LONDON Chiroscience plc last week became the first U.K. biotechnology company to have significant drug approved in a European country, but is being forced to review its commercialization strategy because of the merger of its marketing partner, Zeneca Group plc, with Astra AB, to form AstraZeneca.

The approval should have been good news for Chiroscience, but the doubts cast over the marketing agreement led to an 11 percent fall in the share price last week, which closed at £2.19 (US$3.68) Friday.

The approval is for Chirocaine, a long-acting local anaesthetic that is a chiral formulation of an existing drug, bupivacaine. The deal with Zeneca is called into question because Astra already sells the racemic form of the drug. "Following the proposed merger between Zeneca Group plc and Astra AB, Zeneca is in discussion with Chiroscience to ensure any impact of the proposed merger on the commercialization of Chirocaine is resolved as soon as possible," Chiroscience said.

If it does have to find another partner, Chiroscience will be held back by the fact that Swedish authorities have approved the drug, but have not allowed improved safety claims over bupivacaine in respect to cardiovascular and central nervous system side effects. Chiroscience says it is reviewing commercialization strategy, "which may include further differentiating the labeling of Chirocaine from other competitor products, particularly with respect to cardiovascular safety." However, the Swedish approval does include new applications as a long-acting local anaesthetic in children and for the treatment of chronic pain.

The company plans to ask Swedish authorities to grant a variation to the license, possibly following the completion of further clinical trials, which will be designed to demonstrate enhanced benefits through an increased safety margin. Any such trials can be funded out of existing cash reserves which stood at £59 million at the end of September. Under the European Union's mutual-recognition procedures, the Swedish license could lead to licenses in other European countries.

Chiroscience, based in Cambridge, said it has been notified that the FDA will discuss the new drug application for Chirocaine on Jan. 12, 1999.

John Padfield, CEO of Chiroscience, said the company's review of commercialization strategy is "necessary, given the changed circumstances in the market. Chiroscience has an extensive range of patents protecting Chirocaine, the earliest of which does not expire for another 15 years. Thus, while we are disappointed that Chirocaine may not be launched in Europe as quickly as we had hoped, our product is the superior one, and the outcome of our review will be in the long-term best interests of Chiroscience and its shareholders." *

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