Alteon Inc's. stock dropped 21 percent Tuesday on the news that thecompany's Phase III ACTION II protocol for Pimagedine had beenamended due to flu-like symptoms and cardiovascular eventsoccurring in Type II diabetics with overt nephropathy.

Kenneth Moch, senior vice president of finance and businessdevelopment and chief financial officer at Alteon, pointed out,however, that lipid-lowering results had been observed in bothACTION trials, although lipids had not been an endpoint for thePhase III trials.

Patients currently on the high-dose arm of the trial will be convertedto the ongoing low-dose arm, Moch said, "due to dose-relatedadverse events seen in a number of the older, more fragile Type IIdiabetic patients.

The ACTION I group consisted of patients 22 to 50 years of age withjuvenile onset of diabetes. Three treatment arms, consisting of highdose, low dose and placebo, involved 690 patients. No changes weremade in this group, Moch said.

The ACTION II group, an older onset group age of 30 to 70, also hadthree treatment arms with 200 patients in each arm. The changesmade in this group involved taking the 200 patients in the high dosearm and moving them to the low dose arm, Moch said.

Kenneth Cartwright, senior vice president of development andregulatory affairs at Alteon, said there was no difference in mortalityin the treatment arms of both groups. "Many of the patients in theACTION II group have a history of cardiovascular diseases," he said.

Pimagedine, Alteon's lead compound, is designed to inhibit or blockabnormal glucose/protein complexes, called Advanced GlycosylationEnd-products that lead to diabetic complications. Four clinical trialsfor Pimagedine are currently underway, including two pivotal PhaseIII clinical trials for diabetic kidney disease being conducted at morethan 100 North American clinical sites.

"We are very excited with the lipid-lowering results of this trial,"Moch said. "There was a 10 to 15 percent reduction in bad lipids."

Moch said he does not feel the potential market for Pimagedine hadbeen affected and would not speculate as to the future of any partnercollaborations.

ACTION is a clinical study program involving volunteers withdiabetes and complications of kidney disease. The program is dividedinto two studies, people with either insulin dependent diabetesmellitus or non-insulin dependent diabetes mellitus.

Alteon, of Ramsey, N.J., said the program is a blinded study andinvolves volunteers to be seen 10 times in three months for physical,eye, heart and kidney exams. After that, the volunteers are seen bythe doctor every three months until the end of the program.

Alteon's stock (NASDAQ:ALTN) closed Tuesday down $1.563 to$6.187. n

-- Frances Bishopp

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