AIDS therapeutic vaccine developer Immune Response Corp.was the only biotech company affected by Tuesday's news thatMerck & Co. is phasing out work on a non-nucleoside reversetranscriptase inhibitor to HIV.

Immune Response shares (NASDAQ:IMNR) fell $1.25 to $29.75,even though the Merck compound, known as L-697,661, isunrelated to drugs being developed by Immune Response.

The San Diego company was singled out by investors becauseit's been the most visible of the AIDS group and is in advancedclinical development, said Sutro & Co. analyst MargaretMcGeorge.

"It's a reality check," said McGeorge. "People have tounderstand that the development of an effective AIDStherapeutic is a monumental challenge and a lot are going tofail along the way."

Merck of Rahway, N.J., is phasing out L-697,661 because allseven of the patients given the drug became resistant to itwithin six to 12 weeks.

The compound disrupts reverse transcriptase (RT) by bindingto a portion of the enzyme that mutates very quickly, ratherthan to a part of the active site that would be conserved, saidPeter Johnson, president of Agouron Pharmaceuticals Inc.Agouron (NASDAQ:AGPH) is using protein structure-based drugdesign to target the RNase H domain of RT.

"It's not news to any of us who've thought about this problemthat you have to work on areas that are strongly conserved,"Johnson said.

Merck will now focus on a similar compound in Phase I trials,L-696,229, which will be used in combination with thenucleoside analogs AZT or ddI. L-696,229 has a betterpharmacokinetic profile and should engender less resistancethan L-697,661, the company said.

Merck's in vitro data indicated that related compounds likely toencounter similar problems of HIV resistance are the TIBOcompounds being developed by the Janssen Pharmaceutics unitof Johnson & Johnson and BI-RG-587, which is being developedby Boehringer Ingelheim Pharmaceuticals Inc., said Merckspokesman John Doorley.

"Those were all viewed as a high-risk approach," said JimMcDonald, vice president of business development at IAFBioChem International Inc. Glaxo Group Ltd. is running PhaseI/II trials in North American and Phase II European trials ofIAF's 3TC nucleoside analog against the virus.

-- Karen Bernstein BioWorld Staff

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