Amrad stunned as Serono drops emfilermin trial

Amrad (ASX:AML) has been dealt a blow with the news that Serono is abandoning further development of emfilermin following Phase II clinical trial results that showed the molecule was no more efficacious than the placebo.

The company called a trading halt on Wednesday morning after receiving notice from Serono that the agreement was to be terminated.

"We haven't seen all of the details of the clinical trial, but basically it didn't work," said Amrad CEO Dr Pete Smith. "It was a very surprising result given the strongly positive Phase I/II results from last year... and obviously a major disappointment."

In the Phase I/II trial results announced in July 2003, eight of the 17 patients treated with emfilermin achieved a clinical pregnancy while none of the eight patients on placebo became pregnant, suggesting that the molecule had promise in treating infertility.

Smith said Amrad would be taking a close look at the results of the Phase II trial, to see if any problems contributing to the failure of the drug could be identified.

"We will review the data to see if there is anything that we can salvage from it," he said.

Emfilermin, the recombinant form of leukaemia inhibitory factor, or LIF, was licensed from Amrad by Serono in 2000, after LIF was associated with a role in embryo implantation, and in 2003, the Swiss company was granted worldwide exclusive rights to develop emfilermin for reproductive health applications.

It is not the first time the drug has failed at the crucial Phase II stage -- in 2002 Amrad announced that a Phase II study examining the ability of the drug to reduce chemotherapy-induced peripheral nerve damage had not shown efficacy.

Smith said Amrad would continue to focus on other projects in its portfolio, including the IL-13R project which is the subject of a major collaboration with Merck & Co, as well as its VEGF-B and GM-CSF projects, which are all at earlier stages of pre-clinical development.

But with the loss of its most advanced project, the company may look for other opportunities to flesh out its portfolio.

"We need to look at our strategy and consider bringing in projects to fill in the pipeline," Smith said. "We're in a fortunate position in that we don't have to go out to the market to raise money [in the near future]."

Although details of the financial agreement between Amrad and Serono remain undisclosed, Smith said the company had not been in line to receive much in the way of payments from Serono in the short term, with most of the cash flow being dependent on the product reaching the market.

Smith also said that the failure of the emfilermin project would not affect Amrad's plans to spin out the anti-infectives program into a separate vehicle, currently known as Avexa. The company is currently looking at options to secure funding for the spin-out.

"The disappointing results from LIF don't alter the rationale for that spin-out," he said.

Prior to the trading halt, Amrad shares were trading at AUD$0.89. The trading halt is due to be lifted today.