The U.K. biotech sector was already having a bad start to 2011 before Renovo Group PLC on Feb. 11 announced that Phase III trials of its lead scar revision treatment Juvista (human TGF beta-3) had failed.

Less than two weeks earlier, compatriot Antisoma PLC's lead cancer compound likewise failed to pass muster in Phase III, which was that company's second late-stage failure within 12 months (Also see "Antisoma To Cut Costs After Another Phase III Failure Of A Lead Compound" - Pink Sheet, 31 January, 2011.).

Notwithstanding some good news on Feb. 15 when AIM-listed network pharmacology group e-Therapeutics PLC announced it was raising £17 million ($27 million) from institutional investors (mostly Invesco Asset Management), by and large, "listed U.K. biotech is dying a death," sums up one London-based analyst. Shares in both Renovo and Antisoma have plummeted to record lows, and the news is unlikely to attract investors - already in short supply - back to the sector. Renovo's Phase III data "had potential to renew some [investor] appetite" had it been positive, says Samir Devani, an analyst at Nomura Code.

As things stand, the company is "considering all options", including shutting down and returning cash to shareholders. Since inception in 1999, the company had raised about £140 million, including £57.5 million at its 2006 IPO and $75 million (£40 million) in upfront cash from Shire Pharmaceuticals PLC, which bought ex-European Union marketing rights to Juvista in 2007 (Also see "Shire Gains Renovo’s Skin Scarring Candidate Through Licensing Deal" - Pink Sheet, 20 June, 2007.).

Shire already had been starting to get cold feet, though, back in March 2010 when it revised the deal terms, following equivocal Phase II results in some settings such as breast augmentation surgery.

The new terms saw it share rights with Renovo in territories, including the U.S. where it had initially had exclusivity, and to hold off beginning U.S. Phase III trials (which it would have funded) until EU trials, funded primarily by Renovo, had reported.

Early Into Humans Doesn't Always Work

But while Shire's enthusiasm for Juvista may have waned, most analysts - and the company remained bullish as regards the Phase III scar revision trials. Driving that optimism were good results from Renovo's Phase II "within-patient" trials, where healthy volunteers had two incisions, each 1cm long, made on each arm, with one receiving placebo treatment, the other Juvista. This design eliminated any patient-to-patient variability and was supposed to give a reliable, early insight into the drug's activity.

Indeed, ever since he set up the company, founder and CEO Mark Ferguson had been looking to test its products in humans early on, to inform whether to start expensive late stage trials. Renovo's hallmark, Ferguson explained in 2001, shortly after raising a $12 million A round, was to do "lots of experimental medicine", testing the drug in human volunteers wherever ethically possible before starting human trials (Also see "Renovo Ltd." - Scrip, 1 January, 2001.).

This broad approach now has become widespread across the industry, and is mostly referred to as "translational medicine."

It didn't work for Renovo, however - even though one might expect that for a treatment like Juvista, applied intradermally to superficial scars, the chances that Phase II is predictive of Phase III success might be higher than, say, for a treatment for a particular disease where Phase II trials would be typically be among healthy individuals.

Juvista's Phase III trial results, among some 350 patients across the globe, were unequivocally negative. "This wasn't a near miss, it was a clear failure," acknowledges Ferguson. Patients were selected for trials with scars that were symmetrical around a mid-line (as a control for potential positional effects), and then half the scar was treated with the drug, and half with placebo. In some cases, the placebo half had healed better than the drug half. "We don't understand this variation" in healing within individual scars, declares Ferguson.

Company's Survival In Question

Thus despite the theoretical elegance of Renovo's Phase II "control" trial design, in practice it doesn't appear to be representative of clinical situations. That in itself is hardly news in this sector: if good Phase IIIs always followed good Phase IIs, Big Pharma wouldn't be buying toothpaste and cough-medicine businesses and biotechs wouldn't have lost most of their investors. The trouble for Renovo is that it calls into question the company's entire portfolio, according to Devani, since development programs behind the other scar revision products in the company's pipeline, such as Phase II Prevascar (human recombinant interleukin-10) and tendon adhesion treatment Adaprev (mannose-6-phosphate), have all been designed using a similar Phase II model.

Ferguson is adamant that there were no technical or execution problems in the Juvista trials and that he and his team are seeking to uncover why the scarring response was so variable in some patients. "We are thoroughly mining the data, to determine whether or not there's a way forward for Juvista," he said.

The odds don't look good, given that in any case the entire late-stage program would have to be repeated, and investors are hardly likely to be putting more money in now. As such, the focus of analysts on the call following the news was how much of Renovo's £44 million in cash would be available for re-distribution after winding up the company.

Whether or not Renovo and Antisoma survive as companies, job cuts at both biotechs will add to the 2,400 positions under threat at Pfizer Inc. following the drug giant's decision earlier in February to shut down its R&D site in Sandwich, Kent ('Pfizer's U.K. Sandwich Has Wrong Kind of Filling,' The In Vivo Blog, Feb. 2, 2011).

- Melanie Senior (m.senior@elsevier.com)

U.K. Biotech Renovo's Future On The Line As Phase III Lead Crashes

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