Roche, along with US partner Maxygen, has called time on the development of the investigational hepatitis compound MAXY-alpha, two months after the Swiss healthcare giant had voluntarily placed a hold on the programme.

Maxygen’s chief executive Russell Howard, said that "while we are disappointed, we recognised and had advised earlier that termination of the programme was one of the likely possibilities". In September, Roche stopped clinical development of MAXY-alpha, a novel interferon-alpha for the treatment of hepatitis B and C virus infections, after preliminary observations from a Phase I trial indicated that “an unexpected reduction of the pharmacodynamic and pharmacokinetic effects” of MAXY-alpha occurred in the majority of subjects who received two doses of the drug and antibodies binding to the compound were identified in some subjects.

While disappointing for Maxygen, its share price actually rose 2.5% to $7.12. The MAXY-alpha programme, also known as R7025, was fully funded by Roche, with no milestone payments expected in 2007 or 2008 so the Redwood City, California-based company is expecting no near-term impact on its financials as a result of the termination. All rights to its interferon variant product candidates revert back to Maxygen.

It is the second time this year that Roche has pulled out of a deal with Maxygen. The first, in March, saw the Basel-based firm terminate a co-development and commercialisation agreement relating to MAXY-VII, a next-generation Factor VII drug, for acute bleeding indications. At the time Roche said it was abandoning the project based on the inability of the parties to establish an animal model intended to provide preclinical de-risking of the programme.

Still, Mr Howard is upbeat about his firm’s future, saying that “tremendous potential remains in Maxygen's portfolio”. The lead candidate in its pipeline is MAXY-G34, a novel pegylated granulocyte colony stimulating factor drug for the treatment of chemotherapy-induced neutropenia, which is in Phase II trials.