Neurochem's Crazy Choice

I didn't think it was possible for a drugmaker to look more unscrupulous than Telik (Nasdaq: TELK  ) did earlier this year, but I apparently wasn't following Neurochem (Nasdaq: NRMX  ) closely enough.

In conjunction with its third-quarter earnings release last week, Neurochem announced that it would try to market its Alzheimer's disease drug candidate, ALZHEMED, as a dietary supplement in the U.S. and Canada, following a failed phase 3 study earlier in the year.

Unlike therapeutic drugs, the FDA cannot restrict the marketing of a compound that has been deemed a dietary supplement. But in order to get this designation, a compound must be a food substance and present in the food supply.

Neurochem's stance is that since the active ingredient in ALZHEMED (tramiprosate) "occurs naturally in certain foods," the FDA will allow its marketing as a supplement or "nutraceutical," as Neurochem calls it.  

In conjunction with its attempted launch of ALZHEMED as a dietary supplement, Neurochem is halting its ongoing phase 3 study of the drug. (Hey, why let evidence-based medicine get in the way of allowing a good supplement onto the market?)

Neurochem's plan is to start selling the drug in the next 12 months, if the FDA gives the OK. Of course, it wouldn't be able to market ALZHEMED, the dietary supplement, as a treatment for Alzheimer's disease in the U.S.

Neurochem's other drug candidate, KIACTA, also faces an uncertain future (to put things politely). Neurochem filed a response to the FDA's second approvable letter in September and is awaiting word from the FDA.

Neurochem's CEO said last week that the company was "not going to comment on such things" when asked what new information about KIACTA was in the latest response. Anyone want to bet whether the FDA will fully approve KIACTA in the next several months?

Companies such as NBTY (NYSE: NTY  ) and American Oriental Bioengineering (NYSE: AOB  ) market nutritional supplements throughout the world, so Neurochem's plans would put it in the ranks of these reputable companies and some shady operations.

Trying to market a compound that has failed in all clinical testing to date takes a lot of chutzpah. Neurochem does a disservice to patients and to drug developers like Forest Laboratories (NYSE: FRX  ) , Wyeth (NYSE: WYE  ) , and Elan (NYSE: ELN  ) , which are diligently working to develop drugs to treat Alzheimer's.

It seems to me that Neurochem has been a great test case of what a few development-stage drugmakers will do when they know their lead drugs are a failure, but don't want to admit it to investors.