News that B-MS has dropped out of an agreement to develop Basulin, an improved formulation of insulin which was the subject of a $165 million deal - including $20 million upfront - between the two companies last year.
Flamel said that B-MS was making the decision based on commercial reasons unrelated to the efficacy of the drug, and also announced progress for two other licensing agreements for its drug delivery technologies, with GlaxoSmithKline and TAP Pharmaceuticals. But this news failed to support the company's stock.
One reason could be that B-MS was one of the first major partners for Flamel's Medusa nanoparticulate technology, used to improve the delivery of therapeutic proteins and held up as one of the main technology drivers behind the company.
Flamel has been keen to raise the profile of Medusa, given its potential application in the number of protein-based therapeutics coming through clinical trials and onto the market.
Also, B-MS is not the first company to leave Flamel at the Basulin altar: Novo Nordisk pulled out of a similar, $42 million collaboration on the product in 2002, and investors may fear that the departure of a second partner bodes ill for the project, despite the assurances.
Medusa takes the form of a nanoparticle with the active protein to be delivered residing on its surface rather than inside. The primary advantage of this is that external presentation requires no use of solvents and other chemical processes that can reduce the proteins activity. The protein is injected subcutaneously and is slowly released from the surface of the nanoparticle and absorbed into the bloodstream.
A number of companies have developed new formulations of human insulin that provide a longer duration of action, notably Aventis with Lantus (insulin glargine) and Eli Lilly/Novo Nordisk's NPH.
The idea is to achieve better control of glucose levels. And while Lantus and NPH strive to achieve this goal, Flamel maintains that Basulin is the only product targeted to provide 24-hour control of glucose with human insulin.
In its other news, Flamel reported the start of Phase III trials of an unnamed but already-marketed GSK product, and the signing of a new licensing agreement for this technology with TAP. The latter centres on a Micropump formulation of lansoprazole, the active ingredient in Tap's gastrointestinal drug Prevacid.