By Mary Welch

Citing an unexpectedly high incidence of diarrhea side effects, Janssen Pharmaceutica N.V ended a potential $60 million deal with NeoRx for the anti-cancer drug Avicidin, as Phase II trials are being completed to test the compound in advanced colon and prostate cancers.

Paul Abrams, president and CEO of Seattle-based NeoRx, said the dose was believed safe, and may not need to be lowered much. "But Janssen was interested in a program that marched forward without a glitch, and so when this came up, they stopped it," he said.

NeoRx has received $17 million from the Avicidin agreement, plus expense reimbursements.

Avicidin is a radioimmunotherapy product designed to deliver high doses of radiation to metastatic tumors and minimize the exposure of normal tissues, especially bone marrow. NeoRx's Pretarget technology, which underlies the product, involves the separate administration of an antibody and radiation that then join the tumor, thus exposing normal organs to lower amounts of radiation and permitting larger radiation doses to be given safely.

NeoRx, which has $32 million in cash and posted a second quarter 1998 net loss of $3.1 million, will wait until the data is complete to determine its next move, Abrams said.

"We may continue Avicidin in additional trials using better patient selection, dose modification or a different antibody that does not bind to the intestine," he said. "It is also important to note that we have a lot of information about the Pretarget technology, and we expect that our trials for lymphoma using the Pretarget method will be much more straightforward as a result of this information."

Although preliminary data on Avicidin confirmed some anti-tumor action, Beerse, Belgium-based Janssen, a subsidiary of Johnson & Johnson (J&J), of New Brunswick, N.J., stopped its involvement due to higher incidences of diarrhea and greater decreases in patient blood counts in comparison to the Phase I trial.

In that study, NeoRx believed it had found the appropriate dose to use in the Phase II trials, which was five times higher than conventional systemic approaches. In Phase II trials, NeoRx used a mouse-derived antibody that was tested in Phase I trials. The cases of diarrhea are believed to be due to cross-reactivity of the Avicidin anti-Epcam antibody with the intestine.

"The company now has to re-evaluate its priorities and determine how it will manage its $32 million," Dayton Misfeldt, an analyst with Cruttenden Roth, in Irvine, Calif., wrote in a report. "The company has a lot of potential, but considering the early stage of the programs, we believe the stock is unattractive until products advance into late stage trials, which we believe will not happen until mid-1999."

Under the 1997 deal with Janssen, NeoRx received $10 million up front, of which 50 percent was in equity. The agreement called for up to $50 million in milestone payments. In January, NeoRx received $7 million when Avicidin started Phase II trials. In return, J&J got a worldwide exclusive license to Avicidin and the right of first negotiation to subsequent oncology products using the Pretarget technology. (See BioWorld Today, Aug. 13, 1997, p. 1.)

"We are not in desperate straits financially, and we have two products in trials," Abrams said. "We expect to get good data on them within the next six to nine months." NeoRx's two major programs are Pretarget lymphoma and skeletal targeted radiation. Neither program has a partner yet, but NeoRx is pursuing options in that area, he said.

NeoRx is now enrolling patients with relapsed B-cell lymphoma in the Pretarget lymphoma Phase I trial, which will employ a different antibody from that used in Avicidin.

In the skeletal targeted radiation trials, multiple myeloma patients will receive escalating doses of the test agent, standard doses of chemotherapy, reduced doses of total body irradiation, and stem cell transplantation. The goal is to improve responses observed with the standard treatment without increasing side effects associated with high-dose therapy.

Misfeldt wrote that a pivotal trial in the skeletal targeted radiation trials is likely by the second half of next year, and the product "may be the first of [NeoRx's] portfolio to hit the market."

NeoRx's stock (NASDAQ:NERX) closed Wednesday at $1.906, down $1.343. *