Nova Pharmaceutical Corp. attempted to soothe disgruntled shareholders at its annual meeting yesterday with the news that the decade-long wait for a major new product could be coming to an end.
The company said the first stages of clinical testing on a class of drugs aimed at treating septic shock and inflammatory bowel disease began two days ago. The initial tests are designed to determine whether the leumedins, or anti-inflammatory drugs, will be safe in humans.
But the news did not appear to remove shareholders' skepticism about the proposed merger, announced last week, of the Baltimore pharmaceutical company with Scios Inc., a California-based biotechnology company.
"You have a lot of expertise, but where are the products?," asked Edward M. Cohen, who owns 6,500 shares. "I have been waiting for 10 years for something to happen, and now I have lost my leverage."
Mr. Cohen, like other stockholders who will vote in August on whether to merge the company with Scios, would receive 0.39 shares of Scios for each share he owns in Nova. His stock holdings might be worth the same after the merger, but he said he would lose his leverage as an owner because Nova shareholders would own only about 40 percent of the newly formed Scios-Nova.
Other shareholders complained about what they consider high salaries for corporate executives and consultants. They also questioned why they wouldn't receive a premium over the current stock price when Scios acquired the company.
Despite the pointed questioning, however, shareholders didn't appear eager to vote against the merger.
"What else can I do?" said Wibby Smith, a Baltimore shareholder. "You have to go with the tide. They already made the decision."
Nova Chief Executive Hans Mueller, who would become vice chairman of the merged company, said the tests on the new drugs marked an important step toward the first approval of drugs developed solely by Nova.
The two drugs are aimed at potentially large markets. Septic shock kills about 100,000 people a year in the United States, and inflammatory bowel disease affects an estimated 450,000 people nationwide.
Mr. Mueller acknowledged that a number of biotechnology companies are racing to find treatments for septic shock and that one company, Synergen Inc., has a new drug that is a year and a half ahead of Nova in clinical testing.
But, he said, he believes Nova is in a good position to capture a substantial portion of the market because its drugs would be cheaper, available in oral form and also effective on a type of arthritis.
It will be several years before Nova can show that the drugs are effective and can apply for federal approval to market them.