LONDON — Last week was a hectic one at Scotia plc. It withdrew a marketing application for amelorad (EF27) for treatment of radiotherapy burns. It released plans to raise £25 million to £50 million through a convertible bond issue. It reported results for the year ended December 1997. And its share price ended the week down 9.6 percent to £3.18.
Scotia, based in Stirling, Scotland, said it accepted the European Medicines Evaluation Agency (EMEA) opinion that further proof of the benefit of amelorad (a non-proprietary combination of gamma-linolenic acid and eicosapentaenoic acid) was necessary. However, as other products present greater commercial opportunities, the company, which specializes in lipid drugs, said it would not proceed with the project.
The data submitted covered a trial of 414 women undergoing radiotherapy for breast cancer. Half received amelorad and half placebo. The overall severity of radiation burns was reduced by about 15 percent in the amelorad group, and there were fewer severe reactions.
Robert Dow, CEO of Scotia, told BioWorld International the EMEA's concerns were not just about the numbers involved in the trial.
"There were a series of issues," Dow said. "Firstly, it is usual in cancer indications to do more than one Phase III trial; as is the practice in the biotechnology industry, we did only one study. Secondly, the change in the political situation in South Africa meant that over 100 patients were lost to follow-up. Finally, the study scored only the presence or absence of a reaction to the radiotherapy, and there was an issue over whether many mild reactions were serious enough to go beyond cosmetic embarrassment."
The withdrawal of amelorad compounds the failure in December 1997 to get approval for tarabetic (gamma linolenic acid in the form of evening primrose oil) for treatment of diabetic neuropathy because of wide variations in results from different trial centers. This has convinced Dow, who became chief executive Jan. 1, 1998, taking over from founder David Horrobin, that Scotia needs to change its tactics.
"We won't use this approach in the future," Dow said. "We will take good intellectual ideas from the bench to the end of Phase II for £3 million to £5 million, and then find a partner. With a cash burn of £25 million per annum you can afford a product pipeline of one [if you aim to go through to registration], or you can have a significant number of projects."
Dow said there were problems in trying to register lipids as drugs. "The authorities need to be convinced that they are effective and safe. The other question is, should we register oils, which people can buy themselves, as prescription drugs?"
He added that from now on the company will only develop lipids as new chemical entities. For example, it has two second-generation proprietary products for treatment of diabetic neuropathy, which it currently is re-evaluating in light of the failure of tarabetic. It has two further proprietary lipid formulations, glamolec for the treatment of cancer and epakex for the treatment of cancer cachexia.
Other Technologies Explored
Scotia will focus on two other core technologies, photodynamic therapy and lipid reformulations.
The company also will develop the commercial potential of Olibra, a patent-protected emulsion purified from natural oils, which it said is the first food ingredient to suppress appetite effectively. Yogurts containing Olibra went on sale in Sweden in January.
"We could get as much money from Olibra as if we had licensed a drug which was in the top 100 sellers," said Dow.
About £25 million of the convertible bond issue, due 2002, has been underwritten by the lead manager, Nomura International plc. Dow said, "I have asked for £50 million because we have got the intellectual property and within two years could deliver a lot of value."
Once he knows how much money has been raised, he added, "I will look at the products in development and decide what cash burn we will have. I hope we get the money so people get a chance to see we have a management team which is capable of delivering."
Scotia reported a loss of £20.7 million for 1997, up from £19.1 million in 1996, which it said was "in line with expectations." This was on turnover up 15 percent to £18.9 million.
Other operating income, mainly derived from licenses for the photodynamic therapy drug Foscan, was £9.3 million. Cash balances fell by £15.6 million and there was £18.2 million cash at the year end.
The need to raise more money was underlined by the 18 percent increase in R&D expenditures to £23 million.