Alteon Inc.'s stock tumbled 66 percent after the company disclosed a preliminary analysis of Phase III trial data showing the benefit of pimagedine in patients with Type I diabetics with overt nephropathy did not reach statistical significance.

"We did see activity, just not at the predetermined level," said Kenneth Moch, senior vice president of finance and business development for Ramsey, N.J.-based Alteon. "It's very sad for the patient population and all of us."

Alteon's shares (NASDAQ:ALTN) closed Monday at $1.281, down $2.531.

The setback comes eight months after Alteon, following an external advisory panel's recommendation, ended a Phase III trial of pimagedine in Type II diabetics because of excess side effects. (See BioWorld Today, March 20, 1998, p. 1.)

"Now, we'll review the entire program, including all the data," Moch said. "We're obviously going to do it with alacrity and dispatch. Everything's on the table right now."

Pimagedine is designed to inhibit formation of advanced glycosylation end-products (AGE) by preventing glucose from binding to proteins in the blood. 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 the study of Type I diabetics, called A Clinical Trial in Overt Nephropathy (ACTION I), pimagedine therapy led to reduced urinary protein, reduced LDL cholesterol and triglycerides, as well as lowered diastolic blood pressure.

Data indicated favorable outcomes in other measures of renal function, including estimated creatinine clearance and glomerular filtration rate. But, in the primary endpoint — reducing the risk of doubling serum creatinine — the study did not show enough positive results to provide backing for a new drug application (NDA).

"If [the study] had been successful, we were on track to file an NDA in the first half of next year," Moch said.

The ACTION I study is a five-year effort, involving 690 patients at more than 50 sites in North America. A second Phase III clinical trial continues, evaluating pimagedine in Type I and Type II diabetics with end-stage renal disease

"We have enrolled 200 patients and we're still enrolling," Moch said.

Alteon also has investigated the use of pimagedine for inflammatory conditions. "We did a Phase I/II study with topical pimagedine," Moch said. "We were waiting to see how all this played out [before going further]."

The company also is developing a group of drugs called AGE cross-link breakers, designed to break AGE structures and reverse the pathology, and a series of glucose-lowering compounds. Alteon's lead cross-link breaker, ALT-711, is in Phase I trials, with Phase II trials expected to begin next year.

"We'll end the year with about $20 million in cash," Moch told BioWorld Today. The company's burn rate, including development of pimagedine, is about $2.5 million per month. Without pimagedine, it would be less than $1 million per month, Moch said.

Alteon's partner in developing the drug is South San Francisco-based Genentech Inc. n