By Mary Welch
Following the failure of Transcend Therapeutics Inc.'s lead compound, Procysteine, in a Phase III trial, two top officers have resigned and the company has hired Everen Securities Inc. to explore options for the future.
"This is not a unique situation," said Nicholas Harvey, senior vice president and chief financial officer, adding he is optimistic about "finding a way forward that will be in the best interests of employees and shareholders."
Harvey has been named president and interim CEO in the wake of the resignation of Hector Gomez, the company's president and CEO, and John Whalen, chief financial officer.
In the spring, Transcend halted a Phase III trial of Procysteine, after an interim analysis of data showed more patients with acute respiratory distress syndrome (ARDS) died in the drug treatment group than in the placebo group. The company's stock dropped 61 percent on the news. (See BioWorld Today, March 23, 1998, p. 1.)
Earlier this month, after reviewing the data further, Transcend said Procysteine is not effective for ARDS. No cause for the higher death rate could be determined.
"We looked at the baseline data and couldn't find a reason," Harvey said.
Everen, of Chicago, will evaluate options that include further developing Procysteine, acquiring more technology, forming strategic alliances, or selling the company. As of June 30, Transcend had $12.3 million in cash, with a net loss of $1.5 million and a burn rate Harvey described as "modest."
Harvey said the company most likely will turn toward in-licensing agreements or acquisitions. "Transcend's business model was as a virtual development company," he said. A decision about its direction is expected in three to six months.
Procysteine neutralizes tissue-damaging toxic molecules called reactive oxygen species (ROS) by delivering the amino acid cysteine into cells, thus boosting production of glutathione, which neutralizes ROS.
Procysteine Still In Trials For Other Indications
The ARDS trial used intravenous Procysteine. Oral Procysteine is in Phase I/II trials for amyotrophic lateral sclerosis and atherosclerosis, and Transcend is still developing intravenous Procysteine for use in treating ARDS worldwide except for Japan, which is the exclusive domain of its partner, Boehringer Ingelheim GmbH, of Ingelheim, Germany.
Transcend also counts among its assets TR-500 compounds, which are a group of glutathione derivatives that enable the direct delivery of glutathione into cells.
Harvey said he expects Transcend to prevail in these hard financial times for small biotechnology companies.
"We're in a good position because we have cash and development capabilities," he said. "Transcend has something to offer, but there are a lot of companies competing for scarce funds."
Transcend's stock (NASDAQ:TSND) closed Friday at $0.812, down $0.062. *