By Lisa Seachrist

Washington Editor

WASHINGTON — Texas Biotechnology Corp. (TBC) suffered a setback as its lead drug candidate, Novastan, an anticoagulant, failed to pass muster at the FDA, which sent the company a "not approvable" letter, meaning TBC's new drug application (NDA) is no longer under consideration by the agency.

The Houston-based company's stock (AMEX:TXB) plummeted nearly 50 percent on the news to end the day at $4.75, down $4.25. TBC and its marketing partner, SmithKline Beecham plc, of London, are working with the FDA to resubmit the drug's application for use in patients with heparin-induced thrombocytopenia (HIT).

"Based on what we understand the deficiencies to be from the letter and a brief conversation with the FDA, we see them to be curable and curable in a reasonable amount of time," said David McWilliams, TBC's president and CEO.

"The letter was just a little hiccup along the road for Novastan," he added. "We are committed to working with the agency."

McWilliams said the company isn't discussing in detail the contents of the letter at the request of SmithKline, in order to avoid risking their negotiating position with the agency. The company has requested a meeting with the agency to discuss the details of the letter within 30 days, with an eye to resolving problems with the application.

HIT is an immune-mediated disease caused by the development of antibodies to a complex of heparin and platelet factor 4. In essence, it is an allergic reaction to heparin. Patients who develop HIT continue to need anticoagulant therapy, but must be removed from heparin since its continued used can lead to a thrombotic condition that can result in amputation and death.

Approximately 5 percent (275,000) of all patients placed on heparin therapy develop HIT, which becomes more likely in those who've experienced longer heparin exposure.

Novastan is a small-molecule inhibitor of thrombin, an enzyme involved in blood clotting which TBC licensed from Genentech Inc., of South San Francisco. It is derived from the amino acid L-arginine and has been shown in a Phase III clinical study to reduce the incidence of new thrombosis, amputation and death in patients with HIT and HIT with thrombosis syndrome.

Novastan, the NDA for which was submitted for review in August 1997, received expedited review status from the FDA. McWilliams said once the agency receives the resubmitted application, the review will take place in six months.

"SmithKline is confident that Novastan will be approved," McWilliams said. "They are really gearing up the troops to get this application turned around. We don't think it looks like an insurmountable task."

TBC also has tested Novastan as a treatment for heart attack in combination with tissue plasminogen activator, which is likely to be a secondary indication for the drug should it ultimately receive FDA approval.

The company's European development partner for Novastan is Synthelabo SA, of Montrouge, France, which has marketing rights in Europe, Africa and the Middle East. Mitsubishi Chemical Corp., of Tokyo, currently markets Novastan in Japan for chronic arterial occlusions.

In addition to Novastan, the company has a drug candidate for the treatment of congestive heart failure and a drug for the treatment of asthma, both in Phase II trials. As of Dec. 31, 1997, TBC had $44 million in cash and a burn rate of $15 million to $16 million per year, McWilliams said. *