By Lisa Seachrist

Washington Editor

Matrix Pharmaceutical Inc. said the FDA issued a non-approvable letter for its genital wart treatment, AccuSite Injectable Gel. The agency cited known and unknown side effects as problems preventing product approval.

Matrix stock (NASDAQ:MATX) fell about about 30 percent when the news was released Tuesday. On Thursday, it lost another $0.25 to close at $5.875.

“At this point it is too early to tell what we need to do to satisfy the FDA,“ said Peter Dworkin, senior director of investor relations and corporate communications for the Fremont, Calif., company. “But, we are looking forward to working with them, and addressing their questions in order to get this product approved.“

AccuSite is a biodegradable gel containing fluorouracil (5-FU) — a standard chemotherapeutic agent. AccuSite is injected directly into the wart where it provides a sustained release of the drug. The company has tested the product in more than 2,000 patients with genital warts.

In the letter, the FDA cited concerns about swelling at the injection site as well as the potential that physicians could harm patients by misadministering the drug. Dworkin said the company doesn’t see the clinical significance of the swelling which has always proved to be transient; and, he said, “While there is a theoretical risk of harm to patients with misadministration, none of the centers testing AccuSite had any problems.“

In addition to the clinical concerns, the FDA cited potential problems with expiration dating and sampling plans as well as filter and equipment sterilization validations. Dworkin noted that these concerns should be easy to address, but the clinical issues will require meeting with the FDA which the company is seeking as soon as possible.

The company had originally planned for a second quarter 1997 U.S. launch for AccuSite, Dworkin said. How the agency’s action will affect those plans remains unclear. However, AccuSite has been approved in the U.K. for use in genital warts and the company plans to launch the product in January. Dworkin said that the company expects to have a series of European approvals and launches throughout 1997.

Alex Zisson, an analyst with Hambrecht & Quist, in San Francisco, said that while a non-approvable letter is always a setback for a company, he never saw AccuSite as a big money maker for Matrix, because there are so many competing treatments for genital warts that it will be difficult to gain a large market share.

In addition to treating genital warts the company is testing AccuSite as a treatment for basal cell carcinoma and has another injectable gel, IntraDose, which contains cisplatin, for the treatment of head and neck cancers.

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