Negative trial news Wednesday sent ripples through companies involved in the development of memantine.

Forest Laboratories Inc. disclosed the failure of a pivotal trial studying the drug's ability to treat neuropathic pain in diabetic patients. More specifically, findings showed the drug did not demonstrate a significant difference vs. placebo relative to the trial's primary endpoints.

Though memantine remains under FDA review in Alzheimer's disease, shares of development partner Neurobiological Technologies Inc. plunged on the news. The Richmond, Calif.-based company's stock (NASDAQ:NTII) fell $3.97, or 50.5 percent, to close at $3.89. Forest's shares (NYSE:FRX) lost $1.49 of their value to close at $51.18.

Despite the downbeat data, Forest said it would continue to review the results to determine whether and how memantine could be developed for neuropathic pain. An earlier pivotal study conducted by Neurobiological Technologies showed a statistically significant and clinically relevant effect of 40 mg of memantine on nocturnal pain in about 420 diabetic neuropathy patients.

New York-based Forest's trial studied the same dose in 520 patients for 16 weeks, twice as long as the Neurobiological Technologies study.

"There will be a lot of work in the coming weeks and months to determine why there were such disparate results between our Phase IIb and theirs," Ronny Kraft, spokesman for Neurobiological Technologies, told BioWorld Today. While he would not disclose specific endpoints, he said, "Our trial had a [p value of 0.01] using a statistical analysis that looked at the absolute mean score at the eighth week. This trial used a primary endpoint of the percentage difference in comparison to baseline at week 16."

He called the outcome of the percentage difference for the memantine arm of Forest's trial positive, but suggested placebo affected the trial.

"Our medical director and clinical team and Forest's clinical team will discuss what the data would have looked like had they used the absolute mean score," Kraft said. "It is my opinion that the answer as to why the trial statistically failed possibly has to do with the high placebo effect."

Beyond further statistical analysis, Kraft added that Forest might conduct another study. But the possibility that the indication might not be pursued any further could have significant effects on future revenue streams at Neurobiological Technologies, which would draw greater royalties on pain-related sales than from sales related to the Alzheimer's indication - for which it was approved in Europe almost a year ago.

Frankfurt, Germany-based Merz + Co. GmbH initially developed the drug for Parkinson's disease, gaining European approval in the early 1980s before turning its attention to the Alzheimer's indication. In the early 1990s, Neurobiological Technologies began studying the drug in neuropathic pain, and eventually the two companies reached an agreement to share profits from both indications. Privately held Merz licensed to Forest U.S. marketing rights to the drug, a moderate-affinity, uncompetitive N-methyl D-aspartate receptor antagonist that modulates glutamate levels, and European sales rights to Copenhagen, Denmark-based H. Lundbeck A/S.

Neurobiological Technologies also disclosed quarterly financial results Wednesday for the period ended March 31. The company registered a three-month net loss of $747,000 and just more than $2 million in net losses for nine months, along with cash reserves of $5.1 million. Among its revenues was an early royalty stream on European Alzheimer's sales of the drug, marketed abroad under the name Ebixa.

Neurobiological Technologies receives 1 percent of memantine's Alzheimer's sales. But the earnings news was overshadowed by the drug development disappointment, a letdown that could be softened by FDA approval in Alzheimer's.

Late last year Forest filed a new drug application that included data from three pivotal studies in Alzheimer's. The company said the submission was an amended version that corrected structural and formatting deficiencies identified by the FDA in Forest's initial application, submitted in July but withdrawn in September. (See BioWorld Today, Dec. 23, 2002.)

At last month's American Academy of Neurology meeting in Honolulu, Forest reported data used in the application showing that memantine enhanced cognitive function in a Phase III study of 402 moderate to severe Alzheimer's patients treated in combination with Aricept (donepezil). Results from a six-month, randomized trial demonstrated that combination therapy improved patients' cognition relative to baseline and when compared to the donepezil/placebo arm. (See BioWorld Today, April 7, 2003.)

Three additional Alzheimer's trials are scheduled, though results will not be included in the FDA application. However, findings could be used to expand labeling.

The overseas approval triggered a $1.4 million payment to Neurobiological Technologies, and the company expects an FDA decision in Alzheimer's before the end of this year, Kraft said.

Beyond memantine, Neurobiological Technologies essentially resurrected development of another compound, xerecept, and plans to begin a pair of Phase III trials before the end of the year. A Phase IIb study of the drug, designed to treat patients with peritumoral brain edema, did not enroll enough patients last year and Kraft said development was expected to end. But after analyzing the smaller-than-planned cohort and finding encouraging data, Neurobiological Technologies is moving forward and the compound has received orphan drug status.

Meetings with the FDA, including one as recent as last week, have produced the program's protocol to study about 300 patients for two years. Kraft said, assuming eventual approval, the drug could hit the market in 2006.

"It's not going to be a huge drug, but I think it can be a very profitable drug for us," he said. "I think it will be very important, and potentially there is a lot of off-label usage doctors might find helpful."