AutoImmune Inc. sold 2.04 million shares of common stock in aprivate placement that raised more than $9 million to help supportclinical development of the company's leading drug candidates,including Phase III trials of Myloral for multiple sclerosis.

Thomas Hennessey, chief financial officer of the Lexington, Mass.-based company, said that in addition to Myloral, the funds will beused for Phase II trials of Colloral for rheumatoid arthritis, Phase IIstudies of AI 300 for uveitis and other clinical programs.

Hennessey said fourth quarter financial figures were not available,but as of the end of the third quarter, Sept. 30, AutoImmune had$19.5 million in cash and a burn rate of $1.3 million a month. Withthe issuance of 2.04 million shares, AutoImmune has about 12.25million shares outstanding.

In December, the company signed a potential $20 millioncollaboration with Eli Lilly & Co., of Indianapolis, to developAutoImmune's oral form of recombinant human insulin. Paymentsare tied to milestone achievements and AutoImmune will receiveroyalties on sales. Phase I trials of the drug, AI-401, are complete.

AutoImmune's drug candidates are based on its oral tolerancetherapy. The two most advanced products are Myloral, derived frombovine myelin, and Colloral, made from chicken collagen. Resultsfrom Phase III trials of Myloral are not expected until the first quarterof 1997. The Phase II studies of Colloral are dose-ranging trials andshould be complete by mid-summer.

AutoImmune's stock (NASDAQ:AIMM) closed Thursday at $5.50,up 44 cents. _ Charles Craig


By Lisa PierceyWashington Editor

ROCKVILLE, Md. _ Biologics manufacturers told FDA officials onThursday that the agency's regulations are stifling productdevelopment and forcing many companies to build manufacturingplants overseas.

Representatives from companies and trade associations zeroed in onthe FDA's cumbersome and outdated rules governing biologicsmanufacturing at an FDA-sponsored forum here.

Alan Goldhammer, director of technical affairs at the BiotechnologyIndustry Organization (BIO) said that a significant amount of reviewtime at the Center for Biologics Evaluation and Research (CBER) isspent looking at manufacturing changes. Goldhammer and almostevery other speaker blamed that state of affairs on antiquated portionsof title 21 of the Code of Federal Regulations (21 CFR).

Among the changes requested by industry at the meeting:

* Change the definition of "manufacturer" to account for the complexmultinational corporate structures of modern drug companies.Specifically, allow it to include, when it identifies a corporation, allparent, subsidiary or affiliate companies that are under commonownership and control.

* Allow companies to make minor changes and improvements inmanufacturing methods without being subject to time-consumingFDA reviews. Currently, all manufacturing changes must be reportedto and cleared by agency reviewers, no matter how insignificant. Therequirement has apparently caused some manufacturers to foregomaking improvements to processes and/or facilities.

* Change the definition of "Responsible Head" _ a designation forthe individual at each company who communicates with CBER _ toaccount for the fact that no single individual at a given companypossesses expertise in every step of a product's manufacture.

* Remove the requirement that all work with spore-bearing organismsbe done in an entirely separate building. Although the original rulewas to prevent contamination of biological products by pathogens,key technological developments of the past several decades havemade it obsolete.

* Do not regulate in vitro diagnostics (IVD) as vaccines. Theclassification of IVDs as vaccines, and the resulting onerous approvalrequirements, have driven companies like Abbott Laboratoriesoverseas, said Matt Klamrzynski, director of Abbott's DiagnosticsDivision. "The product approval process is archaic and fraught withpotholes for manufacturers," he said.

* Contemplate not requiring simultaneous submission of ProductLicense Applications (PLA) and Establishment License Applications(ELA). Some industry representatives called for submitting productlots from a pilot facility to prove safety and efficacy in the PLA,followed by a later submission of an ELA for a full-scale commercialmanufacturing plant. That way, companies might not be forced tobuild expensive plants before knowing if they had an approvableproduct.

* Find new terminology to describe the dreaded "non-approvable"letter. Small companies complained that such a letter, by name alone,can send investors running. One suggestion: a "deficient application"letter.

`Regulation By Policy' Must Change _ Fast

One meeting attendee, Thomas Copmann, of the PharmaceuticalResearch and Manufacturers of America, pointed out that regulationsalone weren't the FDA's major problem. "The problem is that, in theabsence of updated regulations and because of the cumbersomeprocess needed to change regulations, we have instead regulation bypolicy," said Copmann, who is assistant vice president ofbiotechnology and biologics regulatory affairs. "And that policy isnot peer-reviewed."

CBER officials promised that the rewrite of the General BiologicsRegulations will be moved to the front burner at the agency once theFeb. 13 deadline for public comment has passed. "We plan toreinvent our regulation of biologics," vowed Michael Beatrice,CBER's deputy director. "We're going to reexamine our existingregulatoryparadigm."

However, industry skeptics will wait to see if the agency can deliveron its promise to remake itself. For those companies that claimexcessive regulation has already killed them off, the FDA's actionswill surely be seen as too little, too late. n

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