LONDON — In what it called a breakthrough for its lipids formulation business, Scotia Holdings plc signed a deal with F. Hoffmann-La Roche AG for the reformulation of an undisclosed marketed product.
Robert Dow, CEO of Scotia, said the deal is significant because it "indicates that reformulation can deliver results, and will potentially give us access to a small royalty stream from an established product with a large market."
Scotia's LipidTechnik subsidiary has done preliminary work which suggests that reformulating with its technology will provide better bioavailability of the Roche compound. "The development agreement will last until we succeed or fail," Dow said. "The project could fail in a few months, [but] if we succeed, it could take much longer to complete the project." Scotia, of Stirling, Scotland, will be reimbursed at cost by Basel, Switzerland-based Roche for the work.
This deal is the first fruit of a new, more aggressive business plan for LipidTechnik, developed over the past six months by Scotia's new management team. Dow said discussions were taking place with 11 other pharmaceutical companies that are interested in applying the lipid technology to their products.
"We did a road show of the technology to 22 major U.S. and European pharmaceutical companies, and on the basis of that we are now in negotiations with over 50 percent of them," Dow said.
"Bioavailability will always be one of the major problems of the industry, and our technology has the potential to solve it," he added. "Lipids are in the food chain, and by definition get absorbed." The aim is to demonstrate to the industry that lipids can be linked to drug molecules in such a way that they are protected from the digestive system, Dow said.
He said Scotia's success in doing this did not hang on the Roche agreement, however. "The technology is not going to solve everybody's problems, but we have seen a great interest in working with us."
Scotia disclosed the Roche deal as it released results for Dow's first six months in office, to June 30, which showed a loss of £11.1 million (US$18.8 million), down from £12.8 million in the same period of 1997. The improvement is a result of restructuring instituted by Dow, who cut the development portfolio from 24 projects to six, with a focus on cancer.
Dow said the restructuring is not yet complete. "We still have several decisions to make," he said. "However, all the money saved as a result will be funneled into other areas. For the full year, we expect the loss to be slightly higher [pro rata], at £25 million."
The company raised £50 million through bond issue in March, and had cash balances of £53.3 million at the end of June. Dow said he was determined that this money would fully fund activities for the next two years.
Sales Rise For Nutritional Products
Sales for the period rose by 1 percent, to £10.2 million, mainly due to an 11 percent increase in sales of nutritional products, such as evening primrose oil, to £7 million.
During the period, the company received a payment of £4.3 million from Boehringer Ingelheim GmbH, of Ingelheim, Germany, as partial payment for the license for Foscan, Scotia's photodynamic therapy agent for cancer. However, Scotia said progress by Boehringer and the Japanese licensee Kyowa Hakko, of Tokyo, has been slower than anticipated. Kyowa Hakko now expects to start clinical trials in lung cancer in mid-1999, while Boehringer is in the process of finalizing the protocol for a large-scale trial in prostate cancer.
These two will be follow-on indications. Scotia is conducting the trials for the initial indication of head and neck cancers and expects to file marketing applications in the U.S. and Europe in mid-1999. If Scotia wins approval, Boehringer will be responsible for marketing this indication, and for developing and marketing all subsequent indications. *