Start with heart surgery
So far, so good. But in neuroprotection, even a strong product and a savvy business model only gets you so far. Neuren had to prevent Glypromate from becoming just another promising drug that founders in human trials.

Neuren decided not to start with stroke, once regarded as neuroprotection’s Holy Grail (with an ageing population and no effective remedy in sight, it’s easy to see why). Instead, following a suggestion from big pharma contacts, Neuren elected to test Glypromate in coronary artery bypass graft surgery (CABG). Depending on which study you read, between 20% and 60% of CABG patients suffer some form of brain impairment when pieces of matter lodge in the brain during surgery, interrupting oxygen supply and triggering the spread of cell death.

When it comes to clinical trials, stroke and CABG are worlds apart, says Dr Harry Tracy, president of Neuro-Investment Research. It’s hard to pinpoint exactly when a stroke occurs, and impossible to determine the patient’s previous cognitive state. Patients often harbour additional health conditions or take medicines that complicate results. In contrast, CABG is a planned procedure that can be precisely timed. Patients can be carefully chosen and evaluated before and after surgery. Demand is high — NeuroInvestment estimates the annual worldwide market for a neuroprotectant for CABG patients to be US$2–$3 billion.

Tracy cautions that CABG is no magic wand. It doesn’t solve the problem of how to make a drug small enough to be delivered to the brain through the bloodstream, safe enough to be given in potent doses, and which acts during a timeframe that might work in the real world. Just last November, Tracy points out, a closely watched Phase IIa CABG trial by Pharmos produced less than stellar results; the compound later tanked completely in traumatic brain injury trials. Still, CABG offers the “best-case scenario” to assess a drug’s true value, Tracy believes. In October, 2004, Neuren cleared the first hurdle, confirming Glypromate’s safety in phase I trials. Next, it needed to raise enough money to prove that Glypromate actually worked.

Neuren approached this task characteristically: staying local by thinking global. The logical move might have been to migrate to the US to seek funding and later a Nasdaq listing. Instead, Neuren decided to seek A$15 million on the ASX, eyeing Australia’s comparatively mature biotech sector, which by late 2004 had 73 listed companies to New Zealand’s four. Neuren’s landing on the ASX was somewhat bumpy. In October, a participant on the Sharetrader chatroom, known only as “labslave”, posted lengthy diatribes claiming that Neuren was duping investors with “outdated cast-offs”, referring to the original European work on GPE, and the fact that Pharmacia declined to test the molecule itself. Tracy says Neuren acquired its GPE patent when big pharma was pulling away from neuroprotection; like other analysts, he describes Neuren’s work on Glypromate as “good science”. Labslave also predicted that the IPO was simply an opportunity for major stakeholders like Pfizer and UniServices to dump shares on unsuspecting punters. (UniServices and Pfizer retain holdings of 12.35% and 8.1% respectively.) Neuren says that labslave was a disgruntled former University of Auckland employee.

Despite pulling “24-hour-days”, Neuren was unable to complete work for its IPO by December 2004 as planned, says Clarke. By the time it listed in February, Australian biotech stocks had sagged after several high-profile firms missed targets or reported disappointing trial results. For months, Neuren traded well below its list price of A$0.40 per share.

All this changed when the FDA put Glypromate on the fast track to phase III. Immediately, Neuren’s share price leapt 25%, and has been more or less climbing since. In September, Australian publication BioShares named Neuren “Stock of the Month”, and BRW magazine rated Neuren sixth in a list of “10 hot stocks under $1”. The media attention illustrates the usefulness of Neuren’s partnership strategy: collaborators that first helped advance Neuren’s science could now leverage investment value. To analysts weighing Neuren’s worth, institutions like Walter Reed and Pfizer act as something of a counterweight to the inherent risks of neuroprotection.

But it’s worth remembering a saying that seems to be Neuren’s mantra: you can never be better than your science. Southern Cross Equities analyst Stuart Roberts devoted a May issue of his Biotechnology Buzz news-letter to Neuren, warmly praising its science, management, and pipeline, but concluding that Neuren’s future hinges on Glypromate’s performance in the CABG trials. If the trials fail, Robert doubts Neuren could undertake another Australian funding round to further mine its pipeline. If the trials succeed, he expects Neuren to become “Australia’s outstanding biotech stock to own”.

What’s next?
Clarke’s five-year plan goes something like this: Glypromate on the market for heart surgery, NNZ–2566 in clinical trials for traumatic brain injury, perhaps a joint venture for stroke, and treatments in development for Alzheimers and Parkinson’s disease. Phase IIa trials for Glypromate are already underway among 30 patients in five sites here and in Australia, and should be completed by Christmas, says Clarke. If all goes well, Neuren plans to launch phase III next year with around 500 patients in the same sites, plus additional venues in the UK and US.

To give Glypromate the best shot at success, Neuren has formed new relationships to hone its trials and help navigate the FDA. It’s consulting with neuropsychologist Stanton Newman, who leads the Brain and Cardiac Surgery Group at University College London. And Clarke reckons he’s acquired “100 years of clinical trial experience” in the form of recruits with big pharma backgrounds, including a former senior vice president of Boehringer Ingelheim USA.

As always in drug development, “success is expensive; failure is quite cheap”, observes Neuren’s chairman, Robin Congreve. As Neuren advances, the costs climb. In the first half of 2005, Neuren reported $11 million in cash and a $4 million net loss. The IPO cost almost $2 million; Clarke notes that his recruiting drive has been “expensive”. While the shortcut to phase III ultimately saves money, Neuren will need to spend $1.8 million earlier than planned. Neuren also anticipates less contract work from Pfizer, which is scaling back on outsourcing. And although its phase III proposal is a comparative bargain at $8–10 million (mostly because of the lower cost of CABG surgery in Australasia) Neuren will need more capital to fund the trials.

Glass has already embarked on the next stage of Neuren’s strategy: shifting its partnership focus from research to investment. In recent months, Neuren has attracted unsolicited interest from US investment banks and is in talks with “half the major pharma on the planet”, says Glass. If Glypromate does succeed, Clarke believes it’s possible that Neuren could ultimately enter a partnership to market the drug, rather than selling Neuren outright or shifting its entire operations stateside. “The reality is that the science is from here,” he says, “and so you have to find creative ways to get that science through a jurisdiction like Australia and then to the US. It’s really just another way of being proud of your science.”