Manoplax: from heart to heartbreak: With millions lost on its 'wonder drug', Patrick Hosking asks whether Boots ignored too many warning signs in its enthusiasm

ONCE UPON a time, Sir James Blyth, the chief executive of Boots, thought he could see a way of making his shareholders much richer. He drew a cheque on the company for pounds 155m, put the money on Sonny Boy in the 3.30 at Kempton Park, and saw the horse limp home unplaced.

Of course, he didn't really. But he might just as well have done, say disappointed shareholders. Boots last week announced that it was withdrawing its heart drug Manoplax after 14 gruelling and costly years of research, development, production and marketing.

The high-risk business of ushering a new drug from the test tube to the doctor's surgery had claimed another victim. New research by the company showed that Manoplax, while easing the symptoms of heart disease, was also increasing hospitalisations and, in some cases, hastening death.

Boots had little choice but to pull the plug on it. The drug had cost pounds 100m in research and development and pounds 20m in marketing costs, including hiring a specialist sales force. There was also the extension to a plant in Cramlington, Northumbria.

On top of this, pounds 35m has been set aside for stock write-offs and possible redundancies. And there is the possibility - very remote, says Boots - of lawsuits in America.

There will always be casualties in the pharmaceuticals business, of course. But some investors are questioning whether the Manoplax saga had to last so long and cost so much. Could Boots have recognised warning signs in 1989 and 1991 and pulled out earlier, saving millions?

Were the managers who ran the project too emotionally tied to it to judge it dispassionately?

Moreover, should Boots, a small player ranked 50th in the world, have been in the prescription drugs business at all when size is crucial to success?

The story begins in the summer of 1979 - just after Mrs Thatcher was elected prime minister for the first time - when biochemists at Boots' laboratories in Nottingham synthesised a substance, labelled BTS49465, later to be called Flosequinan, the active ingredient in Manoplax.

It was one of thousands of formulae isolated by the scientists each year, 99.9 per cent of which are quickly discarded as of no practicable use. But Flosequinan, as it was put through tests on animals and then on human volunteers, showed promise as a means of relieving congestive heart failure (CHF).

Millions of people suffer from CHF, which is incurable. They spend the last few months or years of their lives breathless and tired. Other drugs work, but they all have drawbacks.

Boots could see a huge demand for an alternative drug. The total market for CHF drugs is worth at least pounds 2bn and is growing at 14 per cent a year. There was also scope for Manoplax to be used as an anti-hypertension drug, a market worth about pounds 6bn.

Assuming the new drug could capture 10 per cent of the CHF market, that would mean sales of pounds 200m and, in the high-margin drugs business, gross profits of almost as much.

In January 1987, when the American Heart Journal gave the drug a clean bill of health, the stock market started to take an interest. Analysts suddenly woke up to the money-spinning potential of Manoplax. Meanwhile Boots continued to put the drug through the numerous regulatory hoops.

By 1990 the most bullish commentators predicted that Manoplax could make a profits contribution of pounds 200m by the late 1990s. That was twice the current profits of the entire pharmaceuticals division, which includes over-the-counter products such as Strepsils cough sweets, Farley's rusks and Nurofen painkillers.

Manoplax was especially important for Boots. Emotional as well as financial capital was invested in the drug, especially by Sir James, who repeatedly expressed his confidence in Manoplax right to the end.

None of Boots' other prescription drugs is still under patent in the UK. Synthroid, a thyroid replacement therapy, is still highly profitable but is no longer under patent. Margins on its other big sellers - such as the anti-inflammatory drug ibuprofen - are shrinking, and are likely to shrink further once Hillary Clinton introduces her health reforms in the US.

With new patented drugs still years away from approval, Manoplax was to be a crucial profits earner for the 1990s. The pharmaceuticals division contributed pounds 121m of the group's pounds 422m but the share was declining. Other parts of the Boots group, such as the Do It All and Fads retail chains, were in trouble. The Children's World shops, a new format started from scratch, was taking longer than expected to come good.

By the time Manoplax was finally granted a licence in August 1992 in the UK (and December in the US), it had come to be seen as the great white hope, not only for Boots Pharmaceuticals, but also for the wider group. The disappointment when it finally flopped was therefore all the deeper.

It is easy to criticise with the benefit of hindsight, but the Boots board overlooked or ignored three facts which might have persuaded them that they should bite the bullet earlier.

The first was the disappointing experience of other drug companies trying to come up with profitable treatments for CHF. Several rivals had to backtrack on heart drugs after a promising start, including Sterling Drug (now part of Kodak) and ICI (now Zeneca).

The second came in September 1989, when Boots admitted that the results of the third phase of clinical trials showed that the improvement in patients taking Manoplax was 'not as great as expected'. The Manoplax programme was under review, it said, with 'complete cancellation' possible.

Yet mysteriously, nine months later, an enthusiastic Sir James told shareholders that the programme had reached 'a most encouraging stage'. The explanation for the previous caution was merely that there had been 'unprecedented problems of statistical analysis'.

Boots persuaded itself that the warning signs were of no consequence, no more than a statistical quirk. The message from Nottingham was that it was full speed ahead for the drug, which investors by then had dubbed 'Manana-plax'.

A third worry was the attitude of the Food and Drug Administration, the powerful federal body that licenses pharmaceuticals in the US. Provisional approval for Manoplax was a long time coming, and when it finally arrived in October 1991, it was marginal: Manoplax could only be prescribed for patients who could not tolerate ACE-inhibitors, a common treatment for CHF. It would also have to print warnings on the label.

Boots admitted it was disappointed but again decided to press on. It launched a massive marketing campaign, recruiting hundreds of sales staff on both sides of the Atlantic, earmarking pounds 20m for advertising and other promotions such as medical symposia.

Even in April this year, when it released details of a study showing that patients taking large doses of Manoplax had a 'significantly increased risk of death', it continued to put on a brave face, insisting that the drug still had a future if taken in smaller doses.

So did Boots persist too long? According to Jonathan de Pass, pharmaceuticals analyst with the stockbroker Barclays de Zoete Wedd, Boots had a much harder decision because it had no other products to fall back on. 'If you have a whole portfolio of products in development, you can be much more dispassionate about binning one of them.'

Boots, while admitting that the failure of Manoplax is 'a significant disappointment', says it could not have axed the project earlier. According to Alastair Eperon, director of corporate affairs: 'The highest regulatory authorities in the world decided (Manoplax) should be made available.'

Indeed it was only Boots' decision to mount an extra voluntary study of Manoplax, the 'Profile' analysis, which revealed how dangerous the drug could be. Patients would probably have been taking Manoplax for many years to come but for that study, says Mr Eperon.

Manoplax was just one of those things - a casualty of the high-risk business of developing prescription drugs. Moreover, Boots acted honourably in medical terms. Last week it took several calls from patients wanting to know how they could continue to get supplies: so what if it shortened life - it was at least bearable in the meantime.

As for the pounds 155m cost, that is not out of line with other new drugs. A study of start-up costs for new ethical drugs in 1989 showed the average cost at dollars 231m ( pounds 161m).

But Boots' claim that it is big enough, and that it has enough alternative drugs in the development pipeline to offset the disaster, is more debatable.

Not one of its prescription drugs is under patent in the UK. And products in the pipeline are at best several years from being marketed even if they go through the regulatory hoops.

Even an anti-obesity drug 'at a fairly advanced stage' is several years from exploitation. Drugs for schizophrenia, diabetes, asthma and depression are longer-term hopes.

However, Boots insists that the future is far from grim and was able to boast encouraging first-quarter figures last week. Boots Pharmaceuticals sales grew by 11.5 per cent.

Businessmen only have to look at the enormous sums that a single successful drug can generate and the costly investment all seems worth it. But, as Sir James learnt last week, very few yield a fairy-tale ending.

----------------------------------------------------------------- Table: DIARY OF A DRUG GONE WRONG ----------------------------------------------------------------- July 79 Synthesis of BTS49465 Mar 80 Animal tests start Sept 82 Tested on volunteers Oct 83 Clinical trial certificate Nov 83 Used in heart failures Dec 84 Approval inquiry starts May 85 UK Phase 2 dosage trials July 90 Phase 3 safety trials Oct 91 US heart panel approval Aug 92 License granted in UK Sept 92 Sent to UK doctors Dec 92 Licence granted in USA Mar 93 Launched in USA Apr 93 Warning on dosages July 93 Manoplax withdrawn -----------------------------------------------------------------

(Photographs omitted)