Biotech firm

Biopure

(BPUR)

is telling institutional investors privately that an approval application for its experimental blood substitute will likely be delayed until early next year, according to a fund manager briefed by the company.

This doesn't match what executives of the Massachusetts-based firm have said publicly. As late as last month, CEO Carl Rausch told attendees at an investment banking conference that the regulatory filing for Hemopure would reach the doors of the Food and Drug Administration by the end of the year.

A delay would be a setback for Biopure and a disappointment for the company's investors. Filing delays are not uncommon for companies, however, given the complexity of drug applications. One fund manager tells

TheStreet.com

that Biopure executives told him last month that the odds are very good there will be a delay of up to three months, while assuring him the reasons for the late filing are relatively benign delays with finishing touches.

There is also the possibility of more serious problems with Biopure's Hemopure application that could result in longer delays, or even force the company to redo its clinical trials.

Biopure executives were contacted for this story but they did not return phone calls.

Biopure is developing Hemopure as an oxygen-carrying substitute for red blood cells. With the

setback at rival

Northfield Labs

(NFLD)

last week, Hemopure has the chance to be the first such product reviewed by the FDA. Hemopure's success is vital to Biopure because it's the company's only product with any growth potential.

Anemic Stock Performance

Shares of Biopure closed Thursday at $16.81 per share. Since Oct. 11, shares have fallen 22%, compared to an 18% rise in the American Stock Exchange Biotechnology Index.

Two independent consultants hired by Biopure to assist with its pivotal clinical trial for Hemopure -- conducted in 1999 and 2000 at hospitalsacross the United States -- noted numerous, serious problems with data collection and analysis.

These consultants agreed to talk to

TheStreet.com

on the condition that they remain anonymous because they're still under confidentiality agreements with Biopure.

Biopure has operated with vacancies in key executive posts for well over a year. The company's chief medical officer, Dr. William Hoffman, and members of his team quit 18 months ago, before the Hemopure trial was complete -- and were never replaced.

Biopure's vice president of regulatory affairs, Bernadette Alford, quit at the same time, taking a similar post at another biotech firm. The position was not filled until Tuesday, when Biopure announced the hiring of Howard Richmanas vice president of regulatory affairs and compliance.

Tuesday, Biopure said that Dr. Edward Jacobs, a co-founder and senior vice president of medical affairs, was retiring to become a consultant forthe company.

A clinical research team is obviously crucial to a biotech firm conducting pivotal trials of an experimental product. But keeping atop theregulatory demands of this process -- ensuring the trial is run correctly, the data is collected properly and the application meets all FDArequirements -- is just as important. There's an old saw in the drug industry that says a drug is only as good as its FDA application.

If Biopure is having trouble assembling its FDA application, the 18-month period without a regulatory affairs chief could be a reason. Itcould also explain why the company has hired a Washington, D.C., law firm to cross the country interviewing doctors who participated in the Hemopure trial.

Trials Trouble?

Last month, attorneys from Hyman, Phelps & McNamara, an experienced food and drug law firm, visited the Maguire Veterans Affairs Medical Center in Richmond, Va., asking regulatory-type questions about the protocols and procedures doctors at the hospital used to conduct the Hemopure trial, focusing largely on how the trial was conducted and not on actual results. Alice Bartholomew, Biopure's study coordinator at Maguire, confirmed thatshe met with the lawyers. These attorneys have also interviewed doctors at Hemopure clinical trial sites in Florida, Louisiana and California.

What is not clear is why Biopure would hire a law firm to conduct these interviews less than two months before it was expected to send Hemopure to the FDA.

Attorneys from Hyman, Phelps could not be reached for this story.

Steve Lawton, general counsel of the Biotechnology Industry Organization and a regulatory expert, says biotech firms with a dearth of in-house regulatory people would most often hire consultants -- but not law firms -- to help put FDA applications together. That includes auditing, or interviewing, investigators at clinical trial sites once all the testing is completed, a common occurrence.

"Almost undoubtedly, a biotech firm would not hire a law firm to do this," he says. Asked specifically about Biopure's hiring of Hyman, Phelps, Lawton backtracked a bit.

"I wouldn't necessarily read anything suspicious into this. There are a lot of lawyers

at Hyman, Phelps that counsel clients on how to deal with the FDA," said Lawton, whose employer lobbies on behalf of the biotech industry.

If the lawyers are working on potential problems with an FDA application, it would come as no surprise to some of the consultants who helped run the trial.

Too Many Cooks

In early 1999, Biopure decided against holding an investigator's meeting, where all the doctors participating in the trial would get together with company officials to go over procedures, one consultant said. Instead, Biopure sent employees to individual sites, says the consultant who supervised multiple sites. The result: There was little consistency with how doctors collected data, resulting in problems later when data from all the sites was pulled together.

"This trial was the largest number of patients they had ever tried to organize and they were totally unprepared. It was a nightmare," says oneconsultant.

When told about the lawyer visits, this consultant said he believes Biopure is looking for a way to salvage something positive from the trial,which he predicts will not be strong enough to support FDA approval.

Another consultant, who stopped working for Biopure last year, says he still fields calls from clinical sites needing help to reverifypatient information. Some of this data appears incorrect or is simply missing, says the consultant, who has more than 10 years experience working on clinical trials.

This consultant was particularly upset because he thinks Hemopure has the potential to be a good product.

"Early on, they should have gone back to the drawing board and started over when they realized their problems," he says. "The way I see it now, the FDA is going to ask them to do another trial."