BioWorld International Correspondent

LONDON - Shares in Xenova Group plc were hammered Tuesday, falling 9.75 pence to 10 pence, after partner QLT Inc. said it was stopping pivotal trials of tariquidar in non-small-cell lung cancer, on the advice of an independent safety committee.

The decision has serious implications for Slough-based Xenova, which has £12.9 million (US$20.7 million), or about one year of cash. The company said it would take immediate steps to substantially reduce its operating costs.

Xenova CEO David Oxlade told BioWorld International, "Although we didn't expect this outcome, we did have contingency plans in place. In the last hour or so we have started talking to employees, and there will be a substantial reduction in costs and cash burn."

As well as the cut in headcount, there will be a reduction in overhead expenses, though Oxlade said that did not mean the closure of the facilities in Cambridge that Xenova acquired when it took over Cantab Pharmaceuticals plc. There also will be a prioritization of the portfolio to put the focus on products that are in clinical development, and the company will look for partners for early stage clinical programs.

Oxlade would not forecast how long Xenova's cash will last following the cuts, but said the plan would give the company a significant extension. The immediate financial impact of halting the trials is neutral for Xenova, as Vancouver, British Columbia-based QLT was funding them.

Both QLT and Xenova said they remain committed to tariquidar. But speaking in a teleconference call, Paul Hastings, president and CEO of QLT, said it was a "substantial setback in the clinical development of tariquidar." The company will decide how to take the compound forward after it has analyzed the unblinded data from the 304 patients enrolled in the two studies.

QLT was informed of the safety committee's recommendations on Saturday afternoon, and had a first look at the unblinded data on Sunday. The data indicated there was an increase in toxic side effects in the treatment arm vs. the control arm. Tariquidar's mode of action is to control multidrug resistance by preventing chemotherapeutic agents from being pumped out of cancer cells. While this could be expected to result in an increase in toxicity, there was no evidence of associated benefits.

Hastings said he is "keeping an open mind," as QLT reviews the data to get an idea about safety and efficacy. "We may do more conservative trials in Phase II in other cancers, or we may drop it altogether." He added that the "silver lining" is that QLT now has access to what is the largest collection of safety and efficacy data in the world of a third-generation P-glycoprotein pump inhibitor. "We will exploit the value of the database."

A Phase IIb open-label trial in chemorefractory breast cancer at the M.D. Anderson Cancer Center in Houston is unaffected and will continue. So far there has been no increase in toxicity reported in that trial, said Mohammad Azab, QLT's chief medical officer.

Enrollment of the two Phase III trials using tariquidar as an adjunctive treatment in combination with first-line chemotherapy for non-small-cell lung cancer began in June 2002. Approximately 1,000 patients were due to be enrolled at 100 centers in North America and Europe.

The safety committee called a temporary halt to enrollment in February, but said at the time the data were to remain blinded to preserve the integrity of the trial. Existing patients continued to be treated.

Xenova signed the deal with QLT in August 2001, giving QLT development and licensing rights in North America.