DDI Pharmaceuticals Inc. stock plunged 57 percent Friday afterthe company released a letter to shareholders explaining thatpreliminary analysis of Phase III trials of its bovine superoxidedismutase (bSOD) showed no significant effects on knee pain inpatients treated for osteoarthritis.

The stock (NASDAQ:DDIX) closed at $3.13, dropping $4.13.

The letter was released because "our legal advisers told us thatwe needed to get information out to the public promptly," saidMark Saifer, vice president and scientific director. But since itwas based on a preliminary analysis, "the letter was disastrousbecause it doesn't provide any insights into how the future canimprove the situation."

bSOD is an enzyme made from bovine liver extract. It is used toeliminate oxygen free radicals.

The Phase III study was to see whether injections of bSOD intoosteoarthritic knee joints would relieve patient pain and permitreduced dosages of non-steroidal anti-inflammatory drugs(NSAIDs), which are widely used to treat osteoarthritis.Reduced dosage could reduce the serious and sometimes fatalsides effects of prolonged use of NSAIDs, includinggastrointestinal disorders.

DDI's Phase III study found that "SOD was not significantlybetter than placebo in alleviating patients' knee painsufficiently to allow reduction of their NSAID dose," accordingto the letter.

This conclusion "shouldn't be a surprise," said MontgomerySecurities analyst Brandon Fradd. After Chiron Corp. failed todevelop SOD for reperfusion damage to transplanted kidneysand myocardial ischemia, "most people thought SOD was a deadproduct two years ago," he said.

"Bio-Technology General Corp. also tried it in reperfusion injurywith some pretty prestigious investigators, and it flopped," saidOppenheimer & Co. analyst Jeffrey Casdin.

However, said Saifer, DDI's work has not involved reperfusion,but has emphasized development of the drug for treatinginflammation from arthritis.

BTGC is conducting European trials of human recombinant SODto treat rheumatoid arthritis.

And Chiron is manufacturing bulk human recombinant SOD forTakeda Chemical Industries Ltd. in Japan, said Chironspokesman Larry Kurtz. Takeda is conducting Phase III trials inpatients with osteoarthritis.

bSOD has been marketed in Germany since 1981, and morethan 10 million injections have been administered, primarilyfor osteoarthritis.

Further analysis of the Phase III study indicates there may bean interaction between bSOD and high doses of NSAIDs, Saifersaid. It may be possible to eliminate the interaction byreducing NSAID dosages and substituting bSOD.

At lower dosages of NSAIDs, "we see a significant effect of thebSOD, and that's what gives us encouragement to continuedevelopment," said Saifer. DDI plans to complete its analysis ofthe Phase III study, to conduct a crossover study in whichpatients who received a placebo are given bSOD and vice versa,and do a re-treatment study.

Sterling Drug Inc. is studying a combination of bSOD, suppliedby DDI, and polyethylene glycol (PEG) to increase bSOD'slongevity in patients with closed head injuries.

-- Kris Herbst BioWorld Washington Bureau

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