Liisa Bayko, an analyst at Next Generation Equity Research, described the results from a Phase II clinical trial that tested LE-SN38 as a treatment for late-stage colorectal cancer as 'lacklustre.' Bayko went on to predict the biotech may have to liquidate some of its assets to raise cash and recommends selling its shares. "Neopharm has developed two proprietary technology platforms: a tumour-targeting technology and a liposomal drug delivery system called NeoLipid," said Bayko. Drugs utilising both technologies have now failed clinical trials: LE-SN38 was a liposomal formulation of a molecule called SN38 and cintredekin besudotox (IL13-PE38QQR), the company's lead compound, utilised its tumour targeting technology and recently failed a Phase III clinical trial. "The company will need to raise funds in 2007 to continue development of the NeoLipid platform," Bayko believes, adding that there was Neopharm may potentially liquidate company assets. SN38 is the active metabolite of Camptosar - it is formed when Pfizer's approved cancer drug, Camptosar (irinotecan) is broken down in the body. Both molecules inhibit topoisomerase I, which relieves strain in DNA by enabling reversible single strand breaks. By inhibiting this protein, the strands are not reattached and DNA replication and transcription can be prevented, causing the cell to die. SN38 is around 1000 times more potent than Camptosar, according to Pfizer. By treating patients with the active metabolite of Camptosar instead, Neopharm hoped the drug could improve on Pfizer's drug, in terms of safety and efficacy. An interim analysis after the first 21 patients had been treated with LE-SN38 showed that although the disease had been stabilised, their tumours had not shrunk, which was the primary endpoint of the trial. Neopharm said it will not treat any new patients with LE-SN39 although will continue to treat those already started. Last week, the US Food and Drug Administration (FDA) confirmed that it would require a new Phase III trial for cintredekin besudotox prior to filing for approval after the drug recently failed a Phase III trial. Cintredekin besudotox is a single molecule that contains a tumour-targeting part (IL13) and a toxic part (PE38). IL13 receptors are found on malignant cancer cells in the brain, but not to any measurable degree, if at all, on healthy brain cells. According to Neopharm: "Cintredekin besudotox is designed to bind to IL13 receptors on the tumour like a key fits in a lock. The cancer cell latches onto and absorbs the IL13 and the attached PE38. As a result, the cancer cell dies. "Healthy brain cells are expected to be unharmed because they do not have the IL13 receptors, and thus do not ingest the PE38." The failure of Cintredekin besudotox in the PRECISE clinical trial last December saw Neopharm lose around 75 per cent of its value when shares dropped from around $7 (€5.2). This recent news has sent Neopharm's shares further down - around 6 per cent to $1.60, with Bayko setting a target price of $1. The detailed results of the PRECISE trial are yet to be published, as is a decision from Neopharm on whether it will conduct further trials for either drug. However, with both LE-SN38 and cintredekin besudotox at least delayed, Neopharm will be hoping for a positive outcome for LEP-ETU, a liposomal formulation of paclitaxel, for which a large, Phase III trial is expected to start this year.