This last year was filled with both highs and lows for AutoImmune. In late February, we announced the signing of an exclusive license with Teva Pharmaceutical Industries, Ltd. for two applications of our proprietary technology for immune modulation. The most advanced of these covers Teva’s development of an oral formulation of COPAXONE® (glatiramer acetate), their currently available injectable drug for multiple sclerosis. The clinical trial required by the Food and Drug Administration to change the route of administration for COPAXONE® is now underway. If it is successful, AutoImmune will receive a significant milestone payment upon product approval and escalating royalty payments on cumulative sales.
During April we announced the restructuring of our relationship with Eli Lilly and Company to regain control of the rights to our technology for the treatment of Type 1 diabetes. While we gave up the milestone payments that would otherwise have been received, Lilly committed to continue supporting the clinical trials then underway and to fully sharing the data with us as it becomes available. The final results of the three "new-onset" studies are expected to be made public this year, and the Diabetes Prevention Trial (DPT-1) is now more than 50% enrolled.
Over the first eight months of 1999 we were also very busy with product development and the Phase III clinical trial of Colloral® for rheumatoid arthritis. We made excellent progress with the documentation that would be required for filing and we closely monitored the study to make sure it was well executed. When the data were unblinded the drug was proven to be very safe, but did not meet the primary endpoint specified in the protocol. Consistent with the data seen in previous trials, substantial improvements from baseline were noted in the Colloral® treated group for each of the key measures. Unfortunately, the size of the placebo response was much greater than previously observed, and therefore, statistical significance was not achieved. As a result, we stopped development of Colloral® for the pharmaceutical market and began to explore its potential as a nutraceutical for sale without a prescription.
In September we started the process of downsizing to conserve assets as we evaluated our strategic options to maximize shareholder value. By year-end we had eliminated our facilities and fully transitioned to being a "virtual" company using only contracted resources on an as needed basis. We also ceased our efforts to develop products for uveitis and chronic transplant rejection.
Moving forward into 2000, we are continuing limited support for research on new applications of our technology and hope to strengthen our intellectual property position through additional patents in the future. Our primary focus is now on outlicensing as we await the results of externally funded clinical trials still ongoing. A recently concluded transaction with a subsidiary of Elan Corporation plc should provide us with positive cash flow for the next three years. Over the near term, we are actively looking for a partner to help take Colloral® forward to the nutraceutical market.
We remain optimistic that mucosal tolerance will ultimately prove to be of significant therapeutic value and hope that you share our vision for the future.
Sincerely,
Robert C. Bishop
Chairman of the Board
March 30, 2000