Swedish biotech to test obesity drug on humans

Swedish biotechnology firm Karo Bio said on Monday it has begun phase I clinical trials of a drug for treating obesity, a project which Bristol-Myers Squibb quit last year.

Karo Bio said in a statement the substance, labelled KB2115, had reduced body weight in animals through increasing the body's energy consumption by stimulating the thyroid receptor, and would now be tested for safety on healthy but overweight humans.

"We want to develop this into a drug. We could theoretically push this all the way through phase III (the last step of drug development) if we choose a small and well defined patient group," said Chief Executive Per Olof Wallstrom.

"We expect to finish these phase I studies during this year... we have a number of years ahead of us in clinical studies," he said.

Karo Bio's stock rose 5.03 percent to 9.40 crowns, but was still more than 50 percent below April last year's level of 20.10 when Bristol-Myers Squibb quit the project.

Small biotech companies like Karo Bio typically rely on milestone payments from larger pharmaceutical groups which license substances and finance their later-stage development, as new drugs take many years to develop and several projects fail.

Karo Bio suffered when the company's Diabetes drug partner Abbott Laboratories ceased development of a substance in late 2003. Investor confidence was later further hit by the end of the deal with Bristol-Myers.

It still has drug development collaborations with Merck & Co. and drug maker Wyeth.