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Since acylated peptide impurities were isolated from octreotide microspheres following incubation in an in vivo environment, the present investigation was undertaken to determine the dosage form dynamics responsible for facilitating acylation. In particular, microsphere batches made with poly(l-lactide) (PLA) and poly(lactide-co-glycolide) (PLGA) 85:15 were studied for in vitro drug release, mass balance relationships, mass loss behavior, hydration uptake, and solid-state stability. Furthermore, native octreotide was incubated in a varying pH stability model (heat treated lactic acid solutions 42.5%, w/w) to determine the effects of acidity on impurity formation. From a review of the experimental results, the appearance of octreotide impurities or related substances occurred with the onset of polymeric mass loss. In fact, the significant formation of acylated peptide did not appear until >90% mass loss, which was observed at 14 days. It was surmised that because of water uptake, the hydrolytic cleavage of the polymeric backbone created an acidic microenvironment to facilitate the covalent coupling of peptide with polymer. The lactic acid solution stability model corroborated with greater evidence of acylation at pH 2.25 where the presence lactoyl (+72 m/z) derivatives of octreotide were confirmed by MALDI-TOF mass spectrometry.