Neurochem's Sure Bet at Failure

Thanks to Neurochem (NASDAQ:NRMX), investors should add yet another regulatory date to their biotech calendars, this one regarding the company's lead drug, KIACTA. But investors also shouldn't expect the FDA to change its response this time.

Last week, the Canadian developer of drugs, or supplements, or nutraceuticals -- whatever term it's using these days -- announced that the FDA has set an April 2 PDUFA date for a third review of KIACTA.

Neurochem has tested KIACTA as a treatment for amyloid A amyloidosis, a rare fatal side effect of some inflammatory disorders. In its one phase 2/3 study so far, the drug showed mixed results for efficacy. Neurochem filed a marketing application in early 2006 based on the data, and that August, the FDA issued Neurochem an approvable letter that advised the company to run another clinical trial.

Neurochem ignored the FDA's advice and refiled its marketing application. Predictably, the FDA issued a second approvable letter. That was in July. Perhaps believing that the FDA may not notice the lack of data from a new clinical trial, Neurochem filed yet another approvable letter response in the third quarter. The April 2008 PDUFA date is a culmination of all of the back-and-forth up to this point.

When asked during its third-quarter conference call what new information Neurochem provided to the FDA about KIACTA in this latest resubmission, the CEO said only, "We are not going to comment on such things."

Neurochem could learn from what happened to Encysive Pharmaceuticals (NASDAQ:ENCY) when it failed to heed the FDA's advice to run another clinical trial. It's hard to imagine how KIACTA will get approved, considering that no new data on the drug has probably been produced since Neurochem received the second approvable letter only a few months ago.

Neurochem also expects to hear back from European Union regulators by the end of 2007 regarding its E.U. marketing application for KIACTA. This opportunity really is Neurochem's last chance to get a new drug approved, considering that no new KIACTA studies are under way, and that Neurochem elected to stop phase 3 testing of its Alzheimer's disease treatment ALZHEMED, in the hopes of marketing it as a supplement here in the United States. Investors would be smart to stick to more serious developers of Alzheimer's drugs, such as Myriad Genetics (NASDAQ:MYGN).