Approval of U.S. Bioscience Inc.'s Ethyol in a narrowindication Monday didn't generate the interest amonginvestors that the company was seeing in the early 1990s,when analysts projected near-term approval and largesales.

U.S. Bioscience, however, continued to seek approval ofthe drug after two rejections, and finally securedclearance as a treatment to reduce the cumulative renaltoxicity associated with repeated administration ofcisplatin in patients with advanced ovarian cancer.

The West Conshohocken, Pa., company said it still isnegotiating with potential marketing partners, and expectsthe drug to be available early in 1996.

Also Monday, U.S. Bioscience completed a $20 millionprivate placement that included the sale of 1.1 millionshares at $3.13 each, for $3.5 million, and the remainderin three-year convertible debentures.

U.S. Bioscience's stock (AMEX:UBS) gained 31 centsMonday to close at $4.50. It was pushed up near $80 in1991 in anticipation of approval as a protector of normalcells from chemotherapy. A stock split later cut the pricein half and a series of regulatory setbacks did the rest.

"It's amazing the stock is only up one-eighth," AlexZisson, an analyst with New York-based Hambrecht &Quist Inc., said early Monday afternoon. "It's thecrowning moment for their flagship drug. It's the basis onwhich the company was formed. Wall Street is moreskeptical now than it was in 1991, saying it wants to lookat the corporate partnership and get an early read onsales."

Zisson projected 1996 revenues of $5 million for thecompany, either from its owns sales or from royaltiespaid by a partner. He estimated sales at $27 million in1997 and $80 million in 1998. Those figures reflect off-label chemotherapy usage in 1997 and in radiationtherapy in 1998.

Arvan Disei, an analyst with New York-based Mehta &Isaly, projected peak sales (not in the first year) at $25million to $30 million in the approved indication. "It's arelatively small opportunity," he said.

There are about 20,000 ovarian cancer patients in theU.S., most of whom are treated with cisplatin, Zissonsaid, adding that there probably are 50,000 cisplatin-treated cancer patients.

It's difficult to forecast numbers because they are so tiedto the marketing partner, Zisson said. He's keeping a holdrating on the stock until a partnership deal is completed.

"It may be one of the reasons the stock didn't kick up,"Zisson said of the uncertain marketing plans. "It's apromising drug. The clinical data are outstanding. It's justfinding a way to translate that into revenue for thecompany."

Robert Kriebel, U.S. Bioscience's senior vice president,finance and administration, would not disclose the statusor nature of talks with potential partners, except toreiterate what was in the company's new release: Thecompany is in the advanced stage of negotiation with apotential marketing partner.

Schering-Plough Corp., of Madison, N.J., is marketingthe product in Europe, where launch is under way for aseparate indication: reduction of neutropenia-relatedinfections in advanced ovarian cancer patients. Schering-Plough also has rights in a number of areas in LatinAmerica and the Far East. Eli Lilly and Co. Inc., ofIndianapolis, has rights in Canada, where Ethyol is underreview.

The $20 million financing gives U.S. Bioscience about$33 million. It had about 40.8 million shares outstandingon Sept. 30, 1995.

Kriebel said the money will go toward funding the nineproducts the company has in various stages ofdevelopment, including Ethyol for other indications.Ethyol is being tested in Phase III trials in non-small celllung cancer and to reduce the effects of radiation in headand neck cancer patients.

Ethyol originally was developed as a classified U.S.Army nuclear warfare research project. It was selectedfrom more than 400 compounds for its potential inprotecting soldiers from radiation exposure.

U.S. Bioscience has two other approved drugs. Hexalen isindicated for treatment of ovarian cancer and NeuTrexinis approved for Pneumocystis carinii pneumonia inimmunocompromised patients. U.S. sales of the twoproducts for the first nine months were $6.63 million, a28 percent increase over 1994, Kriebel said. n

-- Jim Shrine

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