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Executive Summary

Nova Pharmaceutical expects to file an IND for bradykinin antagonists as a nasal spray for treatment of nasal congestion before the close of 1987, the company said in an Aug. 28 prospectus announcing the offering of limited partnership interests in Nova Technology Limited Partnership. "Bradykinin antagonists have been manufactured in quantities suitable for human studies . . . further work required for an IND includes additional pre-clinical toxicity testing using the nasal spray formulation . . . [and] the projected filing date for an IND is the fourth quarter of 1987," Nova stated in the prospectus. Nova will conduct three major R&D projects under the partnership: a Bradykinin Antagonist (the Receptor Site Technology) Project; a Brain Cancer Therapeutic Project; and a Drug Delivery Systems Project. The nasal spray bradykinin antagonist is one of three bradykinin antagonist products under development The company tested 200 bradykinin substances. Bradykinin antagonists, Nova explained, "directly block the pain-producing and inflammatory actions of bradykinin," a petide made in the body. Nova announced in a Sept. 21 release that a U.S. patent had been granted for its bradykinin-blocking agents. In 1985, Nova received an exclusive worldwide license to the bradykinin antagonists from two University of Colorado chemists, John M. Stewart and Raymond Vavrek. A bradykinin antagonist product for topical treatment for the relief of pain and inflammation due to burns and dermatological conditions is also being investigated. "A lead compound has been selected and is being manufactured for further study in this connection [and] formulation development will begin as soon as a decision is made regarding the therapeutic target," Nova said. The company estimated that "nearly 2.5 million patient visits take place annually for the treatment of burns. However, only 65% of the patients are treated with medication." Nova puts annual patient visits for dermatological problems at 11 mil. with about 9 mil. patients receiving medication. One of the major companies identified by Nova as already participating in the dermatological market is Celanese, which owns 13% of Nova's common stock. The prospectus describes a $68.5 mil. offering for Nova Technology Limited Partnership. The partnership offering consists of 13,700 units: each unit consists of warrants to purchase 350 shares of Nova common stock and one limited partnership interest. The price per unit is $5,000 and there is a minimum investment of two units. The partnership units are being handled by Dean Witter Reynolds. The largest share of the partnership proceeds, $32.9 mil., is slated for the bradykinin antagonist project. Reflecting the planned start-up of clinical trials later this year, a breakdown of the projected costs of the bradykinin project shows the largest anticipated costs in the three-year period 1988-1990. During those three years, Nova projects spending about $26 mil. for the bradykinin projects. The year-by-year breakdown of expenditures on the bradykinin antagonist project are $550,000 (1987); $7.32 mil. (1988); $9.54 mil. (1989); $8.8 mil. (1990); $5.28 mil. (1991); and $1.5 mil. (1992). Under the partnership agreement, Nova will pay a 6% royalty to the partnership on sales of products from the bradykinin antagonist projects, including the nasal spray. Nova also has a program for non-peptide bradykinin antagonists for oral treatment of pain and inflammation. The partnership will take two approaches for the development of these products. First, non-peptide chemical compounds will be analyzed through Nova's molecular screening system NovaScreen for evidence of activity as a bradykinin antagonist; and, second, non-peptide compounds will be designed and synthesized using computerized molecular models. The company is raising funds now to get the program into preclinical tests. On Sept. 21, the company reported that clinical studies of its implantable, biodegradable polymer drug delivery system in brain cancer will begin shortly in a number of U.S. medical institutions. Nova notes in the prospectus that it filed an IND application for the polymer product on June 29, 1987. Nova will use the biodegradable polymer technology in its Brain Cancer Therapeutic Project. For primary brain tumors, Nova will develop a polymer delivery system incorporating Bristol-Myers' chemotherapeutic agent BiCNU (carmustine [BCNU]). According to Nova, after surgical removal of a tumor, a polymer impregnated with BCNU would be delivered to the cancerous site and as the polymer erodes the drug would slowly be released. For secondary tumors, a derivative of Bristol-Myers' CeeNU (lomustine [CCNU]) would be administered via a carrier drug delivery system, designed to penetrate the blood-brain barrier. Nova plans to file an IND for the drug carrier complex in 1988. The Brain Cancer Therapeutic Project will get $13.9 mil. Nova estimates that products from this project will be introduced into the U.S. market in 1991. Other projects using the drug delivery systems involve developing a wide range of products including those to treat pancreatic cancer, osteoporosis, and brain tissue inflammation. Nova has targeted $8.9 mil from the proceeds raised by the partnership for research and development of these drug delivery products. As part of its in-house research, Nova noted that it is developing a new therapy for treating epilepsy, "which involves a synergistic interaction between phenytoin and dextromethorphan at specific receptors in the brain." According to the company, the dose of phenytoin required to control seizures can cause a number of side effects, but "as suggested by the animal studies, the administration of dextromethorphan to epileptic patients reduces the the amount of phenytoin that must be taken to reduce seizure activity." The osteoporosis project is based on the theory of injecting "polymer microspheres containing calcitonin into a muscle where they would slowly release the hormone into the circulation" to release a constant level of calcitonin over an extended period of time. That development project puts Nova into one of the primary fields of another major investor, Marion Labs (which owns almost 12% of Nova's stock). Marion will have funded $8 mil. in contract research at Nova on five projects by the end of this year. Marion's 1984 agreement with Nova calls for work on seven projects, including drug development in the cardiovascular and respiratory disease areas.

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