By Lisa Seachrist

Washington Editor

Scios Inc.¿s stock dropped 61 percent on news the FDA refused to approve Natrecor (nesiritide), the company¿s intravenous therapy for congestive heart failure.

The company¿s stock (NASDAQ: SCIO) closed at $3.812 a share Wednesday, down $5.875.

The setback came after an FDA advisory panel narrowly recommended the drug, a hormone-based therapy for acute congestive heart failure (CHF), for approval in January. However, the company fully intends to continue development of the drug for the indication.

¿We are deeply disappointed,¿ said David Gryska, chief financial officer of the Mountain View, Calif., company. ¿Nonetheless, we think that this is an approvable drug and we are going to work with FDA to get this drug approved.¿

The company has notified its marketing partner, Bayer AG, of Leverkusen, Germany, and will meet with the FDA next week to determine the clinical data needed to approve the drug. The agency is concerned that there aren¿t enough clinical data to adequately characterize the activity of the entirely new class of drug, in addition to having some reservations about a hypotensive side effect.

Natrecor, which was first cloned by Scios in 1989, is a genetically engineered version of human b-type natriuretic peptide (BNP) ¿ a 32-amino-acid, naturally occurring peptide produced predominantly in the ventricles of the heart. The body secretes BNP, which boosts both sodium and fluid excretion while dilating blood vessels, to combat fluid overload states such as CHF.

Natrecor is considered a balanced vasodilator, meaning it reduces blood pressure in both the veins leading to the heart (cardiac preload) and in arteries leading away from the heart (cardiac afterload). In addition, the drug doesn¿t raise the heart rate. CHF, a potentially life-threatening disorder with no cure, is a chronic pathophysiological condition that results from an inefficiently pumping heart.

Clinical studies of the drug in 721 patients, 505 of whom had received Natrecor, showed a significant reduction in pulmonary capillary wedge pressure, a measure of the blood pressure in the heart that, when elevated, results in fluid accumulation in the lungs.

However, some patients experienced significant, although not life-threatening, hypotension as a result of treatment with Natrecor. The FDA is concerned about how Natrecor causes the hypotension and wants a more detailed pharmacodynamic profile of the drug before approving it as the first new therapy for the treatment of CHF in a decade.

¿The FDA was concerned with the issue of hypotension,¿ Gryska said. ¿We are going to work with them to alleviate their concerns, but the only way to do that is to do more clinical studies.¿

The denial of Natrecor comes at a time when the company had restructured in order to attain profitability in 2000. As part of the restructuring, Scios reduced staff, sold its manufacturing plant and will move its headquarters from Mountain View to its Sunnyvale, Calif., research facility. (See BioWorld Today, March 2, 1999, p. 1.)

¿This sets us back at most a year and a quarter,¿ Gryska said. ¿The only thing that we aren¿t going to get this year is a $20 million milestone payment from Bayer for the approval of Natrecor.¿

Nevertheless, Gryska said that as a result of the restructuring, the company will end the year with more cash on hand than it has now. He projected profitability sometime in 2001.

The company will receive revenues from sales of Fiblast, human fibroblast growth factor, to Kaken Pharmaceutical Co., of Chiba, Japan. Scios has manufactured a three-year supply, after which it will supply the product with the help of a contract manufacturing plant.

In addition to Natrecor, the company is developing vascular endothelial growth factor (VEGF121) ¿ a potent angiogenic factor ¿ with Parke-Davis for the treatment of cardiovascular disease. Scios maintains separate Alzheimer¿s disease programs with Eli Lilly and Co., of Indianapolis, and DuPont Pharmaceuticals Corp., of Wilmington, Del. In addition, the company is developing p38-kinase inhibitors, molecules that can inhibit key intracellular signaling that regulates inflammation, as oral therapeutics for rheumatoid arthritis. n