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Cleveland BioLabs, in a huge blow to its drug-development efforts, said Thursday that a key federal agency has ended negotiations to provide the funding the Buffalo company needs to carry out final tests and studies on its anti-radiation sickness drug.

The decision by the Biomedical Advanced Research and Development Authority, or BARDA, to terminate negotiations with the company is a major setback to Cleveland BioLabs’ efforts to develop its Entolimod drug as a treatment for radiation sickness. Company officials had high hopes that BARDA would provide the millions of dollars that Cleveland BioLabs needs to complete its final tests and clinical studies.

BARDA officials told Cleveland BioLabs executives they were ending the funding talks because of budgetary constraints, Yakov Kogan, the company’s CEO, said during a conference call Thursday morning.

Cleveland BioLabs stock, which already has lost 24 percent of its value over the last year, plunged 38 cents, or 33 percent, to 75 cents per share Thursday.

Even if alternative development routes that the company plans to pursue are successful, the rejection by BARDA will add months – and perhaps longer – to a development process that already has taken longer than company executives had expected and continues to be a financial drain on a business that relies on funding from investors and federal agencies to fund its operations. None of the company’s drugs are approved to be sold commercially, and are unlikely to reach that stage for several years.

Cleveland BioLabs had been in talks with BARDA officials for more than a year, after the agency said it needed more information from the company about its development efforts with Entolimod. Company executives have said they have been working on contingency plans to complete the development of Entolimod as a radiation sickness treatment in the event that the BARDA funding did not come through, most likely through a lengthy review conducted through the U.S. Food and Drug Administration.

Cleveland BioLabs plans during the first quarter to request a meeting with FDA officials to discuss a process, known as a Pre-Emergency Use Authorization, that has been used by the government to stockpile unlicensed drugs for emergency use, in hopes of scheduling a session that will take place by the end of June.

“It is a large undertaking, and it will take months of compilation and documentation” of the results of data collected during the clinical trials and studies that already have been conducted, said Ann Hards, Cleveland BioLabs’ executive vice president for regulatory affairs.

David C. Hohn, Cleveland BioLabs’ chairman, said he still believes that the company’s drugs under development – from the anti-radiation sickness medication to drugs that could be used to treat some types of cancer – are “compelling” and “hold great promise.”

He called the development path available through the FDA “a critical next step” for the company. It likely will be summertime, at the earliest, before the company has any indication of whether the FDA development path is an option for Entolimod.

If the preliminary talks with FDA officials indicate that they are unlikely to back efforts to continue developing Entolimod under the hoped-for path, then Kogan said the company would consider other options for the program, including taking on a partner or selling the drug. Another option would be to shut down the development efforts.

The BARDA funding was important because Cleveland BioLabs continues to lose money while it works to obtain the funding and the regulatory approvals it needs to bring the drugs it is developing to market, including a $4.1 million loss during the third quarter.

Cleveland BioLabs executives believe that studies conducted so far have shown great promise for Entolimod as an anti-radiation sickness drug that company officials believe could be stockpiled by governments worldwide to protect citizens and soldiers in the event of a nuclear accident or a terrorist attack.

Tests that the company has conducted so far have shown encouraging results that a single dose of Entolimod, administered 25 hours after exposure, can greatly increase survival rates following a potentially lethal exposure to radiation. But further studies must be done before Cleveland BioLabs can start selling the drug, and those additional tests will take a considerable amount of both time and money.

The company raised an additional $7 million in capital by selling stock to a pair of institutional investors earlier this month, which should give it enough cash to fund its operations for the rest of this year.

“Our cash will last us into the first quarter of 2015,” said C. Neil Lyons, the company’s chief financial officer.

email: drobinson@buffnews.com