Nigeria revokes sickle cell drug licence…government takes it over

No Comments » June 22nd, 2009 posted by // Categories: Health

Nigeria takes over sickle cell drug

Adole Hassan



Around 12 million people worldwide suffer from sickle cell anaemia


[ABUJA]The Nigerian government will manufacture an indigenous remedy for sickle cell anaemia following the collapse of attempts to produce it commercially by the Nigerian subsidiary of a US-based pharmaceutical company.

Niprisan — marketed as Nicosan by Xechem International, the company that till recently held the licence to produce it — is taken by thousands of Nigerian sickle cell sufferers to alleviate their symptoms. Production slowed down in the last year and sources say it has now ceased completely.

But the government’s National Institute for Pharmaceutical Research and Development (NIPRD), which originally developed the treatment, told SciDev.Net last week (19 March) that it is taking over production of Niprisan.

“We wish to confirm that the exclusive licence given to Xechem International for the manufacture and marketing of Nicosan has been withdrawn and the agreement in this regard terminated,” said Niyi Ojuolape, special assistant (communication) to the Nigerian Minister of Health.

“In the mean time, NIPRD will be producing the drug to make up for any possible shortfall that might arise before a new licensee is appointed,” Niyi told SciDev.Net in an email.

Niprisan is based on extracts from West African plants that had been known to generations of a Nigerian family as an effective treatment for sickle cell anaemia. Around 12 million people worldwide suffer from the painful genetic illness.

The family who owned the recipe initially made a pioneering agreement with NIPRD, widely cited as a case study in “benefit sharing” — allowing local groups to have a stake in the profits from commercialising indigenous products.

The licence to produce the drug was subsequently bought by Xechem International, which held it for six years — during the last few of which it was dogged by allegations of fraud and mismanagement.

In November 2008 Xechem International filed for bankruptcy protection in the United States (see Bankruptcy leaves indigenous sickle cell treatment in jeopardy).

Charles Wambebe, chief executive officer of the International Biomedical Research Institute in Abuja, Nigeria, and former director-general of NIPRD, says: “The development is a good one for the country. Now sickle cell sufferers in Nigeria can access the drug cheaply”.

“Seeing that Xechem failed to live up to their expectations, let the status quo remain — that is, NIPRD producing the drug for Nigerians. After all Xechem did not add any value to the whole process,” he told SciDev.Net.

But NIPRD has said that its own production of Niprisan will be temporary, pending the appointment of a new licence-holder.

LaMonte Forthun, a Xechem shareholder who is attempting to resurrect the firm under different management, says that it was important in the longer term to find a company to take over production of Niprisan.

“The people at NIPRD are all top notch and they have an emotional attachment to the product which is something that is really needed right now,” he says.

“It’s hoped that they don’t let this experience ruin future relationships or collaborations with public companies.

“NIPRD is a research and development group and they are second to none, but having to deal with marketing, sales, distribution, commercial scale quantities of raw material acquisition, etc., would distract them from what they specialise in — developing new drugs.”




Nigeria revokes sickle cell drug licence

Adole Hassan and Christina Scott


16 March 2009 | EN

Sickle cell anaemia


A long chapter in an internationally-watched experiment in the commercialisation of an indigenous medicine has drawn to a close after the company charged with producing the drug had its licence revoked.

Nicosan — based on a traditional remedy for sickle cell anaemia — has been manufactured by the company Xechem, in Nigeria, since 2003.

But the Nigerian government’s National Institute for Pharmaceutical Research Development (NIPRD) has withdrawn the company’s licence, according to documents seen by SciDev.Net.

The move follows the apparent collapse in production of the drug, which has left many Nigerian sickle cell sufferers without a medicine with which to alleviate their symptoms.

It brings to an end a six-year saga in which Xechem International and its subsidiary Xechem Nigeria were dogged by allegations that funds and loans had disappeared. In November 2008 Xechem International filed for bankruptcy protection in the United States and Xechem Nigeria is up for auction today (16 March).

Nicosan (formerly Niprisan) is based on extracts from West African plants that had been known to generations of a Nigerian family as an effective treatment for sickle cell anaemia.

Around 12 million people suffer from the painful genetic illness. It has been labelled “probably the most neglected serious public health disorder in Africa” by Charles Wambebe, chief executive officer of the International Biomedical Research Institute in Abuja, Nigeria.

The family who owned the recipe initially drew up a Memorandum of Understanding for its development with Nigeria’s National Institute for Pharmaceutical Research and Development. This pioneering agreement has been widely cited as a case study in “benefit sharing” — allowing vulnerable groups to have a stake in the profits from commercialising indigenous products.

In 2003, in a controversial move, Xechem bought the rights to develop Nicosan. By February last year its subsidiary, Xechem Nigeria, said it was producing some 50,000 capsules a year (see Sickle cell drug mired in controversy).

But the following month (March) a fraud complaint was brought before Nigeria’s Economic and Financial Crime Commission against Xechem Nigeria. The complainant alleged that US$3.5 million of public funding from the Nigerian government, which was supposed to have been spent on drug manufacture, had been misused.

Xechem had also borrowed nearly US$4 million from a Nigerian bank and US$4 million from a US bank. The destination of these loans has also been questioned.

Rumours that the NIPRD was considering revoking Xechem’s licence have been around for some months. A source told SciDev.Net that the company had not kept up with its quarterly reports and royalties.

But, when asked about this two weeks ago, Ireti Oniyide, managing director of Xechem Nigeria, said rumours of a licence reassignment were “not true”.

“We are producing the drug and it is on the market. You can go to Lawcas or Cutteman pharmacy in Abuja or JKK or Medcloth in Lagos and get it. You cannot get it everywhere because we need to make sure that they have the correct storage facilities.”

He said that that the parent company, Xechem International, filed for bankruptcy protection (see Bankruptcy leaves indigenous sickle cell treatment in jeopardy) specifically to “to protect the Nigerian company. It has not affected us”.

A SciDev.Net survey has, in recent weeks, failed to find the drug in major pharmacies in Nigeria.

And a senior government official told SciDev.Net, on condition of anonymity, that Xechem had stopped production activities for over two months after operating on a skeletal basis for 16 months.

Wambebe, formerly director general of the NIPRD, said last month that he wanted to see the product available for people at an affordable rate. “It is an area of great concern for me, being the chief investigator who initiated the research and development on Nicosan.”

Dorothy Ogundu, a Nigerian physician and scientist who worked in the United States on the commercialisation of Nicosan five years ago, said: “I don’t know whether to be sad or angry at the events that keep unfolding.”

She said in an email that she had worked on the drug “because I believed in the necessity of finding a reprieve in the sickle cell affected community, one that has caused havoc amongst Nigerians”.

“I see this as a misadventure on all sides, the murder of the golden bird, while those who should and ought to know better did nothing,” she added.

 Xechem International Operational Update
 Wed Jun 4, 2008 12:07pm EDT

 Xechem International (PINKSHEETS: XKEM) today announced the following
 information regarding its operations, financial status and
associated matters.

 Overall Summary: The Company’s efforts have been focused on
operational re-structuring in the U.S. and the oversight of its Xechem Nigeria
 Pharmaceuticals, Ltd. subsidiary, which is engaged in the production
and sale of NICOSAN(TM), a product used in the management of the symptoms of
Sickle Cell Disease (SCD). This work is being done under the supervision
of Dr. Robert Swift, the Chief Oversight Officer of the Company.

 U.S. Operations: As a cost saving measure and to improve research
 efficiency, the Company closed its operations in New Brunswick, NJ in 2007. This closure
 included terminations of personnel and removal and transfer of lab and
 production equipment valued at more than $2 million to Nigeria.
Presently, the Company maintains an office in Edison, New Jersey and employs 3
people in New Jersey on a full time basis, two located at Rutgers University, and
several people part time. It also utilizes laboratory space on a
cooperative basis at Rutgers University and is engaged in the further development of
NICOSAN(TM) and the development of 5HMF, a compound licensed from Virginia
Commonwealth University for the treatment of sickle cell disease.

 Xechem’s scientists at Rutgers have developed a formulation of
NICOSAN(TM)  that can be made into tablets for sale in the USA as a nutraceutical. Xechem
 International has identified an FDA certified manufacturing facility in the USA that
will produce NICOSAN(TM) as tablets and we expect to begin the sale of this new
product in 3Q08, if there is sufficient working capital. The Company will also
seek distributors for sales of this product in the rest of the world as a
 nutraceutical, which could generate additional cash flow in 2008. It is
 difficult to gauge the demand for this product in the USA and Xechem
International is therefore making no revenue projections at this time.

 Xechem International continues to function on debt financing and is
 experiencing difficulty in raising working capital necessary to run its
 operations, including the U.S. nutraceutical opportunity. Xechem
International  has generated an additional $0.6 million of debenture sales during the
 approximately 12-month period following the over $7.0 million of
debenture  sales in April 2007 (the”Prior Debentures”) and estimates that it
needs up  to an additional $1 million to continue operations in 2008. Xechem
 International remains in default with respect to its past due
indebtedness for past due payables and for borrowed monies borrowed during the
term of  previous management, which are estimated to exceed $14,000,000 in
the aggregate.

 The majority of the over $14,000,000 in aggregate is in the form of
convertible debt with attached warrants. If all of this convertible debt was
converted   and all corresponding warrants exercised (after giving effect to the
 anti-dilution  ratchet triggered by conversion rights at $0.0007 per share), these
additional  shares would exceed 16,000,000,000.

 The Company recently borrowed $28,676 from Dr. Swift and he posted a
 letterof credit for an additional $118,255 to secure a certain
obligation of the Company, secured by an interest in its contract with Virginia
Commonwealth  University for the licensing of 5HMF. The loan calls for repayment within 90
days, subject  to a 90-day extension. Dr. Swift has accrued compensation from the
Company  since his  appointment as Chief Oversight Officer of approximately $152,500.

 Nigerian Operations: Xechem Nigeria currently employs
approximately 90  people. It has made improvements in its production processes for
NICOSAN(TM)  and its goal is to continue to increase sales of NICOSAN(TM) now
that its  production  capabilities enable it to support a greater number of regular
customers than was  the case in 2007. Its present capacity is about 50 million Naira or
about  $420,000 of product per month based on a single work shift. Xechem
 Nigeria’s current sales effort is focused on Nigerian States buying
 NICOSAN(TM) to distribute to the children and adults in their
States. We have  been fortunate that we have shipped NICOSAN(TM) to three of the
thirty-six  Nigerian States (Niger, Nassarawa and Ondo) so far in 2008. We estimate
revenue for  Xechem Nigeria was approximately $350,000 in the first quarter of
2008. The  revenues  in Nigeria have been sufficient to support day-to-day operations
(before debt  service) and certain extra-ordinary expenses, but not sufficient to
repay any  of its indebtedness to Xechem International, NEXIM Bank or UPS Bank.

 Litigation – USA: The Company is subject to various outstanding
 These  include the litigation previously disclosed regarding claims for
payment of  monies by each of Dr. Ramesh Pandey, Dr. Renuka Misra and Bhuwan
Pandey. More  recently the following additional legal proceedings have been
instituted: (i)  an action in state court by a laboratory services and materials company,
 seeking in excess of $325,000 for certain services allegedly performed on behalf
 of the Company; (ii) an action in state court by a leasing company
seeking in excess of $20,000 for the balance due on an equipment lease, plus
costs and  fees; and (iii) actions in small claims court by: (a) a former
landlord for the  payment of utilities and removal of hazardous substances; and (b) a
supplier of  office supplies.

 Litigation – India: The Company is currently still in settlement
 discussions in  India with respect to stock ownership of Xechem India. A resolution of
 this litigation would facilitate the Company’s ability to bring
current its  financial statements and required public filings with the Securities &
 Exchange Commission.

 Financing and Reporting: While the Company believes the
opportunities for Xechem Nigeria remain very positive and the future opportunity for
 NICOSAN(TM) in Nigeria and the rest of the world remains, there is a
 substantial risk that Xechem International will not be able to
obtain sufficient  proceeds from capital raising efforts or other sources to enable it
to continue  to operate as a going concern. There is a substantial risk that it
will be  required to seek protection from creditors through court supervised
 reorganization or other proceedings in the event it is unable to raise
 sufficient additional capital in the very near future. The Company
is exploring all of its options, including possible funding through the sale of
debt or  equity interests by Xechem Nigeria, the raising of debt or equity in the
 United States through Xechem International, the possible sale of
some or all of the business of the Company or the possible reorganization of the
Company  through bankruptcy in the event that it is unsuccessful in its other
 efforts. The Company has consulted with special counsel regarding a
possible  reorganization should it determine that it has no other viable means of
 financing its operations.

 On May 30, 2008 the Company received a letter from the Securities &
 Exchange Commission dated May 14, 2008 advising that due to the
Company’s  failure to remain current with its public filing requirements under the
Securities &  Exchange Act of 1934, the Commission will seek to deregister the
Company if the  matter is not remedied within 15 days following the date of the
letter. The  Company has sent a response to the Commission requesting additional
time to come  in  compliance with the reporting requirements and is in the process of
seeking to  address the matters that have precluded it from making such filings,
including  seeking the additional funds necessary to enable it to finance the
cost of  bringing its filings current. In the event the Company is
unsuccessful in  bringing its filings current, its stock will be deregistered from

 About Xechem

 Xechem International is a development stage biopharmaceutical
company  working on  Sickle Cell Disease (SCD). Its recent focus and resources have been
directed primarily toward the development and launch of NICOSAN(TM). In
addition to  NICOSAN(TM), Xechem is also working on another sickle cell compound,
5-HMF,  which it has licensed from Virginia Commonwealth University.

 Forward-Looking Statements

 This press release contains certain forward-looking statements
within the  meaning of Section 27A of the Securities Act of 1933, as amended,
and Section  21E of the Securities and Exchange Act of 1934, as amended, which
are intended  to be covered by safe harbors created hereby. Such forward-looking
statements  involve known and unknown risks and uncertainties. Such risks
include the  risk that operations of the Company could be disrupted due to the
chronic  limited availability of funds to meet ongoing obligations and that the
Company may be required to seek protection from creditors.


 Xechem International, Inc.
 379 Thornall Street
 Edison, NJ 08837
 (732) 205-0500
 (732) 205-0504 Fax

 Copyright 2008, Market Wire, All rights reserved.


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