By Lisa Seachrist

Washington Editor

Following a preliminary analysis of Phase III data in November that showed pimagedine failed to meet its primary endpoint, Genentech Inc. ended its collaboration with Alteon Inc. to develop the drug as a treatment for overt nephropathy in patients with Type I diabetes.

Genentech cited "business reasons" in terminating the pimagedine agreement before detailed analysis of the clinical data could be completed, even though the drug provided statistically significant benefit to patients in a number of secondary endpoints.

As a result, Ramsey, N.J.-based Alteon will regain all rights to both pimagedine and any second-generation drug candidates that are in development, as Genentech's financing of the program ramps down. In the meantime, Alteon will continue its statistical analysis of the Phase III data and, pending the outcome of those analyses, search for a new partner.

"We don't believe pimagedine is dead," said Kenneth Moch, president and CEO of Alteon. "The markets believe that it's dead. We don't have all the data in hand and, until we do, it's too soon to call the regulatory pathway this drug will take."

Alteon was recently notified by the FDA that should a new drug application (NDA) for pimagedine be filed, it will receive fast-track designation. Alteon currently is preparing a pre-NDA data package to get agency input on the status of the drug.

Pimagedine is designed to inhibit formation of advanced glycosylation end-products (AGE) by preventing glucose from binding to proteins in the blood. AGE causes the proteins to stiffen, with cells, tissues and blood vessels hardening as a result.

Everyone develops AGE, but diabetic patients are prone to high levels as a result of excess glucose in their bloodstreams. Accumulation of AGE can damage kidneys, blood vessels and nerves.

In November, Alteon announced that in a study of Type I diabetics with overt nephropathy, pimagedine therapy provided a statistically significant reduction in urinary protein, LDL cholesterol and triglycerides, as well as lowered diastolic blood pressure. In addition, the data indicated favorable outcomes in measures of renal function, including estimated creatine clearance and filtration rate.

Nevertheless, the primary endpoint - reducing the risk of doubling serum creatine - failed to reach statistical significance.

Moch, however, pointed out that analysis was on a preliminary set of data and noted that a series of protocol-specified analyses on the completed trial was in the process of being completed. Those are the data that will be represented in the pre-NDA package.

Alteon Now Seeking New Partner

"We had a number of analyses planned before we unblinded the study, and we are working to complete those as soon as possible," Moch said. "Pimagedine certainly has had a long and winding road. We still believe in it and intend to seek a new partner."

In March 1998, Alteon ended a Phase III study of the drug in Type II diabetics following the recommendation of an external advisory panel that had found an excess of side effects. The setback occurred just four months after South San Francisco-based Genentech signed the $200 million collaboration that it ended this week.

Nevertheless, Genentech will retain its equity investment in Alteon for the period of time specified in the now-defunct deal. And the pimagedine experience has no effect on other deals that the two companies are currently negotiating.

Alteon's stock (NASDAQ:ALTN) closed at $0.8125, down $0.1875. Genentech's stock (NYSE:GNE) closed at $80.0625, up $0.0625.