BioWorld International Correspondent

PARIS - Neurotech SA, a French biotechnology company set up in 1995 to develop cell-based therapies for diseases of the eye and the central nervous system, will focus solely on ophthalmology from now on and has halted its other research and development programs.

Since all of its ophthalmological R&D takes place at the Lincoln, R.I., research facility of its American subsidiary, Neurotech USA Inc., the move also means the company will terminate its French research activities and lay off 24 employees out of nearly 30 in France. Neurotech USA employs 15 people.

Neurotech was hitherto based at the Genopole, France's national biotechnology science and business park at Evry, south of Paris, but the company now is looking for a new, and much smaller, corporate headquarters in Paris. Chief Financial Officer Bernard Davitian said the legal entity that is Neurotech SA will remain intact, acting as the holding company for the group and controlling the purse strings.

Davitian told BioWorld International that the new corporate strategy was formulated long before the departure of former CEO Tom Shepherd in May. Shepherd left for "personal reasons" to return to his family in Scotland and was replaced by Bernard Chauvin.

The decision to focus on ophthalmology flowed from the company's acquisition in January 2000 of the Encapsulated Cell Technology (ECT) developed by the U.S. company CytoTherapeutics Inc. In addition to the technology, Neurotech acquired a research team that formed the basis of the American subsidiary it subsequently established.

Neurotech's ophthalmological R&D now is centered almost entirely on applications of ECT, which enables therapeutic agents to be delivered directly into the retina. The technology entails placing in a small capsule cells that have been genetically modified to produce large quantities of a given neurotrophic factor. The capsule is composed of a semipermeable membrane that allows oxygen and nutritive substances to pass through, but protects the modified cells from the patient's immune system.

The lead product in the program is NT-501, a therapy that delivers ciliary neurotrophic factor (CNTF) for the treatment of retinitis pigmentosa, a degenerative disease of the retina for which there is no available treatment. Neurotech obtained an exclusive license from Amgen Inc., of Thousand Oaks, Calif., in January to develop and market CNTF for local delivery in ophthalmology indications.

Davitian said Neurotech was hoping to file an IND application for NT-501 in the first quarter of 2003 in retinitis pigmentosa. The company hopes to establish proof of principle for ECT not only in ophthalmology but also in other applications, for which it would grant licenses to third parties. In the area of eye diseases, NT-501 also is due to be tested for the treatment of age-related macular degeneration and glaucoma.

Davitian stressed that all the company's ECT expertise is located in the U.S., and that there had been "little integration" between the company's French and American research centers. The R&D programs Neurotech was undertaking in France remained focused on neurological diseases - especially brain tumors - and cell therapies for broader applications, and were generally at a more upstream stage of the development cycle.

That said, they did result in the development of a cell therapy for the treatment of high-grade gliomas (tumors of the central nervous system), but a Phase I/II trial initiated in April 2000 was halted later that year because of adverse side effects. Last year, moreover, Neurotech completed a subretinal transplantation of human cell lines in a rat model of retinal degeneration that provided effective protection against genetic malfunction of retinal epithelial cells, but Davitian said a lot more work needed to be done before the therapy could be tested in the clinic and that Neurotech did not have the resources to do that without a pharmaceutical partner.

Financial considerations effectively bulked large in the company's strategic shift. By closing its French operations, Davitian said, Neurotech would be able to survive significantly longer with its existing funds. Of the €35 million committed by investors in the company's third funding round completed in May 2001, he said, the first tranche of €20 million would be used up in the first quarter of 2003. The second tranche of €15 million will be called during that quarter, which Davitian said will be sufficient to finance the company's activities for another two years, up to the first half of 2005.