Alpha 1 Biomedicals Inc. released potentially devastating newsThursday for its lead drug candidate, while licensee SciClonePharmaceuticals Inc. said it will continue moving towardcommercialization of the product, thymosin alpha 1, for treatingchronic hepatitis B.Alpha 1 said partial data from its 99-patient U.S. Phase III trial ofthymosin showed about equal responses in patients treated with thedrug and with placebo, as it relates to the disappearance of hepatitis Bvirus DNA, one of three treatment indicators. Based on the results, theBethesda, Md., company believes it will not be able to file a new drugapplication without additional testing.Alpha 1 (NASDAQ: ALBM) stock fell 68 percent, from $6.19 to closeat $2 per share, after reaching a low of $1.25 on Thursday in trading of5.3 million shares.SciClone (NASDAQ:SCLN), of San Mateo, Calif., has exclusivemarketing rights to thymosin (under its brand name Zadaxin) for allareas other than North America, Europe, Korea and Israel. It's stockdropped from $12.75 per share to $5.19 _ 59 percent _ on Thursdayin trading of 8.8 million shares.SciClone Buys Alpha 1 StockSciClone also purchased more than 15 percent of stock of Alpha 1 _with which it has been embroiled in arbitration and litigation _ forabout $1.2 million and said it intends to purchase about 20 percent ofthe stock to become the largest shareholder, SciClone's chairman andCEO, Thomas Moore, said via a conference call with reporters andinvestors Thursday. He also said SciClone intends to buy back aboutone million of its approximately 18 million shares outstanding, becauseof the belief that the stock is undervalued."We feel that thymosin is a significant product and we have not lostfaith in it," Moore said.Alpha 1's president and CEO, Vincent Simmon, did not return phonecalls Thursday from BioWorld.Moore said that SciClone is going forward in its commercial effortsbecause efficacy of the drug was proven in previous trials and for otherindications. Further analysis of the data is needed, he said, before theresults of Alpha 1's trial could be considered definitive. He cautionedthat further study could point to a flaw in the three-center trial.He said that SciClone intends, in the fourth quarter of this year, tolaunch the product in Singapore, where it was approved last Septemberfor chronic hepatitis B."God bless them," analyst Eric Hecht told BioWorld. "I don'tunderstand the concept of trying to market a drug that doesn't work."I think the test was fair," said Hecht, who follows the companies forMorgan Stanley & Co. of New York. "It was based on earlier data thatled them to the hypothesis that the drug worked. Now we have no datato suggest that the drug works or doesn't work. We're at point zero."While Moore told the conference-call audience that it would be betterto let Alpha 1 field specific questions about preliminary trial results, hesaid that a placebo remission rate of 20 percent to 28 percent is "notinconsistent with what we're hearing." And he indicated that the ratewas highest at one of the three centers, which were in Los Angeles,Miami and DetroitIn November, SciClone filed product license applications for Zadaxinto treat chronic hepatitis B in Hong Kong and the People's Republic ofChina, where it expects approval soon. It also has the drug in Phase IIItrials for the same indication in Latin America, Taiwan and, throughpartner Schering-Plough Corp., in Japan.Thymosin Alpha 1 is a chemically-synthesized version of the naturallyoccurring peptide hormone thymosin. It is thought to act by stimulatingthe production of cytotoxic T cells that recognize viral antigens orepitopes and subsequently destroy the cells that express them. Alphainterferon is the only approved drug for chronic hepatitis B, but itproduces flu-like symptoms and neurological disorders in somepatients. A number of companies are working to develop a hepatitis Bdrug for a market that affects an estimated 300 million peopleworldwide, the vast majority of whom are in SciClone's marketingarea.An arbitrator on April 8 ruled that Alpha 1 reached its obligation assole supplier to provide SciClone with commercial quantities of thedrug, allowing SciClone to seek other manufacturers. SciClone wantedto launch the product in March in Singapore. The arbitrator also ruledagainst Alpha 1's claim that it was entitled to a higher sales price inroyalties under an amended agreement. (See BioWorld Today, April12, p. 1.)Further arbitration is scheduled to start May 18.Hecht said, "They've been fighting over smoke. Thymosin has been aprofitable product for attorneys and their families."042994ALPHA1
-- Jim Shrine
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