The good news for Lidak Pharmaceuticals Inc. was that its new drug application (NDA) for a topical herpes treatment was accepted for review by the FDA.

The bad news for La Jolla, Calif.-based Lidak was that the $80 million to $130 million loan offer from HealthMed Inc., of Los Angeles, was withdrawn, after HealthMed — frustrated by delays — asked Lidak's board of directors, except for president and CEO David Katz, to step down as a condition of the loan.

Lidak's herpes treatment, Lidakol Topical Cream, is a long-chained fatty alcohol that interferes with viral entry into target cells and has been shown to reduce the healing time of herpes episodes. The NDA was filed late last year. (See BioWorld Today, Dec. 29, 1997, p. 1.)

The offer from HealthMed, a privately held company that holds significant stock in Lidak, was tendered in January, and a four-person committee was formed to explore the matter. (See BioWorld Today, Jan. 16, 1998, p. 1.)

On Feb. 23, HealthMed said Lidak's board was "not capable or not willing" to move ahead on the loan, and asked the entire board to resign in order for the deal to go through.

William Jenkins, Lidak board chairman, said in a statement the company doesn't "intend to determine the future of Lidak through the public media." Lidak replied to HealthMed with a letter in which the board members declined to resign until "a competent set of independent directors" is on hand to replace them, and a binding agreement is made regarding the loan.

On Tuesday, HealthMed said it had withdrawn its offer. Lidak's shares (NASDAQ:LDAKA) ended the day at $1.781, unchanged. — Randall Osborne