WASHINGTON _ Inaccurate information about Chiron Corp.'smultiple sclerosis (MS) drug, Betaseron, caused the company's stock tojump $3.50 per share on Tuesday and another 75 cents on Wednesdayto close at $69.25.The stock (NASDAQ:CHIR) apparently surged on erroneous reportsfrom Chiron that the American Academy of Neurology (AAN) hadendorsed the use of Betaseron for treating a severe form of MS, chronicprogressive MS. However, the AAN has informed Chiron that itsrecommendations are not yet finalized or published and that, whenpublished, they may not include any such recommendation.A spokesman for AAN said his organization will issue a clarification inthe next day or two. AAN guidelines will ultimately be published in theorganization's Journal of Neurology.Chiron's vice president of corporate communications Larry Kurtz wrotein a memo to analysts and institutions on Tuesday that, "The AmericanAcademy of Neurology's MS Practice Committee voted to recommendprescribed use of Betaseron in all MS patients, both relapsing remittingand chronic progressive." Kurtz said he based his memo on reportsfrom numerous analysts who attended an AAN meeting last week.However, he did not confirm the reports with AAN."It was not appropriate for me to preempt their recommendations,"Kurtz told BioWorld.On the same day Kurtz's memo went out, Chiron vice chairman andchief executive officer Ed Penhoet spoke at Alex. Brown & Sons Inc.'s19th Annual Health Care Seminar in Baltimore., and said that the AANrecommendation could double demand for Betaseron. Counting bothrelapsing remitting and chronic progressive, there are approximately300,000 MS patients in the U.S.Betaseron, which is manufactured by Chiron and marketed by ScheringAG unit Berlex Laboratories of Richmond, Calif., received FDAapproval late last year to treat a moderate form of MS, relapsingremitting MS. Although Berlex could never actively promoteBetaseron for a non-FDA approved indication, an endorsement from amedical group such as the AAN might have induced doctors toprescribe the drug more broadly and eased reimbursement issues.Several analysts contacted early in the day before confusion over theaccuracy of the report set in, said that the endorsement could be a boonfor Chiron. However, it's unclear how increased demand could havebenefited Chiron in the short-term since Betaseron is currentlydistributed by lottery due to supply shortages.Analysts said the fact that it was an unsolicited endorsement and thatChiron habitually downplays positive news imbued the ill-advisedAAN announcement with special meaning. Some analysts have beenbearish on Betaseron's prospects this year due to reimbursement issues,the ability of patients to pay for the drug and reported side effects.Despite the AAN debacle, the potential for Chiron to penetrate deeperinto the MS market remains: its ability to do so will rest on Betaseron'sperformance in a well-controlled Phase III clinical trial testing the drugin chronic progressive MS patients.T-88 Development DiscontinuedIn other developments, Chiron also announced late Tuesday that it hasdiscontinued development of T-88, its antibody to treat gram-negativesepsis. The drug failed to reduce mortality in a randomized, placebo-controlled Phase III clinical trial that enrolled 826 patients at 34 centersacross the U.S.The news may not come as a surprise to hard-bitten observers of sepsistrials. Not a single Phase III clinical trial using a biotechnology-produced therapy has demonstrated efficacy in a prospectively definedgroup of patients. Three top-tier biotechnology companies _ CentocorInc., Xoma Corp. and Synergen Inc. _ have fallen from grace as aresult."This was a well-conducted clinical trial by a group of experts incritical care," said David Martin, president of Chiron Therapeutics."The data are high quality, of which we are proud. Unfortunately, theresults were not positive."Chiron did not disclose any details but said the trial data would besubmitted for publication by clinical trial investigators and that T-88personnel will be re-assigned to other projects. Analysts had notexpected the drug to work due to past failures of sepsis drugs and theypraised the Emeryville, Calif.-based company for making a swiftdecision to terminate the T-88 program."It's critical for the management of a pharmaceutical company to knowwhen to kill a project," said David Stone, biotechnology analyst atCowen & Co. in Boston.Although many lump T-88 together with core-directed anti-endotoxinantibodies such as XOMA Corp.'s E5 and Centocor Inc.'s HA-1A, thedrug represents a slightly different approach. T-88 was designed totarget and bind to enterobacterial common antigen (ECA), a proteincommon to many gram-negative bacteria.T-88 Designed To Kill BacteriaAnti-endotoxin antibodies were not designed to kill bacteria, but ratherto bind to a single bacterial by-product, endotoxin, and clear it from theblood. T-88 was designed to bind to bacteria via ECA and then harnessthe natural immune process of the body, called opsonization, to kill andclear the bacterial invaders. Opsonization occurs when immune systemscavenger cells recognize and devour foreign matter, in this case, thebacteria.The anti-endotoxin approach assumed that binding and removingendotoxin from a patient's circulation is key to curing gram-negativesepsis. T-88 is based on much the same premise as antibiotics: killingthe bacteria and removing it from the body can cure infection. In fact,the real question looming for T-88 was whether or not it would workany better than antibiotics. Apparently, it did not."Chiron remains committed to building a business in critical caretherapeutics, which includes the development of products that havepotential application in treating sepsis or septic shock," said DavidMartin, president of Chiron Therapeutics. "Our experience and datafrom T-88 will be valuable in helping us structure clinical trials forfuture product candidates in this indication."Chiron also announced on Tuesday the acquisition of a Frenchopthalmic products company, Laboratoires Domilens SA, which had1993 sales of $22 million. n

-- By Lisa Piercey Washington Editor

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