Prana aborts trial in 'blow for biotech'

Prana Biotechnology (ASX:PBT) has dropped a bombshell on the market, announcing that it has halted a UK Phase II/III clinical trial for its lead compound clioquinol (PBT-1) after it discovered that manufacturing impurities could cause side-effects including mutagenicity and neurotoxicity.

Prana said in a statement that as part of its effort to manufacture GMP-grade PBT-1, it had found unacceptably high levels of a toxic di-iodo form of PBT-1 occurring during synthesis. It said these "could be responsible for increased risks of side-effects and mutagenicity".

"While Prana has considered methods to reduce the levels of di-iodo impurity it has come to the conclusion that attempts... are not likely to be successful in a timely manner, and that further development of PBT-1 is not warranted," the statement said.

Prana management refused to answer questions today. A spokeswoman for the company said it is still awaiting a full report on the clinical symptoms the impure drug might cause. She said that the last patient in the Phase II PBT-1 trial was dosed in 2003, and to Prana's knowledge no-one had developed a problem that could be specifically linked to the presence of the impurity.

The clinical material used in the Phase II trial were apparently produced by a different manufacturer and the problem was discovered only when the new manufacturer produced batches to higher production standards for potentially pivotal clinical trials.

"This is unfortunately and regrettably another negative news blow for the Australian biotech sector," said independent market analyst David Blake, of investment publication Bioshares. "This has got the hallmarks of a company wanting to get rid of its bad news when the entire sector is in a slump.

"The company's unwillingness to discuss immediately and publicly these announcements are a cause for concern for investors. And companies that they think they can communicate news to the market without being available to answer questions might want to consider their listing on the Australian equities market."

The 52-week study -- which was due to begin in the first half of the year in 435 patients - was aimed at testing the efficacy of clioquinol in slowing the progression of Alzheimer's disease. It had been approved by the UK's Medicines and Healthcare Regulatory Agency in January.

A known adverse effect of chronic clioquinol -- sub-acute myelopathic optic neuropathy, associated with vitamin B12 deficiency and anaemia -- was the reason for the drug's withdrawal from the market in the early 1970s. It is unclear whether this side-effect is in any way linked to today's announcement.

Prana said its back-up compound, PBT2, did not contain iodine and therefore was not capable of forming the impurity. PBT2 retains clioquinol's core 8-hydroxyquinoline molecular structure, but Prana's chemists have made several strategic changes to the functional groups attached to the rings. Patients are currently being enrolled for a Phase I trial of PBT-2.

Prana is now "conducting a strategic review of its development programs" which will take "several weeks". It is unclear whether both PBT-1 and PBT-2 will be reviewed.