dated back to February 1998 when J&J paid a $10 million license fee and bought $10 million in Ergo common stock. Additional milestones would have added another $20 million to Ergo's bank account. (See BioWorld Today, Feb. 25, 1998, p. 1.)

As a result of the setbacks, Ergo laid off 20 employees, leaving between 20 and 25. Currently, Ergo has three full-time employees, as well as consultants and part-time staff, DeScenza said. (See BioWorld Today, Dec. 17, 1998, p. 1.)

Ergoset is the flagship of Ergo's Neuroendocrine Resetting Therapy (NRT), based on research showing that daily activity patterns of neurotransmitters can be controlled to normalize glucose and lipid metabolism. The drug is a fast-release formulation of bromocriptine, a dopamine-receptor agonist currently approved for the treatment of Parkinson's disease in a different formulation.

The FDA also rejected the trade name Ergoset, and additional trademarks are being considered, the company said.

The company reported it had a net loss of $1.2 million for the second quarter of 1999, compared to a net loss of $5.3 million for the same period last year. There were no revenues for the 1999 quarter. The company, as of June 30, had cash of $30.5 million.

DeScenza conceded the FDA's action may be a little late. "I don't know what's going to happen," she said. "Ergoset may never be commercialized; maybe it will. But right now, at least there's hope."