Washington Editor

Zadaxin (thymalfasin) failed a Phase III trial in hepatitis C patients, the first of two studies planned to support the investigational drug's approval in that space, leading developer SciClone Pharmaceuticals Inc. to believe the immunomodulatory compound will instead receive its first approval in malignant melanoma.

The news caused a sharp 40 percent decline in the company's share value, as its stock (NASDAQ:SCLN) tumbled $1.54 to close at $2.31 Wednesday. The company will push ahead, however.

"We remain committed to the development of Zadaxin and our goal to obtain approval in a major pharmaceutical market," SciClone President and CEO Ira Lawrence said in a conference call.

"We believe that the best near-term opportunity to obtain this goal for Zadaxin is in malignant melanoma, and we intend to move vigorously forward on this front, he said."

Top-line results from the U.S.-based study, which evaluated Zadaxin in combination with pegylated interferon alpha to treat hepatitis C patients who have failed previous interferon-based therapy, did not demonstrate a statistically significant benefit compared to pegylated interferon alone in sustained viral response or histologic improvement, the trial's co-primary endpoints.

More specifically, 4 percent of the 269 patients treated with the combination achieved a sustained viral response compared to 2 percent of the 265 control arm patients, a positive treatment-related trend for Zadaxin but not statistically significant.

The study's protocol defined that endpoint as the disappearance or absence of detectable hepatitis C virus RNA in the bloodstream after a 48-week course of treatment and at week 72, the end of a 24-week observation period following treatment.

Also, there was no significant difference in histological improvement between patients treated with the immunomodulatory compound plus pegylated interferon alpha and those treated with pegylated interferon alone.

"Based on these interesting initial observations," Lawrence said, "we believe that further in-depth analysis of the data is necessary so that we are able to fully understand Zadaxin's possible incremental role in hepatitis C therapy."

The drug, the San Mateo, Calif.-based company's lead product, was well tolerated, with no treatment-related toxicities or side effects, and patients who received it were less likely to relapse.

Also, there was a better sustained viral response rate among Zadaxin patients who previously had failed regular interferon monotherapy.

All patients had failed prior interferon-based treatment for hepatitis C virus and had no cirrhosis of the liver. More than 75 percent of those enrolled were nonresponders to the combination of the antiviral ribavirin with interferon alpha, regular or pegylated, and were infected with the genotype 1 strain of the virus. In addition, most of the patients had a high viral load of greater than 850,000 copies per ml of the virus.

Zadaxin is being evaluated in another U.S.-based Phase III trial in hepatitis C patients, and most eyes now are focused on May, when SciClone expects to report data from that study. Its protocol is identical, except that those patients have early liver cirrhosis.

Previously, SciClone had projected filing a new drug application about the end of next year, if its hepatitis C data had supportive it.

A third Phase III trial, which is being conducted in Europe, is evaluating the triple-therapy combination of Zadaxin, pegylated interferon alpha and ribavirin to treat nonresponder hepatitis C patients with early liver cirrhosis.

Sigma-Tau SpA, SciClone's European collaborator, is running that 550-patient study, which aims to establish Zadaxin as part of that triple-therapy combination. However, it isn't designed for registration.

Zadaxin is a synthetic version of the naturally occurring peptide thymosin alpha 1, or thymalfasin. The compound promotes T-cell maturation and increases the immune system's response, with both functions playing a role in eradicating virally infected and cancer cells.

SciClone also reported interim Phase II findings on the drug in malignant melanoma. Lawrence termed the data "an encouraging, dose-dependent, overall tumor response" from the ongoing European trial, which has enrolled 320 patients to date under the watch of Sigma Tau.

The multicenter, open-label study is testing various doses of Zadaxin with the chemotherapy agent dacarbazine (DTIC), with or without low-dose interferon alpha.

The initial findings show that more patients in the three Zadaxin treatment arms have achieved an overall response than those in the control arm. The best results have been seen among patients receiving 3.2 mg of Zadaxin plus DTIC, with an overall response rate of 12.9 percent.

Also, 10.9 percent of patients receiving 3.2 mg of Zadaxin, DTIC and low-dose interferon exhibited an overall response, along with 7.4 percent of patients receiving 1.6 mg of Zadaxin plus the other two agents. Control arm patients treated with DTIC and low-dose interferon had a 3.9 percent overall response.

A fifth arm is beginning to recruit patients to test 6.4 mg of Zadaxin, DTIC and low-dose interferon.

"Based on these encouraging interim data," Lawrence said, "we together with Sigma-Tau will request meetings with the FDA and European authorities to discuss our regulatory strategy for the use of Zadaxin in the treatment of advanced-stage malignant melanoma."

Those discussions will form the basis of Phase III plans, with such studies planned to begin next year. SciClone also plans to apply for orphan drug status in both territories.

Zadaxin also is being evaluated in other late-stage clinical trials for the treatment of hepatitis B and other cancers.

The company's other principal drug development candidate is SCV-07, a Phase I product being evaluated for its ability to treat viral and other infectious diseases.