BioWorld International Correspondent

LONDON - Shares in Vanguard Medica Ltd. fell by 20 percent last week to #1.58 (US$2.67) after the company said it was stopping development of VML 252 for the treatment of elevated blood phosphate levels in dialysis patients. The fall came despite the simultaneous announcement of a collaboration deal with 3M Pharmaceu ticals to evaluate a potential treatment for hepatitis C, under which Vanguard stands to earn up to US$25 million in milestones plus royalties.

Vanguard, based in Guildford, Surrey, said it decided to drop VML 252 after analysis of Phase II study results. The company concluded that the drug needed to be reformulated to improve compliance and tolerance before further studies could be done. The extra cost and delay to the development program would have reduced the return on investment. The decision frees up money for new programs.

Clinical studies of VML 600, an immune-response modifier, are planned to commence in the first half of 1999. Early studies using oral administration of VML 600 in humans show it produces markedly increased levels of interferons and other cytokines. The current therapy for hepatitis C, a chronic liver infection, is injected alpha interferon. The compound has a similar mechanism of action to 3M's Imiquimod cream, a topical treatment for anogenital warts caused by human papillomavirus and the first small-molecule immune-response modifier to be commercialized.

3M is retaining responsibility for the remaining preclinical studies and for manufacturing. Under the terms of the agreement, 3M also retains the right to commercialize VML 600, and will confirm its intentions following an interim review of Phase II studies. Confirmation of an intention to commercialize will trigger a milestone payment of US$5 million to Vanguard, followed by four further payments totaling up to US$20 million prior to submission of marketing approvals. If 3M decides not to commercialize, the rights will revert to Vanguard. n