La Jolla Pharmaceutical Co., which last year signed a potential $40million deal with Danish drug maker Leo Pharmaceutical ProductsLtd., canceled the alliance Friday over disagreements on a timetablefor development of La Jolla's lead product for lupus.

The San Diego company's LJP 394, which binds to the surface ofspecific B cells and shuts off their production of disease-causingantibodies, successfully completed a Phase IIa trial and is ready toproceed to a Phase IIb efficacy study in lupus nephritis patients.

"They [Leo officials] wanted to move slowly and we wanted to movemore rapidly," said Andrew Wiseman, director of businessdevelopment for La Jolla Pharmaceutical. "We ended thecollaboration as a friendly relationship."

La Jolla Pharmaceutical will keep a $3 million up-front paymentmade by Leo, of Ballerup, Denmark, which had purchased Europeanand Middle Eastern rights to LJP 394. La Jolla Pharmaceutical,which had retained ownership of the drug in the U.S. and elsewhere,reacquired those rights from Leo.

Wiseman said the Phase IIb trial of LJP 394 will get under way laterthis year.

With 20 months of cash, he added, La Jolla Pharmaceutical hassufficient funds to continue development of its lead product. It endedthe first quarter of 1996 with $20 million in cash and a net loss forthose three months of $2.9 million.

"We have no problem in the short term," Wiseman observed. Thepositive Phase IIa findings, he said, have generated interest amongpotential corporate partners.

LJP 394 is derived from La Jolla Pharmaceutical's ToleranceTechnology, which is designed to make molecules that bind to thesurface of B cells. The drug targets specific B cells that produceantibodies to double-stranded DNA, which are believed to causekidney disease, the main killer of lupus patients.

The Phase IIa placebo-controlled, dose-ranging trial of 58 patients inthe U.S. demonstrated the drug was safe and could reduce levels ofdouble-stranded antibodies. The greatest median reduction ofantibody levels, measured two months after the treatment, was nearly50 percent for patients receiving the highest of three doses, whichwas 50 mg per week for one month. In the placebo group, patientsexperienced a 5 percent median increase in antibody levels.

Investigators also said the drug was well tolerated with no significantdose-related adverse reactions.

Details of the Phase IIb trial have not been determined, Wisemansaid. The study will evaluate LJP 394's effectiveness in preservingkidney function in lupus nephritis patients and in reducing theirreliance on the current standard therapies, which include steroids andwhich can have serious side effects.

La Jolla Pharmaceutical's stock (NASDAQ:LJPC) closed Friday at$7.50, down 44 cents. n

-- Charles Craig

(c) 1997 American Health Consultants. All rights reserved.