LONDON -- Share value in Cortecs plc, which focuses on drug delivery, was halved last week, to £0.135, after the company revealed that two of its three lead programs are not as advanced as previously stated and announced the departure of the second CEO in six months.

This follows an internal review conducted by Phil Gould, who joined the company from London-based Glaxo Wellcome plc as director of research and development in January. As a result, Michael Flynn has resigned as acting CEO. Flynn assumed the post in June, when founder, chairman and CEO Glen Travers left in the wake of objections from shareholders on the slow progress in commercializing the lead product, Macritonin. Flynn had been chief scientific officer from 1992.

Gould has been appointed acting CEO, and the board of Cortecs has ordered a commercial and technical review of the scientific programs by an independent consultancy. The chief operating officer, Martin Preuveneers, is also leaving the company.

Cortecs also will cut back on expenditures to preserve the cash balance of £16.2 million (US$26.7 million). At the beginning of 1998, the stock price stood at £1.80.

Third Lead Program On Track

Just two months ago, Cortecs released what it said were "encouraging results" on one-year, bone mineral density data from its European Phase III trial of Macritonin, an oral form of calcitonin for the treatment of osteoporosis. The company has filed registration applications, based on a 400 I.U. dose, in seven European countries using biochemical bone turnover markers. Now, Cortecs says, a change in regulations means it is likely to reapply on the basis of bone mineral density data, significantly delaying any product registration.

Data from the 560-patient European trial were being used to design U.S. Phase III trials, in which it was planned that bone mineral density, an accepted surrogate indicator of bone fracture potential, would be the prime efficacy measure. Following an internal review, Cortecs, based in London, now says that it will have to collect bone fracture data and investigate higher doses. As a result, submission of a new drug application in the U.S. is not expected before 2004.

If, as appears likely, higher dosage levels are required, the cost of raw materials and manufacturing could place the profitability of Macritonin under threat.

The Phase III European trial is due to run for two years, with the aim of showing equivalence with nasally administered calcitonin.

Cortecs submitted marketing authorization applications for Macritonin in the seven European countries where nasal calcitonin is registered in the last quarter of 1997. The applications were based on biochemical bone turnover markers. However, the first country where the application has been assessed, Finland, refused approval on the basis of bone marker data, and asked to see clinical data on bone mineral density.

There is also a delay on Pseudostat, which Cortecs is developing for the treatment of cystic fibrosis. The company had completed and presented data on Phase II trials conducted in Australia. Following a review of these studies and the change to GMP biomass material, a further Phase I study has begun and Cortecs is conducting more preclinical studies. If successful, Pseudostat will enter Phase II studies again in the third quarter of 1999.

Cortecs said its third lead program, Macrulin, an oral formulation of insulin for diabetes, is "progressing as anticipated and maintains its promise." The company expects to have results from the single dose Phase II study in Type I diabetes -- and an initial multiple-dose, one-day Phase II study in Type II diabetes -- in the second quarter of 1999. *

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