After 14 years of de-signing and testing drugs to treat neurological diseases currently without cures, Neurochem Inc. is hoping to have its first products available in North America by yearend.

Dr. Francesco Bellini, chairman, president and CEO of the firm, which trades on the Toronto Stock Exchange and Nasdaq, has travelled this road before. As the founder, chairman and CEO of Laval, Que.-based Biochem Pharma Inc., Bellini headed the firm that developed Epivir — one of the biggest-selling AIDS drugs on the market today. Biochem was acquired in 2000 for $6 billion by Shire Pharmaceuticals Group PLC of Hampshire, England.

Now, Bellini hopes Neurochem — founded in 1993 by Parteq Re-search and Development Inno-vations, the technology transfer office of Queen’s University in Kingston, Ont. — will see similar success.

Neurochem, which is now located in the Parc scientifique et de haute technologie de Laval technological hub, has yet to be profitable. High research and development costs are keeping the firm in the red. The most recent numbers show revenue of $2.4 million and a net loss of $56 million in the nine months ended Sept. 30, 2006, vs $3.6 million in revenue and a loss of $56.7 million for the same period in 2005. Last year’s net loss per share amounted to $1.45, vs $1.65 in 2005.

Laurence Terrisse-Rulleau, a senior biotechnology analyst at Toronto-based brokerage firm Blackmont Capital Inc. , has been following Neurochem for four years. She says such losses are quite common in the biotechnology field.

“Biotech companies are mostly burn-rate companies, as they have to pay for the cost of clinical trials,” Terrisse-Rulleau says. “When biotech companies start to make money, you actually have much of the upside behind you. The real question is: can the company raise more money from the equities market to cover for the cost?”

Neurochem has a pipeline of product candidates targeting neurological diseases. But the firm is pouring its financial and human resources specifically into two late-stage drug-development programs filed for marketing approval: Kiacta and Alzhemed.

“We always believed in simple approaches. So these are very small chemical products,” says Dr. Lise Hébert, vice president of corporate communications. “They are the products of chemistry, purely and simply. They are both oral — Kiacta is a capsule and Alzhemed is a tablet — and simple to manufacture.”

Kiacta, currently in its final stages of testing, is the world’s first potential treatment for amyloid-A (AA) amyloidosis — a condition that’s a consequence of chronic inflammatory diseases, including rheumatoid arthritis and Crohn’s disease — which occurs when inflammation is not controlled. Kiacta aims to target the underlying problems of this rare, little known and often fatal condition.

Of the four end points Neurochem aimed for in testing Kiacta, three have been reached — including a decrease in kidney dialysis in patients taking Kiacta, which is a huge clinical benefit.

“I have a more positive outlook on Kiacta than most people,” Terrisse-Rulleau says. “I think Neurochem has a decent chance to get approval from the U.S. Food and Drug Administration by May. Most people give it a zero chance of approval, but it is a safe drug and a drug showing some end points. It has a good chance of approval.”

If final testing is successful, Kiacta will be available in the U.S. and Europe before the end of 2007. Neurochem is currently working with Canadian authorities to make Kiacta available here in 2008.

Neurochem hopes its second major product will also soon be on the market. Pending successful testing, Alzhemed, a treatment for Alzheimer’s disease, is expected to be available in the U.S. toward the end of 2008, with availability in Canada later. When Alzhemed becomes available, Neurochem expects the drug to be a blockbuster.

“Right now, there is nothing to treat Alzheimer’s,” Bellini says. “This drug is not like others. It will stop the disease; this would be a huge step forward.”

Alzheimer’s disease is a progressive, degenerative disease involving dense, toxic deposits in the brain that interfere with vital processes and eventually choke off the living cells, causing thought and memory impairment. As brain cells degenerate and die, some areas of the brain shrink significantly.

“We are trying to change the future of Alzheimer’s by developing a drug to stop the disease, not just to improve the memory,” Bellini says. “In a couple of months, we will know if Phase III has been successful. If it is a success, it will change the way Alzheimer’s is treated.”

@page_break@But success is still uncertain, Terrisse-Rulleau says. Alzhemed is progressing well with its recent completion of Phase III trials with 1,052 patients in the U.S. and Canada, and its enrolment of patients for Phase III trials in Europe.

However, she says, jumping from 40 patients in Phase II trials to more than 1,000 in Phase III is a big step for investors to comprehend. She would have preferred Neurochem to repeat its Phase II trials with more patients.

“If you look at Neurochem’s stock right now, $21 in my opinion is representative of a potential positive outcome for Kiacta,” she says. “On the basis of Kiacta alone, the stock is fully valued. If Alzhemed is fully valued, the stock could go up to $30. But because Alzhemed is quite risky, I’m not sure at those levels I’d be pounding the table to buy the stock.”

If Phase III isn’t successful, it will still cost time and resources. But it’s a cost Terrisse-Rulleau believes Neurochem can bear: “The company has a great management team and strong shareholders to back it up. If Phase III doesn’t work out, it has the financial resources to do another Phase III. The CEO has built products before. And he knows how to build a company.”

Once products make it to market and Neurochem sees the resulting revenue, Hébert anticipates her firm will expand its staff and research capabilities. She adds that Neurochem will stay true to what it knows in the neurological field. IE