BioWorld International Correspondent

LONDON - Alizyme plc is raising £32.8 million (US$62.7 million) as it prepares to move an obesity drug and a treatment for irritable bowel syndrome into pivotal work.

The money will pay for final preparations of a Phase III U.S. trial of Renzapride in constipation-predominant irritable bowel syndrome (IBS); to complete a Phase IIb European study of Cetilistat in obese diabetics and prepare the lipase inhibitor for Phase III; bring a third product, Colal-Pred, for treating ulcerative colitis through Phase III; and complete a Phase IIa trial of ATL-104 in mucositis in cancer patients.

The Cambridge, UK-based company announced the fund raising as it published 2004 financial results showing it has £16.1 million in cash at December.

Richard Palmer, CEO, said in an analysts' meeting that the company did not need the money yet, but the company knew "when we put out the results people would start speculating about fund raising," so they decided to raise the money.

He added, "If we had put it on hold pending getting partners, you are effectively telling [potential] partners [the products] are worth nothing without them." Alizyme now is funded until the end of 2007.

Alizyme is placing 30.5 million shares at £1 per share on the basis of four new shares for every 19 existing shares. The balance of the money is coming from Qfinance Inc., the investment arm of the contract research organization Quintiles Transnational Corp.

"We are delighted to have a private placement by Quintiles," Palmer said. "This is their first investment outside the U.S. and without any specific [contract]."

Alizyme operates as a virtual company, and has used Quintiles to carry out development work on Renzapride, a 5-HT₄ full agonist/5-HT₃ antagonist, from its preclinical stages.

Palmer said Alizyme now is in the thick of discussions with the FDA on the design of the Phase III study for Renzapride using the special protocol assessment process.

The problem has been getting the FDA to agree on the Phase III trial design. "It has been very frustrating because they have changed their minds on various things, but I think we will agree before the summer," Palmer said. "The debate is not about Renzapride but about how you assess benefit - what questions do you ask the patients?"

Palmer noted that in the past year the FDA has turned down a marketing application for Solvay SA's treatment for IBS and added new warnings to the label for Zelnorm, Novartis AG's IBS treatment. "It will cost $100 million to get Renzapride through Phase III. In view of the regulatory risk that has appeared in IBS over the last year, a partner needs to know what the program is."

Similarly, Palmer noted there have been "happenings" in the obesity arena that will influence the program for Cetilistat, which is expected to compete with F. Hoffmann-La Roche Ltd.'s Xenical. Palmer said that as efficacy is similar for all lipase inhibitors, success depends on minimizing the unpleasant side effects of oily spotting, fecal urgency and flatus.

"The obesity market is very large and if the product meets patient expectations that will drive the market," he said.

The current Phase IIb trial of Cetilistat has an arm comparing it with Xenical, and the investigational new drug application now is open for a U.S. trial in 60 obese but otherwise healthy subjects.

Alizyme also is slicing through regulatory thickets in Europe, trying to agree on the design of a single Phase III registration trial for Colal-Pred in which it will be compared directly to current standard therapy with the steroid prednisolone. The company has negotiated the regulators down from 1,000 patients per arm to 160. "The trial we've got is extremely manageable," Palmer said.

The market for ulcerative colitis treatments was $500 million in 2002, so Colal-Pred (a formulation of prednisolone that is not released until it meets with digestive enzymes in the colon) is not in the same league commercially as Renzapride and Cetilistat. Palmer noted that Alizyme has spent £54.4 million since it was founded nine years ago and now has four products in Phase II and III that are unrelated to each other.

"If one falls over it doesn't take the others with it; any one of the products gives the return for our investors," he said.