(Veloci)Raptor’s Rapture

Posted on May 2, 2013 by BioChef in Training

Look. It’s done.

Indeed. Believe it or not, this is the second post of the year…and within 10 days of the first.

Twice 2012’s output already.  More shocking than ODAC’s resounding rejection of $AVEO’s tivozanib on today!

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I wanted to take a step back in time with this post. Raptor ($RPTP) has been mentioned before as a development stage company – and now, they have finally done it.

They crossed the finish line and received FDA approval for DR cysteamine (Procysbi) on the last day of April for the treatment of nephropathic cystinosis. Congrats Chris! It’s not easy getting any drug approved especially for a small biotech.

Andrew Pollack from the NY Times wrote a nice article on the company (here)

The concept, I get – low risk, PK enhancement, ultra-orphan play (according to management, 500 patients US and 2,000 worldwide). What I have a harder time understanding is the pricing, about $250,000 annually, when the generic (taken four times daily, instead of twice daily) is $8,000 -10,000 annually. So a couple of comparisons to put it into context:

On one hand, we have Kuvan (sapropterin; $BMRN), which is indicated for a subpopulation of PKU patients – those that are BH4 responsive. What is important to note here is that most PKU patients can be “successfully” treated through diet, which means that Kuvan is not essential for a patient’s normal development. And still, the drug comes with a $120,000/year price tag. Could this explain the modest 2012 sales of $134 MM, since its 2008 US launch?

US incidence is 1 in 15,000 births per year (about 260 patients yearly); it is unclear the the prevalence numbers are, but the company estimates that there are “at least 50,000 diagnosed patients under the age of 40 in the developed world. We believe that approximately 30 to 50% of those with PKU could benefit from treatment with Kuvan.” Assuming that there are 20,000 patients in total, Kuvan numbers (a minimum of 1,100 adult-sized doses) suggest that most have elected to go with the lower cost alternatives.

On the other extreme, we know that $ALXN’s Soliris (eculizumab; approved for PNH and aHUS) costs roughly $440,000 annually with 4 – 6k PNH patients (typically adults) in the US. Soliris was launched just a year earlier than Kuvan and reported 2012 sales of $1.1B; they are projecting $1.5B sales in 2013. Vastly different sales stories. Here, the patients have no alternatives and poor prognoses once diagnosed, so a premium can be justified (one can debate the magnitude).

Using these comparators – that $250,000/year cost does not seem so bad, until we look at other ultra-orphan products which also improve the quality of life (not just the dosing). Here’s a chart from Matthew Herper’s Forbes article on $ALXN back in September of last year discussing ultra-orphan pricing:
Looking at the chart, by five years of age, Naglazyme costs close to $300K annually, and Vpriv is tracking towards $250K per year. If we enhance Naglazyme to be infused once monthly versus once weekly, or to be delivered once daily in a tablet, could we charge $1.2M?

In the grand scheme of things, if Procysbi was the first to market, why not $250K? But as a PK play, taking the dose down from QID to BID, and minimizing, but not eliminating the side effect profile (e.g., GI, bad breath) is the premium still justified?

Procysbi pricing seems rather high to me, but so does Soliris, so there must be more beneath the story to support the pricing strategy.

The market, as always, will tell. It always does.

I’m not sure how to add a polling box to the page, but do you think Procysbi is priced: Fairly, Too High, or Too Low?

Posted in I don't get it, Orphan, Pricing, Update | Tagged , , , , , , , , | Leave a comment

Crazy way to start 2013

Posted on April 24, 2013 by BioChef in Training

Love or hate it, here’s to the first post of 2013. Given that the site fee was just renewed, I thought that I should post something and get some sort of return…

…or so I thought.  The plan was to post this past Monday…Marathon Monday. Unfortunately, I was glued to the media, both social and traditional all week. Any musings about biotech seemed a bit out of place. And now we are dab smack in 1Q earnings season.

I’m amazed that in a blink of an eye, we kicked off the year at JPM and have already reached BIO (is it still snowing in Chicago?!).

There is no particular agenda for this posting, so here’s five events I found interesting in March: 1) we had the hot venture capital team at ThirdRock raise $515 MM for their third fund; 2) a biotech ($ZIOP) blow-up; 3) a stem cell company’s ($ASTM) possible last hurrah; 4) a big pharma’s ($AZN) restructuring (again); and 5) an FDA approval for $BIIB BG-12 (yea!).

Since I’ve mentioned $ZIOP (updated here) and $ASTM (mentioned here) in the distant past, let’s start there.

$ZIOP, Simply Nasty. This 3-mo chart from Yahoo!Finance for $ZIOP (as of 4/10/13 close) shows the agony of defeat in biotech. A failed pivotal trial.While I’m sure there are some who confidently “predicted” palifosfamide’s (pali) failure and more who were convinced of its success, it does remind us that drug development is a risky game, where drugs have a 1 in 10 chance of success. As an aside, is that why there are so many baseball lovers in science? Wouldn’t you rather take a .300 average into drug development? I would. Better yet, I could go to bat with systemic enzyme replacement therapies, where the odds are likely better than Ted Williams’ astonishing .406 batting average. OK, back to the story.

When the trial data were announced, the price per share dropped 65% (from $5.13/share, 3/25/13, to $1.82/share, the next day). Hefty, but not complete.  According to Yahoo!Finance, $ZIOP had 82.5 MM shares outstanding, which means that  they took a loss of $272 MM in market cap ($423 MM, pre-data to $151 MM, post-data). Why not lower?

$ZIOP reported $73.3MM cash YE12, and had been burning roughly $20 MM cash per quarter, with 1Q13E cash to be $53 MM. Assuming outstanding options and warrants are under water, and no long term debt, EV is roughly $100 MM. What’s behind the $100 MM curtain?

Ta-Da, we see two Phase II trials with a yet to be proven gene delivery/therapy approach…uh-oh. Shifting from small molecule drug development into the molecular medicines business seems to be a pretty significant change for the company. Will they have the necessary know-how to be successful?

From ClinicalTrials.gov, we can quickly review the two ongoing studies, without much regard to the science. The first, is an open-label Phase I/II in 30 patients for the treatment of advanced melanoma (primary data completion expected January 2014) with safety and tolerability as the primary endpoints. The second trial is a randomized, open-label Phase II trial in combination with pali for the treatment of non-resectable recurrent or metastatic breast cancer in 68 patients (primary data completion expected December 2015) with safety/tolerability and 16-wk PFS as the primary endpoints.

My guess is that investors would want to see signs of efficacy, which points to the second trial as the primary driver, with data likely to be announced 1Q16. Even if they can reduce their burn rate to $25 MM per year and make it to data, the math suggests that the company will need to raise additional capital in the next 9-12 months – let’s hope the data will be stronger than $GNVC’s and $INGN’s Ad-based technologies. Without much digging into an unproven technology, they do most certainly feel rich at present.

Next, $ASTM. Looking at the three-month chart below, they too left investors with little confidence (dropping 38% from $1.15/share to $0.71/share, 3/27/13) after announcing a strategic change in R&D. They terminated an ongoing Phase III in critical limb ischemia due to slow enrollment to focus on dilated cardiomyopathy, and enrolled the first patient in early August. In this case, $ASTM took a completely different approach to $ZIOP, by focusing on a single Phase III trial…of course, their significantly weaker financial position might have contributed to that decision.Briefly, the trial is expected to enroll 108 patients, who will be followed for one-year; primary data completion expected August 2015. With $13.6 MM cash reported at the end of 2012, even if they cut the 2012 $29.5 MM cash burn in half, there “‘ain’t no way” they will make it to data.

For a company with a $32 MM market cap (45.66 MM shares outstanding x $0.70/share), there aren’t many options for survival, which is why I’m sure their new CEO was brought in to right the ship.

Now, some good news. I’ve “heard” that healthcare VCs are in panic mode, unless you are Third Rock, which has had pretty solid outcomes with Alnara and Lotus Tissue Repair. In retrospect, given that they have received plenty of press, lots of credit has been bestowed upon them, so here’s their website (here) for you to check them out. I suppose, it is not too surprising that investors are liking what they see.

And some news that make you go “hmm”. $AZN had a busy March 21st, with four announcements on their Investor Day, which was held to highlight their new strategy and showcase their scientific prowess. Focus on core areas, sell Brilinta and Onglyza – nothing earth shattering. The press releases discussed: 1) a fourth strategic reorganization, with more staff reductions and site consolidations; 2) a new appointment to the leadership team to head a new group; 3), a new academic collaboration, focused on translational outcomes ; and 4) they made a big splash with a high value preclinical research agreement. Pretty interesting times for their new CEO, who took the the Captain’s chair back in October. At present, it is unclear what the plans are to plug the near term revenue gap, but they are certainly looking towards a productive future, with several preclinical deals announced in April – Bind, Horizon, Alchemia.

Lastly, three cheers for an approval for $BIIB, which is now toying with the $50B market cap mark. BG-12 (Tecfidera) has led the way with approval in US as first-line treatment for MS, on the heel of favorable IP news (dosing schedule). Looks good for MS patients, who now have the option of a twice daily oral medication instead of a needle. Terrific story, with a twist – possible PML case in EU with a dimethyl fumarate-compound. Time will tell, if this will be a barrier to further uptake and growth.

A much longer post, than expected – thanks for making it this far!

If you just skipped to the end, thanks to you too! Lots of ideas to jot down, but not quite enough time to flesh out some of those ideas. Happy earnings season.

No position in any companies listed.

Posted in Random, Update | Tagged , , , , , | 1 Comment

What’s for dinner?

Posted on May 21, 2012 by BioChef in Training

Alas, I have not contributed many posts this year and I appreciate the follows and comments. I’ve switched gears a bit and have found myself in a situation where blogging on a company or a drug could be considered a conflict of interest. Devices and diagnostics are probably OK, but I don’t have as much fun in that space. Too bad I am not quite savvy enough to truly become a ghost in the machine!

I am disappointed that this is just the fourth post of the year, but if I may be a little defensive, there aren’t too many solid long-term investment opportunities in publicly-traded biotech companies, at least within my price range. Lots of trades, though.

Perhaps, a quick retrospective look at what the Big Boys thought were interesting…worth at least a half billion or more.

Here’s a list* from Current Partnering with deals in 2012 thus far:

*Top M&A deals of 2012 valued at over US$500 MM.
Included are drug-related acquisitions only

Partners Date Value, US$m Subject Termsheet
GlaxoSmithKline, Human Genome Sciences Apr 2012 2600.0 Acquisition agreement for Human Genome Sciences (rejected) Human Genome Sciences has received an unsolicited proposal from GlaxoSmithKline to acquire HGS for $
… read more
GlaxoSmithKline, Human Genome Sciences May 2012 2600 Acquisition agreement for Human Genome Sciences for $13 per share (proposed) GlaxoSmithKline announced that it will not participate in Human Genome Sciences strategic
… read more
Bristol-Myers Squibb, Inhibitex Jan 2012 2500.0 Acquisition agreement for Inhibitex 13 February 2012
Bristol-Myers Squibb Company announced the successful completion of the tender
… read more
Ardea Biosciences, AstraZeneca Apr 2012 1260 Acquisition agreement for Ardea Biosciences AstraZeneca and Ardea Biosciences have entered into a definitive merger agreement, pursuant to
… read more
Amgen, Micromet Jan 2012 1160 Acquisition agreement for Micromet 7 March 2012
Amgen announced the expiration of the subsequent offering period of the tender
… read more
Takeda Pharmaceutical, URL Pharma Apr 2012 800.0 Acquisition agreement for URL Pharma Takeda Pharmaceutical and URL Pharma jointly announced that Takeda’s wholly-owned subsidiary,
… read more
EUSA Pharma, Jazz Pharmaceuticals Apr 2012 700 Acquisition agreement for EUSA Pharma Jazz Pharmaceuticals and EUSA Pharma have signed a definitive agreement under which Jazz
… read more
Bausch & Lomb, ISTA Pharmaceuticals Mar 2012 500 Acquisition agreement for ISTA pharmaceuticals 24 April 2012
Bausch + Lomb, the global eye health company, and ISTA Pharmaceuticals, announced
… read more

Interesting list.  There are five Big Boys (four publicly-traded pharmas, one private healthcare) in $GSK, $BMY, $AZN, Takeda and Bausch and Lomb (private), one Big Bio ($AMGN) and one mid-cap speciality pharma ($JAZZ) all going out for dinner. Is it surprising? No, not really. With patent cliffs and lost revenues, these deals are just part of the game and it is getting hotter.

Setting aside valuation considerations, most of the deals listed here make sense…I could build a good story around each asset to sell to my investors. There are two exceptions, as indicated in red above.

First. Benlysta, what’s my name again? I haven’t studied $HGSI in any depth recently, but this is what I know. This is a company with close to a $Billion in debt, a drug that is only mildly efficacious and does not work in a clinical indication (lupus nephritis) or in an ethnic population (African-American women), where a significant patient population resides, and has a small biodefense contract. And to top it off, they recently implemented a poison pill to ward off GSK. Huh? You want to play hardball? $GENZ, you are not. I hope I’m wrong and missing something, but this meal is not being served.

And then there is Takeda – does anyone else feel that they are are going to get a bit of indigestion after taking a bite out of this? $800M for Colcrys, an already approved generic drug (colchicine) that now has fulfilled a FDA wish for clinical validation for established therapies. All we need now is for someone to buy KV Pharma’s Makena. Heck, it is an approved drug. Anyone? Anyone?

Oddly, enough, I feel like eating now…thanks for stopping by.

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Getting ready to go Fishin’

Posted on January 21, 2012 by BioChef in Training
[Off point today. Just thinking aloud as I re-assess my reasons for playing in the biotech space, Part I].
When looking for an opportunity, I hope to find a name that has the potential to generate excitement (and hopefully, returns) over a period of time – not over a day, a week, or even a month, but also usually not more than 12-18 months. If I wanted to wait longer, I’d buy a sector-specific index or fund and let those analysts do the work for me. I play because I have fun trying to find a gem and it is a good way of staying on top of the industry.  ‘gotta have some skin in the game, right?

Suffice it to say, that I am not a trader. I have no clue as to how to daytrade, whether it be momentum, quantitative, technical, swing, rap (OK, I made that last one up) or any number of other styles. I do have respect for those traders that perform consistently over time – it’s not easy, and requires a significant amount discipline. I do own mutual funds through retirement plans and such, but only because it is a mindless way of (at least) matching an index and (hopefully) not lose principle.

Short segue here. There is a reason most mutual funds fees can be low (<1.0%, the lower the better in my book) – the portfolio manager just needs to match its index comparator, and hopefully beat it by a few percentage points, their “value add.” Sure, the portfolio manager can change the individual weightings or perhaps add a contrarian idea or two to the fund, in hopes of getting an edge, but as long as they do not underperform their index routinely, you should be in OK for the long haul. If you are paying more and not matching the index at minimum, shouldn’t you find another manager? Ultimately, any reasonably competent mutual fund manger should be able to perform and preserve your investment.

For better returns, there are always hedge funds…the “smart money.”  Those who can and are so inclined, can pay management fees of 2% and give up 20% of the profits in expectation of better returns. It takes work to find a good manager and effort to understand the strategy and risks, but it is certainly worth the effort. The beauty of hedge funds? The ability to “hedge” their bets and protect from losses…in theory; of course, some do use leverage to juice returns as well…lots of leverage. Too bad, I am not an accredited investor…yet (gotta aim high!).

All right. Back to me. Instead of hitting the casinos, I am more comfortable betting on myself to conduct my own research and make an investment decision. Where and how to proceed? As an individual, it means that I am limited in both time and funds to do my homework. I am at a severe disadvantage to the professionals, who have access to a plethora of resources, analysts, and do this full time…as a career. The only way I can have any chance to succeed is to invest in a sector that I know and understand, biotech (hopefully).

I will also need to make concentrated bets in order to generate a return to continue and justify the process. Who wants to study only to simply break even or worse, to lose? Concentrated bets are needed, because if I have $10,000 to play and decide to spread it across 10 companies for diversification/risk management, it gives me 100 shares of a $10 stock. If it goes up 10%, or $1/share, then I have made $100. Taking out the $14 in fees (assuming $7 per transaction), this leaves me with $86, less whatever I would pay with capital gains. If I take a calculated risk and bet on 5 companies instead, I could buy 200 shares of that same $10 stock, doubling my returns.

Better yet, if I can get that same company at $5/share, I can buy 400 shares and increase my chance for greater returns (think Medivation’s ($MDVN) Dimebon failure, followed by MDV3100). So for my own investment game, I need to find companies that are undervalued with potential…aha, just like every other investor out there!

My only edge will be to understand as many companies as possible in order to identify a jewel in the rough, to find the companies people aren’t quite talking about yet, so that I can make a well-researched, concentrated bet, and go in, knowing that an unknown, unknown (Thanks, Mr. Rumsfeld) can pop up and blow my thesis away. Good luck Gilead ($GILD) and Pharmasset ($VRUS)!

With hundreds of publicly traded biotech companies across the globe, how should I whittle them down? First, by size, and by almost default, price per share (PPS). While most folks talk about large, mid, small cap companies, when I think about biotech, it is more about development stages, so to me, there are maybe five, distinct development stages, which is reflected by their valuation (broad strokes; there are always exceptions):

1. Babies: those with valuations <$100 MM, with products in early-mid stage development, usually with a big wart
2. Kids: companies with valuations between $100 – $500 MM, with products in early-mid stage development
3. Tweens: companies with valuation >$500 MM, with products in late stage development and looking to grow up
4. Young Adults: companies with valuations >$1 B, usually a single product, and perhaps, a pipeline
5. Mature: companies >$10 B, with multiple marketed products, exposure to multiple therapeutic areas, research pipeline

At this point, I feel pretty good my decision to continue my focus on biotech and making concentrated bets. But, I will keep an open mind and continue to learn about trading styles and different sectors. In Part II, I’ll look at each development stage.

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No, the Broncos did not have gout, but they sure looked slow and in pain against the Pats

Posted on January 15, 2012 by BioChef in Training
(Ack.  Wrote this on Friday, and completely forget to post)
Here we go – I can’t compete with all the goodies the came out from the JPM Healthcare Conference, but here’s Part II of my six-month update from June. No, I wasn’t there, but if you were on Twitter and followed #JPM12, you could have followed some some interesting updates and commentary from the likes of @adamfeuerstein, @BiotechStockRsr, @LifeSciVC, @3NT and many, many more. For a first hand account, some of the presentations were webcast as well, though I did not get a chance to watch any of them live – maybe I can catch a replay over the weekend?

Next up are two companies that may not be the most interesting at present. On this post, I wanted to take a look at two different gout companies that seem to be on opposite paths. In one corner, we have Savient ($SVNT), a former billion dollar company with a marketed product Krystexxa (pegloticase), which has hit some bumps. And in the other, we have Ardea ($RDEA), which is just getting their Phase III trials started, and appears, to my eye at least, an opportunity.

When we last visited $SVNT, they had a $490 MM market cap (71 MM shares x $6.96/share, 6-10-11). By the end of 2011, they had dropped another 68% to $159 MM market cap at $2.23/share (12-30-11) with no significant change in share structure (11/5/11).  Wow.  Truly amazing, how the market gives and takes away – the never ending battle between bulls and bears.

From the chart below, some of the loss was certainly correlated to weakness in the broader market in August, but for $SVNT, the losses continued into the new year.


Source: Yahoo! Finance

What happened? Slow sales for one. Recall that the full US launch for Krystexxa was near the end of February (2/25/11). If we give them a pass on March, and take a look at the subsequent six-months, during the second and third quarters, we see that uptake is slow: $1.091 MM in Kystexxa revenues 2Q11 Krystexxa, and $1.850 MM during 3Q11. I have no clue what analysts are projecting for 4Q11, but $SVNT will need to do much better.

One would assume fairly robust revenue projections prior to approval, but there are some disappointed investors out there and some analysts that need to re-visit their market models. If I put myself in their shoes and use 100 K as the number of treatment refractory gout patients (conservative?), I come up with a big number, $6 B, in fact, at peak sales. Just a 10% penetration rate would be $600 MM. Given, their slow launch, something is missing from a market adoption perspective.

Maybe the $60,000 annual price tag ($2,300/8 mg dose x 26 weeks) is too much, or the need to visit their doctors office every two weeks for a two hour infusion or the lack of a specific reimbursement code, or J-code, had something to do with lackluster sales…maybe it is just not a major improvement (see Benlysta, from $HGSI)

We know that going forward this year, reimbursement coding won’t be an issue. The company received approval for a specific J-Code for Krystexxa in November. Strange how struggling or marginal products generally cite the lack of a specific reimbursement codes as a hurdle for sales.

Of course, this was followed in December with the dreaded “Dear Healthcare Provider” Letter, which contained new guidance for use, suggesting the potential for some sort of adverse event profile when used in current patient management:

“In this letter, the Registrant recommends that oral urate-lowering medications be discontinued before a patient begins treatment with KRYSTEXXA, and that therapy with oral urate-lowering agents should not be instituted while the patient is taking KRYSTEXXA. It is important to note that during KYSTEXXA’s clinical studies, patients discontinued oral urate-lowering therapy before commencing treatment with KRSYTEXXA. While it is difficult to draw finite conclusions from post-marketing adverse events reporting rates, to date, the Registrant has not seen any unexpected rates of infusion reactions and/or anaphylaxis, which to date remain consistent with the labeling for KRYSTEXXA, and the Registrant continues to closely monitor these events. “

They closed at $2.48/share today, giving them a market cap of $176 MM. Assuming they burn another $40M during 4Q, cash is c. $160 MM at the end of 2011 ($240 MM cash 2Q11, $203 MM cash 3Q11). $2M 3Q sales annualized, yields $8M sales, suggests a 2x sales multiple for simplistic valuation ($160 MM cash + ($8 MM sales x 2 sales multiple) = $176 MM). Crude and doesn’t account for debt, growth, burn, etc.

Is there an opportunity here? It certainly doesn’t look like it at present.  Wonder what IMS data looks like, what docs think, and what the Street is modelling for the target population and penetration rates. While this looks cheap, I don’t think the little guy has an edge here. Leave it to the pros.

Alright, next. How did I spend so much text on $SVNT?

When we last looked at $RDEA, they were valued at  $636 MM (26.7 MM shares, 4/29/11 x $23.81/share, 6/10/11). While the company also took a hit in August, losing 30% of its value,  they were relatively stable through year end ($452 MM market cap = 26.9 MM shares (10/28/11) x $16.81/share on 12/30/11).

Progress. They initiated the first of four Phase III trials for lesinurad (12-19-11). According to clinicaltrials.com, we can expect primary efficacy data in January  2013 (looking for sUA < 6.0 mg/dL). Lucky for me, I still have time to review the Phase III clinical design and compare it to the Phase IIs and look for discordance. Still, has anyone find any data flaws so far?

With $123 MM cash at the end of September last year, they look in pretty good shape, though they did file a $150 MM shelf in Dec. Just out of curiosity, does anyone know what the cost per patient was during the Uloric (febuxostat) Phase III?

Could $RDEA hit the $1 B mark, like $SVNT?  If the Phase IIIs perform as well as the Phase IIs without safety issues, then there is a very good chance. Wish the share price is lower – doesn’t hit my arbitrary criteria of <$10/share for consideration.

Last, but not least, I forgot all about BioCryst’s ($BCRX) gout program, BCX-4208, as add-on therapy to xanthine oxidase inhibitors (e.g., allopurinol, febuxostat), on the original post. [Unfortunately, I still have memories of their influenza program and issue with needle length in “larger” patients.]  All in all, I think Adam Feuerstein has a good data review here. Follow-up data was released earlier this week, but it doesn’t change my view.

I do like the idea of “multiple shots on goal” for some types of companies, but I’m not so sure $BCRX should have their hands is so many different therapeutic areas: rheumatology (BCX-4208 in gout), infectious disease (peramivir in influenza), and oncology (forodesine in CTCL).

Thanks for stopping by, and see you next week for new goodies and Part III of the June updates. Will try to keep this shorter going forward!

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Kicking off the New Year – in June

Posted on January 6, 2012 by BioChef in Training
That was one fast December. It seems like just yesterday that I reviewed my November notes, and boom, here we are, at the end of the first week of January.

I expect to be back posting regularly…uh, maybe after the college bowl season! Three consecutive games with overtime takes its toll, followed by a doozy Wednesday  night, 70-33. In a BCS bowl game – how is that possible? (That’s for a different blog post!) Going forward, in the spirit of continuity, I hope to put up at least one post weekly. Egads, did I just make a resolution? Never liked them. Thinking about a new format too, but that might just have to wait a bit.

Let’s take a look at the six-month update for the first post in June. In it, I commented briefly about recently approved repurposed drugs and their lack of commercial success. For the most part, nothing has made me change my mind at year end, 2011. Between Nuedexta (quinidine/dextromethorphan; $AVNR), Vimovo (naproxen/esomeprazole; $POZN/$AZN), and Silenor (doxepin; $SOMX), my guess is that Nuedexta should have the best chance for success. Continued exposure and education of MS-docs on pseudobulbar affect is their best shot, but will require time, lots of it – will investors have the patience? Vimovo and Silenor both compete against cheap generics without any true safety or efficacy advantage, so they have an even bigger hill to climb. As a group, I am not a buyer today.

Raptor ($RPTP) continues to intrigue as they seek to improve the quality of life for nephropathic cystinosis patients and family members. When we last visited them in June, they had a  $187 MM market cap ($5.76/share (6/3/11) with 32,540,318 shares, 1Q11) and were awaiting critical Phase III data. At year end, they were trading at $6.26/share (12/30/11) with 47,153,503 shares (10/31/11), giving them a market cap of $295 MM – a whopping 9% gain in price/share. While they did report positive Phase III data for their lead asset, RP103 (delayed release (twice daily) cysteamine bitartrate or simply, DR cysteamine), in July – demonstrating non-inferiority to current standard of care, Cystagon (four times daily) – they were also victim to dilution in September when they raised capital: $42.89 MM net cash ($46 MM gross, 11.5 MM shares issued). Hopefully, if you bought for data, you also got out before the (expected) dilution occurred.

$RPTP does plan on NDA/MAA filings this quarter, so while the ensuing cascade of regulatory events: FDA and EMEA submission file acceptance, decision on priority review, and PDUFA can be viewed as catalysts, I am looking forward to their presentation next week at JP Morgan to learn more about NASH…and make sure they remain on track. While treating NASH is an important unmet need, partnering with the NIH, while minimizing burn, can only slow progress. Other questions: what will they do with tezampanel, and their peptide targeting agents? Convivia? At the right price, this could be a long term keeper.

From one extreme to another, we go from $RPTP with its positive Phase III data set, to Unigene ($UGNE), which reported not only a failed Phase III from their collaborators, Emisphere ($EMIS) and Novartis ($NVS; through Nordic Bioscience) for oral calcitonin in November, but also lukewarm Phase II data for their oral PTH program, once partnered with GSK.

However, if we go back earlier into the Fall and look, we can find some positive news.  One of $UGNE’s licensees, Tarsa, reported positive Phase III data for Ostora, an oral calcitonin asset that uses their delivery technology, and showed non-inferiority vs intranasal calcitonin. Tarsa expects to file an NDA this year; it is important to note that $UGNE owns a 20% stake in Tarsa and is eligible to receive sales-related milestone payments and royalties (single digits; my guess is low, 1-3%) on worldwide sales, so there is a bright spot here. Unfortunately, oral calcitonin will be competing with generic parenteral and intranasal calcitonin, so pricing, efficacy and safety are also important factors to consider for penetration and ramp. In addition, if I read the filing correctly, their supply agreement with $NVS for Miacalcin could be in jeopardy, if and when Ostora launches.

So, what happened? In June, we left $UGNE with a $97M market cap (92.5M shares (4/26/11) x $1.06/share (6/3/11)), and by year end, they had traded down to $0.53/share with a corresponding market capitalization of $50 MM (94,715,599 shares outstanding, 11/1/11). $UGNE plans on presenting at Biotech Showcase next week, so we‘ll get an update on its plans for 2012. Any new program they announce will likely have several years ahead of developmental uncertainty, so buying now would be a stretch unless you think someone will buy them for their technology and/or peptide manufacturing capabilities. Cool on this one.

This update took a bit longer than planned for today. I think it might be best to break the June updates into smaller bites, so that I feel like I am making progress! Next up, $SVNT and $RDEA, 6-months later.

And, just a quick thought: when did Pharmacyclics ($PCYC) get to be a $1B company? Yowsa – I better bone up on BTK; maybe check out @MaverickNY’s PharmaStrategyBlog for a refresher.

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Thoughts, six months later

Posted on November 21, 2011 by BioChef in Training

Whoa, what happened out in UC-Davis? Pepper spraying students protesting peacefully? Not right.

OK, back to some fun. A half-year. Six-months. 184 days. More grey hairs. This has been a fun experiment. Once a week (or so), I jot down a random thought and post it here. It has served as an online journal and a cheat sheet of sorts; sometimes with data, mostly without, to remind me of ideas that sounded interesting at the time.

I don’t get many reads, referrals or links, but that wasn’t the point. My goal wanted to keep an eye on the sector as life continues to plow forward. Today, I wanted to go back and review my thoughts – update the stories, and evaluate what I liked and didn’t like. So, before the short week expires and we hit the Thanksgiving festivities – a quick recap since May. If you want to look at the referenced post, just click on the link.

My very first musing was on AVEO ($AVEO), but having written something more about it in June, I’ll wait a bit longer before reviewing my comments.

The honor for the first update goes to Icagen ($ICGN), which had a remarkable change in fortune. Prior to data release, they were acquired by $PFE for $6/share, or $56 MM;  when I wrote about the company in May, they were trading at $2.72/share! Not bad for Phase I data. Their strategy made a lot of sense to me – selecting targets with known human genetic models. I hope to find another one like this.

I then decided to take a look at the stem cell place, in particular neural stem cells since I have a neuroscience background (yup, hard to believe isn’t it!)

StemCells ($STEM) initiated their Phase I/II trial in patients with chronic spinal cord injury in September, so we have hope, optimism, and a long way to data. They have traded down to the $2/share point.

NeuralStem ($CUR) is making steady progress with their Phase I ALS program and was granted permission to dose the final six patients in the cervical region of the spinal cord just a couple of weeks ago. The first 12 patients have been dosed in the lumbar region – so far, so good. No SAEs in these patients, as of data presentation at the American Neurological Association Meeting in September.

The London-listed ReNeuron ($RENE) is also chugging along, having been allowed to advance dose their 2nd cohort for disabled stroke patients. More to come on their interim results on the 28th.

Name Shares Outstanding (MM, as of) PPS
(11/18/11)		 Market Cap Cash
$STEM 13,879,893*
(8/2/11)		 $1.83 $25.4 MM $12.5 MM 3Q11
$CUR 48,486,304
(5/4/11)		 $1.1299 $54.8 MM $4.2 MM 3Q11
$RENE 486,506,803 MM
1Q11		 5.9 p GBP 28.6 MM GBP 9.7 MM 1Q11

* 1:10 Reverse split announced 7/1/11

So far, delivery of neural stem cells at the doses tested appear safe; unfortunately it is unclear what expectations are for efficacy. Taking a step back, we have recently discovered that the human embryonic stem cell (hESC) space was not as stable, with Geron ($GERN) pulling out to focus on oncology and at the same time shutting down their Phase I oligodendrocyte program in spinal cord injuries. More here.

On the next post, I highlighted three transitional stories from Oxigene ($OXGN), RXI ($RXII), and Allos ($ALTH). $OXGN announced restructuring plans in September to focus on earlier stage programs – we’ll have to wait to see what pans out. $ALTH had a merger opportunity with AMAG ($AMAG), but fell apart when AMAG shareholders voted management’s decision down and resulted in the CEO, Brian Perrera, departing – the company is now looking at strategic alternatives (code for sale to the highest bidder). There was a rumor that Spectrum ($SPPI) would be interested in $ALTH – keep an eye out, at the right price everything looks good. Why could it make sense? Simple. $ALTH markets Fotolyn (pralatexate) for relapsed/refractory peripheral T-cell lymphoma patients. $SPPI is a small oncology company already detailing Fusilev (levo-leucovorin) to medical oncologists, so why not put something else in their bag that they can sell? Granted, they would likely need to target a slightly different physician population in hematology-oncology, but not too far off. We’ll skip $RXII for now (see October’s RNAi post)

The next two posts introduced three small oncology firms, CytRx ($CYTR), Threshold ($THLD) and ZioPharm ($ZIOP).

With  $CYTR, I did not write anything useful about their current oncology pipeline, but they are developing INNO-206 for soft-tissue sarcoma, a cancer both $THLD and $ZIOP are also looking to treat. Hopefully, nobody invested in May or June – they diluted existing shareholders to raise $20.4 MM gross in July, and are now trading $0.38/share with a market cap of $55 MM, roughly 38% lower from May. I had planned on taking a closer look back then, but never got around to the process – at this valuation, I should tackle this soon.

The value of $THLD has not changed significantly over the past six months ($1.81/share on 5/20/11 when I posted vs $1.60/share on 11/18/11, a 12% loss) and we still expect controlled Phase II data in pancreatic cancer next month. This is the value driver for TH-302. If TH-302 fails in pancreatic cancer, then our next inflection point will be one year later (late 2012) when interim Phase III data in advanced soft tissue sarcoma is reached. What I don’t yet know, is how the probability of success will change in this indication if TH-302 fails or works in pancreatic. They are different types of cancers with different origins, growth rates and phenotypes. For example, can TH-302 be activated in a small, but fast growing tumor? How about a slow, but big tumor? At least, they are using overall survival as their primary endpoint.

On the other hand, $ZIOP share price has dropped roughly 31%, from $6.59/share when I looked at it, to $4.49/share, as of Friday’s close. Quickly scanning through their press releases, nothing strikes as being overly negative. Perhaps, others thought that $ZIOP was overvalued as well? I still have concerns with PFS as palifosfamide’s primary endpoint in advanced soft tissue sarcoma, and I am still working out how ZIN ATI-001 and/or ZIN CTI-001 (Adenovirus and cell-based regulated expression of IL-12) will fare. In recent years, we have had several gene therapy-based oncology failures from Introgen’s p53 expressing adenovirus to Genvec’s ($GNVC) TNF-alpha expressing adenovirus; going further back, $ONXX gave replication-conditional adenovirus a shot before betting on sorafenib. Different strategies, different tumor types, but all have ended in failure. $ZIOP has enough programs with multiple shots on goal, so it might be time to take a closer look at their financials, timelines, existing clinical data.

Looks like this has been my longest post to date. If you made it this far, thanks for stopping by. It has been fun and I have lots of thoughts to work on, so enjoy the short week, and hope to see you again. Feel free to comment and provide suggestions.

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Bittersweet hESCs, $GERN

Posted on November 15, 2011 by BioChef in Training
Bittersweet to see Geron ($GERN) drop their embryonic stem cell (ESC) program. On one hand, the science is pretty cool and much has been learned with $GERN leading the way. But, on the other, the bar for safety and efficacy is quite high for any biotech company to tackle independently. For better or worse, this currently leaves Advanced Cell Technology ($ACTC), a bulletin board company, as the only publicly-traded embryonic stem cell-based company in the game. [Recall that there are many different types of stem cells (I wrote about companies developing one type of stem cell, neural stem cells, previously), but human embryonic stem cells are truly pluripotent (able to continue dividing and become any cell in the body).]

You can learn more about $GERN’s decision to drop their hESC (human ESC) program, and read some opinions from these articles: Bloomberg, Forbes, theStreet.com, and from the Washington Post.

$GERN has spent hundreds of millions of investor dollars developing hESCs for therapeutic applications, and investors have happily handed over their capital to push stem cell research forward on a hope and dream. A wonderful dream, but a dream nonetheless, that will require more research, as well as selective targets and indications. In this regard, $ACTC may have selected a better target for their retinal pigment epithelial (RPE) cell-derived line for back of the eye diseases, such as macular degeneration.

hESC development has met and overcome numerous challenges over the years, from government funding challenges to FDA safety requirements, but with $GERN now exiting the field, who or what else will help push ESC therapies forward? We already know that it is costly from both a financial and time perspective – has it been more expensive than small molecule development? Given the risks, how long can/will any new investors wait before their investment can be harvested? Will we be looking towards Asia (Singapore, China) or Europe for breakthroughs, or can the public/private sector here in the US, tackle this dilemma?

Geron has 131.5 MM shares outstanding (10/24/11) and after a 23% correction on the stem cell news, the share price (intra-day, 11/15/11) is down to $1.69/share, giving them a market cap of c. $222 MM. They reported $180 MM cash in the bank (3Q11), and expect to end the year with $150 MM cash. As management shuts down the hESC program, they will be ramping up Phase II trials for GRN1005, so burn will likely not drop. If we assume a $80 MM burn rate (using OpEx guestimate as surrogate; $20 MM G&A + $60 MM R&D) going forward, $GERN is comfortable through YE12, roughly one-year’s cash. At this point, we should have a fair idea if our two candidates have legs, or if additional creativity will be needed to keep the company afloat. This is what we should expect over the next 12-18 months:

Data Expected*

 Three Months Ended September 30, 2011 Nine Months Ended September 30, 2011
Unaudited in (‘000s)
Oncology $10,073 $28,318
Imetelstat (GRN163L) Telomerase
Inhibitor		 Multiple trials including:
1. NSCLC
2. Breast
3. MM#
4. ET^

Phase II trials in progress

May 2012 Feb 2013 Dec 2012 Jan 2013
GRN1005 Peptide-
conjugated
paclitaxel		 Brain Metastases from Breast Cancer and NSCLC Phase II expected to start 4Q11 Before the end of 4Q12
hESC Therapies $6,272 $21,326
Oligodendrocyte Progenitor Cells Spinal Cord Injury Phase I Terminated
TOTAL $16,345 $49,644
Adapted from $GERN 3Q 10-Q;
* ClinicalTrials.gov
^ Multiple Myeloma
# Essential Thrombocytopenia
(Sorry, haven’t yet learned how to create/copy over a table yet)
The oncology programs are interesting, but I have not yet studied the existing data for both imetelstat and GRN1005, so I don’t yet have an opinion. Suffice it to say, that these are exploratory studies targeting a new pathway, so there are “unknown, unknowns” to reckon with for this analysis. To their credit, the ongoing imetelstat-telomerase Phase II trials appear to have control arms, so we should be able to get a handle on the data sets late next year.

I wonder what the odds are for $GERN to become the next $ONXX – if the data are good, of course.

If memory serves, they were spun out of Chiron in the early 90s. In their 1st 10-K filing (1997), their lead program was another novel therapeutic hypothesis: adenovirus-based gene therapy (ONXX-015/CI-1042) for treating cancer. But, by 2002-2003 they underwent a business realignment to develop BAY 43-9006, which we know today as Nexavar (sorafenib).

It is far too early to place bets on imetelsat as the next Nexavar, but this hope and dream may be able to deliver faster and cheaper than the hESCs. We will see.

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Don’t feel like chicken? ($NVAX)

Posted on November 12, 2011 by BioChef in Training
We wrap up an interesting week with thanks to all the veterans for their dedication and service. No where better to live than here in the US.

And an interesting week it has been. While earnings continue to be reported, we also had medical conferences that wrapped-up this week (AASLD, ACR), and conferences that will begin tomorrow (EORTC, AHA).

In between, we had break-ups, with $AMLN buying back rights from $LLY for exenatide and its successors for $1.6B, and hook-ups, an East-West alliance between Lundbeck and Otsuka in CNS. There were more job cuts with up to 1,500 now looking for new opportunities (involuntarily, of course), partially as a result of $TEVA’s acquisition of $CEPH, but no sign of increased hiring. We saw late-stage clinical trial failures, some surprising, such as a failed Phase 3 trial from $TRGT (they had good Phase 2 data, but from India….just saying…), and not so surprising Phase 3 failures, where $NABI showed convincingly that their vaccine for smoking cessation does not work (again). And today, Friday, Veterans’ Day, we had FDA regulatory news, whereby $ALIM/$PSDV Iluvien NDA’s received a CRL. Whew.

I was not long or short  in any of these names, nor was I interested in trying to trade around these events, though I am sure there were traders who had a fun time this week.

So, here we are, looking for opportunities currently under the radar. Perhaps, I just need a shot in the arm to stay focused and persistent.

Half of the family is now vaccinated for this year’s three flu strains (same as last year), and the rest will get their shots over the next couple of days.

The vaccines approved by the FDA are made in chicken eggs. But it got me thinking, what happened to the flu vaccines that were going to be made from newer technologies? Just a few years ago everyone was looking at alternatives to chicken egg-based manufacturing. Weren’t we concerned that if a pandemic flu hit, we could not be able to make vaccines fast enough or vaccines at all?

$NVS has made significant investments into vaccine production using mammalian cells, but they haven’t been approved for vaccine production in the US. $SNY took a different approach and went with scale to produce influenza vaccines in the US. Anyone know where they stand today on cell-based flu vaccines? Thought they gave back rights to cell-based influenza vaccines to Crucell (now a part of $JNJ), sometime last year.

But where are the little guys? They are generally great places to look for new and innovative technologies.

It’s probably still a bit early, but Novavax ($NVAX) is intriguing. Setting aside their slow progress over the past several years, if one looks simply at their virus-like particle (VLP) technology as a vaccine platform, it seems feasible.

To understand their platform, you should probably check out their website. Here is the 101 – and as always, please use at your own risk. Simply put, they engineer a virus (Baculovirus, or BAC) to produce the proteins used in our typical flu vaccine in insect cells (in contrast to $NVS’ use of mammalian cells). No big deal right?

They hope to make an impact in two ways. First, the vaccine we use today consists (mostly) of a single protein (hemagglutinin, HA) which has been purified and inactivated (denatured), so the body sees globs and blobs of this protein. In nature, the influenza virus exists as an ordered 3-D structure with multiple surface proteins (HA; neuroamidinase, NA) that poke through on the surface and with structural proteins (such as maxtrix, M1) hanging out closer to the base – all of  which can all be antigenic targets. The VLP is designed to look like the native influenza virus in 3-D structure, so that the body sees a “safe, non-flu causing look-alike” to build an immunity.

The second impact is production. Using insect cells and a disposable manufacturing process, they have the advantage of time. The claim is that they can make vaccine in 12 weeks versus the 20-24 weeks needed using chicken eggs, a significant time savings. If there is a crisis, or manufacturing hiccup, that 1-2 month advantage could be invaluable.

Downsides.  Of course, there are  – nothing is perfect. Thus far, it doesn’t look like we get significantly better serological response with the VLP, nor can we use a lower dose of product. From an efficacy standpoint, why bother? There are no apparent clinical advantages. From a regulatory standpoint, it is an entirely new process, so the bar for safety, especially for prophylactic vaccines and in particular, those used in children, will be significant.  On the other hand, they are looking to make a vaccines with four strains, so we could get more bang for the buck.

If all goes well, we won’t expect to see this new vaccine marketed until 2014-2015. There will be lots of time before we get to Phase III data, FDA approval, and the market…unless of course, we get another pandemic flu scare, and then all cards are off the table.  Luckily for the company, BARDA is paying for the vast majority of this program, so the overall costs to $NVAX is minimal. They can put their resources towards the development of their other programs, RSV and Foot and Mouth Disease (they do have a grant from the Department of Homeland Security, so most of their burn should be on RSV).

At last check, they closed at $1.50/share today. With roughly 115 MM shares outstanding, their market capitalization is c. $172 MM. They reported $19.6 MM cash 3Q11 and guided to a 1-yr runway. They will need to raise cash in the near future – we will need to keep an eye on RSV data and make sure that they stay on track with the influenza program. Being a thrift guy, I’d like to see this a bit cheaper before I buy shares for the long haul.

No position in $NVAX.

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No, not inhibited ($INHX)

Posted on November 5, 2011 by BioChef in Training

This why biotech is fun. Beginning yesterday and continuing through the weekend, many investors’ eyes will be focused on The Liver Meeting, being held in San Francisco, with the latest advances in liver disease being shared and discussed. The first salvo was released yesterday morning, when Inhibitex ($INHX) announced positive interim data on their lead asset INX-189 (briefly discussed here).  Investors who read their 3Q11 press release quickly unleashed a buying binge, which pushed the stock up to $8.54/share, a $650 MM market cap, at the close.  A 116% gain! Just think, my last post on $INHX was just two months ago, when it was trading with a $275 MM market cap. Today, the company’s fortune has changed significantly.

When we left the story, the company was testing a higher dose of INX-189 in HCV GT1 patients. The existing data had suggested that the 100 mg QD was safe and efficacious, but that there was room for improvement. This expectation for improved efficacy, or as a potential competitor to Pharmasset ($VRUS), is likely why some investors continued to hold and/or place their bets.

Generally speaking, during dose escalation studies, as the dose increases, efficacy typically increases as well, until it hits a wall. Makes sense, right?

While we should not compare data expressed as median with mean, and I don’t have the median numbers readily available for IDX-184 and VRUS-7977, the median HCV RNA reduction observed with INX-189 was robust (see table below) and can be viewed as a worthy competitor to $VRUS. The other looming issue would have been safety and at the 200 mg there did not appear to be any serious adverse events (SAEs).

Drug, dose

Mean HCV RNA reduction (log10 IU/ml), 3 days monotherapy

Mean HCV RNA reduction (log10 IU/ml), 7 days monotherapy

Median HCV RNA reduction (log10 IU/ml), 7 days monotherapy
$INHX INX-189,
100 mg QD

-1.53

-2.33

-2.53
$INHX INX-189,
200 mg QD*		    

-4.25*
$IDIX IDX-184,
100 mg QD

-0.74

No data

  
$VRUS PSI-7977,
400 mg QD

-3.65

-4.69

  

* Press release, 11/4/11; sorry, need to work on table formatting

No doubt, $INHX stil has a long road ahead, but the race for the first all-oral HCV regimen is on.

I stand by my comments on rushing into GT2/3 patients, as I would rather take the 200 mg dose into patients. However, given that drug is development is a race, calculated risks are part of the game. We know that 1) GT2/3 patient are easier to treat, 2) direct acting anti-viral agents (DAAs) should work across multiple genotypes, and 3) $VRUS is laying a path forward for the rest to follow.

Is it too soon to wonder if the recent success of $VRUS, and now $INHX, could create another warehousing effect, whereby patients who can, will wait a few years for a new, better therapy before starting treatment.

Perhaps, we should simply just enjoy this data for now (and not forget about $MDVN’s recent success with MDV-3100).

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