Nuvelo Loses Bayer as Development Partner in Stroke Treatment (NUVO, BAY)

Nuvelo, Inc. (NUVO-NASDAQ) dropped the bomb today with the announcement that it will resume development of alfimeprase, its lead investigational product candidate for the potential treatment of multiple blood clot-related disorders such as acute ischemic stroke, catheter occlusion (CO) and acute peripheral arterial occlusion (PAO).

In addition, Nuvelo and Bayer HealthCare have agreed to terminate their collaboration.  Nuvelo has agreed to waive Bayer’s obligation to provide Nuvelo twelve-months’ notice of termination in consideration of Bayer’s agreement to pay Nuvelo a lump sum of $15 million. Nuvelo has also granted Bayer the one-time option to reacquire rights to alfimeprase upon the initiation of a pivotal stroke trial, on the same terms as the original agreement with the addition of a $15 million option exercise payment from Bayer.

Nuvelo (NUVO) shares are trading down 19% at $2.70 in after-hours trading.  Losing a larger partner is almost never considered a good thing on Wall Street.

Dr. Ted W. Love, chairman and chief executive officer of Nuvelo: "Based on our review of all clinical data and extensive consultations with Data Safety Monitoring Boards, study steering committees and regulatory authorities, we believe that alfimeprase has the potential to offer many benefits, and we remain committed to its development."

ONGOING & INVESTIGATIONAL DEVELOPMENTS: Going forward, Nuvelo is investigating whether a single, higher, more concentrated dose of alfimeprase would generate results it believes are necessary for commercial success.  Nuvelo has concluded that the delivery method for alfimeprase in its acute PAO program is suboptimal. Nuvelo will close the suspended NAPA-3 trial and plans to initiate preclinical studies focused on identifying optimized delivery methods in acute PAO in the second half of 2007. Data from the Phase 3 acute PAO trial, NAPA-2, indicates that efficacy could potentially be enhanced by maintaining alfimeprase longer at the site of thrombus. 

FINANCIAL GUIDANCE UPDATE: For the first half of 2007, in anticipation of a mid-year update on alfimeprase development, Nuvelo provided guidance that it expected both operating expenses and net cash used in operating activities to be in the range of $30 to $35 million for the six month period. Factoring in the revised development plans for alfimeprase described above and the change in its collaboration with Bayer, Nuvelo expects that both operating expenses and net cash used in operating activities will not exceed this same range for the second half of 2007. The company expects to provide further clarification with respect to operating expenses and use of cash as well as the accounting treatment of the Bayer payments made to Nuvelo on its second quarter earnings release conference call.

Jon C. Ogg
June 26, 2007

Jon Ogg can be reached at [email protected]; he does not own securities in the companies he covers.