By Frances Bishopp
After 14 years of research and development, Scios Inc. has drawn the curtain on its lead product, Auriculin, after reporting Thursday it did not achieve its primary endpoint, dialysis-free survival, in an interim analysis of a Phase III trial for the treatment of oliguric acute renal failure (ARF).
Scios, of Mountain View, Calif., will discontinue development of Auriculin, which had previously failed in a 1995 Phase III trial for the treatment of acute renal failure. As a result of these most recent Phase III results, Scios' relationship with its partner, Genentech Inc., could well be discontinued. Genentech began collaborating with Scios for the development of Auriculin in 1994.
Scios' stock (NASDAQ:SCIO) dropped 30 percent ($2) Thursday, closing at $4.687.
Genentech, of South San Francisco, has the option to continue development of Auriculin, Richard Casey, president and CEO of Scios, told BioWorld Today. However, at this point, he said, there has been no word as to what Genentech's plans are in terms of the collaboration.
Edmund Debler, an analyst with Mehta & Isaly, of New York, said the failure of Auriculin represents a big setback for Scios, adding it will be difficult for the company to get any capital from the equity markets. "If there is any chance for the company to make a comeback," Debler said, "it will have to be on its own dollar."
Scios, as of Dec. 31, 1996, had $63 million in cash on hand. In the first quarter of this year, Scios also drew down a loan from Genentech, which added $30 million to its cash base. After first-quarter expenses, Casey said, the company had approximately $80 million in cash.
"These results are a major disappointment," Casey said, "but corporately speaking, this event will not threaten the company."
Auriculin (anaritide) is a naturally occurring hormone produced in the atrium of the heart. Its benefit as a treatment for ARF was based on its ability to regulate blood flow through the kidneys.
Analysis of the 1995 Phase III trial showed Auriculin did not reduce the need for dialysis, nor did it reduce mortality in the 504-patient, placebo-controlled trial for acute renal failure. Statistical significance, however, was achieved in a subgroup of 120 patients — those suffering from oliguric ARF, or abnormally low urine output.
In October 1995, Scios initiated the 250-patient Phase III study of Auriculin for the treatment of oliguric ARF. This study demonstrated that no statistical significance could be achieved if the study were continued.
Casey said Scios remains optimistic about other products in the pipeline, specifically Natrecor BNP, a naturally occurring molecule believed to be part of the body's response to a failing heart. Scios is developing Natrecor as a treatment for acute congestive heart failure. Natrecor currently is in two Phase III trials: a 120-patient pivotal efficacy trial and a larger, 300-patient safety study. Scios, which is developing Natrecor alone, expects trial results by the end of 1997, Casey said.
Scios expects to file a new drug application for Natrecor by the first half of 1998.
Scios' second product, Fiblast, is in phase II studies for three indications: stroke, peripheral vascular disease and coronary artery disease.
Fiblast is Scios' recombinant form of basic fibroblast growth factor, a naturally occurring peptide with potent neuroprotective and angiogenic properties. Scios is collaborating with Wyeth-Ayerst Laboratories, of Radnor, Pa., on the development of Fiblast. Wyeth-Ayerst is a division of American Home Products, of Madison, N.J.
"The company is reallocating all of its people to accelerate the development of Natrecor BNP for heart failure and Fiblast FGF," Casey said.
Analyst Felicia Reed, of Cowen & Co., in Boston, said she had expected profitability of 10 cents per share in 2000 for Scios; however, the company's negative news would push out the company's timeline for profitability. "The company is going to take a hit because it won't receive the $30 million milestone payments from Genentech," Reed said. "They do, however, have another shot with their upcoming Phase III result with Natrecor for congestive heart failure. Obviously, that result will have to be a success or the company could be in pretty hot water."
Debler sees Auriculin's failure as a major setback for Genentech as well. Genentech needs late-stage products, he said, and, in that regard, Natrecor could possibly fill the bill for both companies. "Both companies need each other, and know each other, so let's talk," Debler said. *