Nova to announce new anti-inflammatory drug

January 17, 1991|By Thomas Easton | Thomas Easton,New York Bureau of The Sun

NEW YORK -- Nova Pharmaceutical Corp. will announce today a new anti-inflammatory drug that the company says could have broad applications for common problems such as rheumatoid arthritis and contact dermatitis.

The drug, part of a family known as leumedins, is in the midst of medical trials and won't be on the market for several years at best.

But the Baltimore-based company says there has been a significant enough breakthrough to justify the one of the highest-profile news briefings since Nova's founding in 1982.

"The good news is that if it has a solution [for inflammatory diseases] you are talking a huge potential market," said George Shipp, an analyst with Scott & Stringfellow. "The bad news is it will take a long time in coming, and we don't if it has side affects."

Currently, inflammations are treated with drugs such as ibuprofen and steroids, notably hydrocortisone, the company said, adding, "Neither of these is totally effective, and [both] may cause side effects."

Nova says leumedins might treat more types of inflammatory diseases more effectively with fewer side effects than other drugs on the market. But a considerable, and uncertain, period of testing remains. In the past, noted Jonathan Frank, an analyst with Swiss Bank Corp., "some of [Nova's] most promising developments haven't panned out."

Though no details are being revealed pending today's disclosure, company spokesman Tony Russo said the drugs passed the first round of required tests last year and human applications began.

Marketing to the public will require the completion of two additional phases of testing and a lengthy application process with the Food and Drug Administration. Final approval is unlikely for at least three to four years, Mr. Russo said.

Although drugs directed toward certain types of diseases -- particularly acquired immune deficiency syndrome -- have received far faster reviews, analysts suggest that leumedins probably won't.

"There are far more people who have [anti-inflammatory] diseases," said Viren Mehta with the New York research firm Mehta & Isaly, but those people's diseases are not as life-threatening, he said.

News of Nova's pending announcement had little effect on the company's stock, which closed unchanged at $1.875 a share yesterday. Five years ago, when enthusiasm about Nova's research efforts was pervasive, its stock traded for more than $24 a share, and each whisper of a new idea echoed through an investment world thrilled by the prospects of medical research.

But Nova's share price tumbled under the weight of several discouraging announcements about products and a growing Wall Street disenchantment with companies whose earnings aren't established. The current depressed share price is actually a significant rebound from the end of last year, when it fell as low as $1.25 a share.

Nova has invested heavily in new products since its inception and, as a result, has racked up annual multimillion-dollar losses. Through the first three quarters of the recently completed fiscal year, Nova lost $10 million on sales of $22 million and appeared headed for record sales and losses.

"There has been a growing realization over the past three years that significant profits are still a few years away," Mr. Shipp said. "One of the problems Nova has had is that all of its developments take five to seven years, and in this market, Wall Street is looking ahead five to seven minutes."

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