Biotech catch-phrases? ($LXRX, $INFI, $ALNY)

Posted on October 29, 2011 by BioChef in Training

Feeling a bit silly again. Hard not to during earnings season, right?

I was just thinking – why do people seem to complain about the cost of healthcare. There’s rarely extra money for useful things like like prescription drugs, hospitals, health insurance premiums and the like, but there is always room for daily $4 coffees and $300 iPhones…without the service plan.

We wake up, grab our coffee at Dunkin’ Donuts, because “America Runs on Dunkin,” turn on our Macs/iPads because we like to believe we “Think Different,” and open a browser to the NY Times, where “All the News That’s Fit to Print” lives.

Why not get development stage biotech companies with cool platforms into the game and introduce folks to the the next greatest cure-all?

Let’s take a quick look through two platform companies that used a slogan to show how cool they were/are. I’m sure there are more, but these are the ones I remember.

Lexicon Genetics ($LXRX) spent hundreds of millions of dollars to develop transgenic mouse knock-out models as a way to identify drugable pathways. Once they found some cool targets, they initiated their 10TO10 program back in January 2007, and confidently announced that “With two investigational new drugs already in clinical trials and two more INDs to be filed this year, we believe we are well on our way to achieving our goal of ten drug candidates in human clinical trials by 2010.”

At that point, everything looked good, with two assets in Phase I: LX6171 for treating cognitive impairment, as found in disease such as Alzheimer’s, schizophrenia or vascular dementia, and LX1031, that was being developed for irritable bowel syndrome and other gastrointestinal disorders. They had also promised that in the second half of 2007, they would be filing IND applications for LX2931 for rheumatoid arthritis and LX1032 for gastrointestinal disorders.

When 2008 rolled around they had indeed make good on the four programs highlighted, leaving them with six assets to get into the clinics by 2010.  Sounds do-able, get 3 INDs approved in 2008 and in 2009, and goal achieved!

How did they fare in 2008? Not so hot as their 4Q08 press release revealed:

“In 2008, the company made significant progress in moving multiple drug development programs forward,” said Dr. Arthur T. Sands, president and chief executive officer of Lexicon.  “As part of our focus on the development of our pipeline, we streamlined operations and concentrated our resources on our most promising programs.  We look forward to reporting data from several of our programs as they progress through clinical trials this year for irritable bowel syndrome, carcinoid syndrome, rheumatoid arthritis, and diabetes.”

Of course they still managed to spend $100 MM in 2008 as part of their streamlining process. Not too hot. Their 10TO10 program lasted one entire year. Today, they are still developing a handful of compounds and spending close to $100 MM annually.

Drats. That experiment failed. It must have been due solely on those bad banks, right?

Let’s go beyond the crash of 2008 and look at Infinity Pharmaceuticals ($INFI)? They announced their I4 2012 (“Eye for 2012”) objectives in January 2009, also with confidence as they entered the new year:

“Begins 2009 With Four Years of Capital, Three Clinical Candidates  in Development, Two New INDs, and One Pivotal Trial” – sounds like a great way to kick off 2009, especially after a pretty brutal 4Q08.

Here are the I4 2012 claims:

“The four major strategic achievements that will distinguish Infinity by 2012:

* At least one marketed oncology product, commercialized by Infinity in the U.S.
* Three oncology product candidates in global pivotal trials
* Five or more product candidates in clinical development
* A strong financial profile and exceptional value-creation”

Just a couple of months later, in their 1Q09 press release, there was no additional mention of I4 2012 initiative. Bummer. Of course, having a Phase 3 program terminated doesn’t help one’s cause.

As we approach the end of 2011, where does $INFI stand?

* At least one marketed oncology product, commercialized by Infinity in the U.S. → NOPE
* Three oncology product candidates in global pivotal trials → NOPE
* Five or more product candidates in clinical development  → NOPE
* A strong financial profile and exceptional value-creation → Give them credit here for their partnerships and R&D based funding

Oops, strike two.

There is no sure thing in  science, and publicly-traded biotech companies are even more at risk. Maybe it is not such a good thing to advertise for success.

I’ve got my fingers crossed for Alnylam’s ($ALNY) 5×15 program, which promises that “By 2015, the company expects to have five RNAi therapeutic programs in advanced clinical development…with ALN-TTR (for the treatment of transthyretin-mediated amyloidosis (ATTR), for the treatment of hypercholesterolemia, and for the treatment of refractory anemia…”

Looks like they are off to a good start.

Maybe we’ll get one right, finally. Maybe.

Posted in Random | Tagged , , , , , , , , , | Leave a comment

Hey, Aaabbooott! ($ABT and Costello; silly)

Posted on October 25, 2011 by BioChef in Training

With Abbott ($ABT) spinning off its pharmaceutical division, I’m looking forward to see what the clever marketing folks come up with as the new name for the Humira heavy entity. Back in 2004, they split off their hospital-based business and called it Hospira ($HSP). Not super-original – guessing that “Hospitalia” didn’t make muster (doesn’t that just sound wrong?) – nor tremendously value generating, if you never sold your shares: $HSP closed at $27.04 on May 3, 2004, and $30.65 yesterday. Wonder if any (mutual) funds are have held on to $HSP from the beginning.

Yes, a lot of crazy macro-economic factors have played into that valuation, but acute and hospital sales based Cubist ($CBST) and speciality pharma Shire ($SHPGY) seemed to have fared well over the same time period. And, of course, I cherry-picked the names, but why compare against the weak?

Source: Yahoo! Finance, 10/25/11

The reason for this (silly) post, is to lend support and/or propose a name for the new entity – I’m sure people joked about it back in 2004 and perhaps, it continues to be fodder today – but, I like “Costello” Pharmaceuticals. Why not? We have the conservative, staid businesses of branded generics, devices, diagnostics, and nutritionals in Abbott, the straight-faced half of our infamous Abbott & Costello duo, and the unpredictable pharma business in Costello, the lovable, unpredictable half of the team.

Wouldn’t it be great if “Costello” could shout out “Heeyyyy….Aaaaboottt” at some point during an investor call, or have someone compare the two companies in seven years’ time and think, “Who’s (on) First?”.

I say, c’mon, let’s make it fun for those who enjoy following the biopharma world! It sure beats trying to figure out the rest of October’s “A-list” and make sense of Roche’s interest (by valuation) in Anadys ($ANDS) and $CBST’s acquistion of Adolor ($ADLR; though to be fair, I can see some value there with Entereg). Now, if only Spectrum ($SPPI) would only step up and acquire Allos ($ALTH), we could start the “B’s” in November…or, perhaps, the “C’s”.

Here’s to emailing (does he Tweet?) Richard Gonzales and voicing support for Costello Pharmaceuticals.

Posted in Random | Tagged , , , , , , , , , , , , , , , , , , , | Leave a comment

No respect for RNAi ($RXII)

Posted on October 7, 2011 by BioChef in Training
RNAi must feel like Rodney Dangerfield – it gets no respect. Back in 1998, RNAi was hot. It was so hot that just 8 years later, Andrew Fire and Craig Mello, received the Nobel Prize in Physiology or Medicine for their work. Today, you will have a hard time finding investors willing to put their hard-earned dollars into these companies.

To rub a bit of salt into the wound, RXI ($RXII), originally an RNAi-based therapeutics company founded in part by Dr. Mello, has been passed around and recently dropped by its Board for the new, hot co-ed in therapeutics, immunotherapy (see sipuleucel-T and ipilimumab).

Taking a quick step back, this is how the story unfolds: at the end of March, the company announced “RXi Pharmaceuticals Aggressively Moves into Late-Stage Clinical Development with the Agreement to Acquire Apthera, Inc.” This was an interesting move, but we can assume that the Board recognized the challenges with RNAi therapeutics and in the spirit of creating shareholder value brought in a late-stage asset to get them into the clinics – why this particular asset? That’s another story. A short 6-months later, they announced “RXI Pharmaceuticals to Strengthen Strategic Focus by Separating into Two Publicly Traded Companies”. So, exactly, who acquired whom? Who got ditched?

Hmm…I wonder if the March investors knew that they were going to be shareholders of an immunotherapy company.

Given how this story has developed, it would have been fun as a fly on the wall to see/hear how this strategy evolved from the Board: 1) $RXII acquires Apthera/Galena for a Phase III ready asset, with the concurrent departure of its CEO; and 2) Apthera/Galena sends RXI off to fend for itself as a separate entity, with the current CEO staying to run Apthera/Galena. If I were RXI, I’d feel like a cheap, used date, but I guess that’s the way it goes sometimes.

Some fun questions to ask: Which Board member(s) pushed for this immunotherapy asset? Did they plan to drop RNAi from the beginning? Why not do this in one simple stroke? If NeuVax was so compelling, how did a small biotech company with no experience in immunotherapy get it without cash upfront? and without any competition – were they the only suitor? If you are going to wait 3-5 years for data, why not stick with RNAi? Will anyone from old $RXII/Galena will stay with RXI? Does Board member Steve Kriegsman finally do the inevitable, and really drop RXI for good – first from CytRx and now with Apthera/Galena? Oh well, the deed has been done.

On the flip side, the new RXI will be 83% owned by two well-known biotech investors, Kevin Tang and Rod Wong (who had previously managed Davidson-Kempner’s healthcare portfolio) – Galena will retain 12% ownership and Advirna (CSO’s company) will own 5%. The company will be capitalized with $9.5 MM to get their anti-fibrotic program to an inflection point (simply, my assumption). Not a bad start, given that $RXII reported $11.1 MM cash 1Q11, from which $7.3 MM (net) was raised March 1. I wonder how much enterprise value other investors will give them? I haven’t thought this through yet, but at this point, does it makes more sense for them to go private – save some money, stay out of the limelight?

Do they have enough cash to create some value? Probably, but they’ll need to raise more if they want to keep going. In 2010, the company spent roughly $6 MM on R&D and $5.5 MM on G&A, but that was before they trimmed their staff by ⅔ (from 32, 1Q11) with their new strategy. Assuming they save about $2 MM in salary, that leaves them with $7.5 MM to run the business. This means, they can conduct some research, complete their GMP toxicology studies, file and run a Phase I trial and pay the bills to keep the lights on. Certainly do-able, but I suspect any new investors would wait for data, maybe by YE12 or early 2013, at which point, they could be low on cash. I guess, we could simply view this as a single shot on goal. If it works, great, if not, we still have the ALS program with UMass. I’m certainly looking forward to see what their Phase I trial will look like and if they can generate clinically useful data.

In any case, RXI and RNAi has seen better days – just ask $ALNY, $MRNA, $SLN.L, TKM.TO, Quark (pulled IPO in September).

No position in any company mentioned.

Posted in How did that happen?, I don't get it, Why did they do that? | Tagged , , , , , , , , , , , , , , , , , , | 1 Comment

$MYRX, running down a dream

Posted on September 14, 2011 by BioChef in Training

What should you do when biotech companies trade below cash and have early stage assets in development? While each case is unique (e.g. did it crash after a failed trial or did investors not approve of a reverse merge into a cash-rich shell), I sometimes wonder, what should a company do when this happens. If the cash/share is worth more than its current price, should you simply close shop, give the cash back to shareholders, and find new investors to take the existing projects forward?  Could you buy-back shares, take the company private, and continue development without the external burden of public pressures? Or, perhaps, the company should simply continue to push forward and try to create greater value by continuing development? There is probably a fun analysis in there somewhere and I have no idea what the answer is, but perhaps the discussion has already begun. There was a article in July’s In Vivo, entitled “How to create a lasting peace between biotech management, shareholders, and employees,” that may have already touched upon this. I don’t have access to the article and have no insight to the context, so if you have a PDF, please forward!

What got me curious in this scenario was Myrexis ($MYRX) and why someone would own the stock now. They have a $74 MM market cap (25.8 MM shares outstanding, 5/4/11 x $2.86/share, 9/13/11) with $116 MM in the bank at the end of June. This gives them a negative $42 MM enterprise value (EV = market cap + debt – cash), or $4.50/share in cash, which is a 57% premium to their existing  price.

Their cash burn was $34 MM during their fiscal year ending June 2011, and management has guided to a lower cash burn during the June 2012 fiscal year.  They had guided to $7.2 MM in cost savings on their March 29 reorganization announcement and had expected to spend $12 – 13 MM on their Azixa – GBM program (Rodman Conference), which they suspended last week during their quarterly results. Management has indicated that as they ramp up development of their lead asset (MPC-0767) and pre-clinical programs, there will be increased costs as well. If we are really conservative and assume just $10 MM in savings, it reduces burn to $24 MM, or $2 MM per month over the next fiscal year.

Program wise, they have one program in clinical development, MPC-3100, a daily, orally-available HSP90 inhibitor that is not based on geldanamycin, for solid tumors, and two preclinical programs, one of which is expected to enter clinical trials during calendar 2012. They expect to present Phase I data 4Q11 (perhaps in November at EORTC;  trial started back in April 2009), which should be positive (effect on tumor) and hopefully comparable to (or better than) SNTA’s ganetespib (STA-9090). As mentioned above, they plan to take MPC-0767, a pro-drug of MPC-3100, forward into clinical trials for solubility and formulation advantages, and will likely need to first run a small trial to show equivalence. By the end of 2012, assuming $2 MM/month burn, they should have $104 MM cash, or a little over $4/share, plus, Phase I tumor response data. It will be interesting to see where investor’s take the stock.

So, here we have a company that was spun out of Myriad Genentics ($MYGN) to develop therapeutics, and has recently discontinued their most advanced program to focus on earlier stage compounds, Depending on the data, one would expect $MYRX to get some credit for MPC-3100 in November if the data show signs of efficacy and safety. Unfortunately, 2012 does looks to be slow, with respect to data, as they look to transition from MPC-3100 to MPC-0767, and get two pre-clinical assets into the clinic.  We are unlikely to see any additional data until 2013, after they burn through more cash.

If we think about analogs, Synta ($SNTA) comes to mind. When their lead compound elesclomal was suspended in Stage IV metastatic melanoma in 2009, their value dropped to $46 MM (33.9 M shares outstanding, 11/7/08 x $1.36/share, 2/27/09), but they had $89 MM cash at the end of 2008. This gave them an EV of roughly negative $44 MM with a HSP90 inhibitor (STA-9090, ganetespib; a once or twice weekly infusion) in pre-clinical development – interesting coincidence in targets. By the time they initiated a P1/2 trial just a few weeks later, they were worth $68 MM, comparable to where $MYRX stands today, with pending Phase I data. As of 9/13/11, $SNTA was worth $189 MM (49.5 MM shares outstanding, 7/29/11 x $3.81/share), with their valuation fluctuating between $100-260 MM,  since they announced positive Phase II data in NSCLC.

MPC-3100/MPC-0767 does have the advantage of being an oral formulation over ganetespib’s infusion, but it is at least two years behind. We do not yet know about MPC-3100’s efficacy profile, but one would expect that the $MYRX must have some confidence in the data to drop their only other clinical compound, Azixa. We do know that HSP90 has been an active target of interest for partnerships (see $KOSN and $INFI), but does not mean anything today.

While $MYRX trades below cash, it doesn’t scream buy right now – they will need to continue spending cash to drive towards data, , so I think I’ll just follow along until the picture clears up a bit. I’ll be looking for gradual clinical progress and a greater control on burn rate.

Posted in Uncategorized | Tagged , , , , , , , , , , , , , , , , | Leave a comment

Brain fart with $TELK

Posted on September 9, 2011 by BioChef in Training

What the heck was I thinking last year? $TELK? (palm to face) No thinking at all obviously. There was no fundamental reason for putting any money into $TELK. Of course, I could try to convince myself that it was undervalued and that it would run into data, but that would be irrational; perhaps, I can call a gimme and simply claim, brain fart. But, not more than one per year! At least it wasn’t a total loss. I bought shares at roughly $0.70/share during 3Q10 (which was after interim Phase II data (see below) was announced – an even sillier move, given the data) and (luckily) sold most (slap to cheek) at $1.00/share in February. Why, most, but not all? What was I clinging to? No idea, especially with the stock trading at $0.31/share at the close yesterday (9/8/11).

I fell off the boat on this one, so I will try reverse engineering a potential rationale for foolishly placing this bet. What did the company look like one year ago? At the end of 2Q10, $TELK had a market cap of $42 MM (53.5 MM shares outstanding (4/30/10, 7/30/10 10Qs) x $0.78/share, 6/30/10). They had $30.8M cash in the bank and were burning roughly $10 MM/Q, with management guiding cash through YE11. Not a good sign, as they would need to raise cash and dilute any current investor.

OK, let’s look at their assets – they had two in clinical development: Telcyta, which had already failed in Phase III trials, and Telintra, a small molecule glutathione analog inhibitor of glutathione S-transferase P1-1, with interim Phase II data released in June. Telintra was being developed for the treatment of blood disorders associated with low blood cell levels, such as neutropenia or anemia, and had selected myelodysplastic syndromes (MDS) as their first indication. Barring some crazy partnership for Telcyta to continue development, all eyes were/should have been on Telintra.

Thinking about the “joy” of interim data, I guess one could have hoped for a run into final Telintra Phase II data at ASH, but in retrospect, the interim data from June was simply not very exciting. And the final data confirmed this; to my eye, the data did not appear much better than Vidaza or Dacogen, when we look at “improved” response, not overall response.

Not a lot of positives above, but, could we have expected something over the following year? Well, they initiated a Phase II trial in Severe Chronic Neutropenia (SCN) pts during 2Q10 and during 4Q09, they initiated a 30-patient Phase I dose-ranging study in combination with Revlimid (lenalidomide) in patients with MDS. Not a pretty sight for one’s confidence going forward either.

At the end of 2Q11, $TELK still had a $42 MM market cap (54.0 MM shares outstanding (7/31/11) x $0.78/share, 6/30/11; a bit misleading, just pull up their chart). They reported $17.1M cash 2Q11, and burned $6-7 MM over the past 6-months; cash guidance is until 3Q12. $TELK had not yet raised cash, but was able to extend their runway by cutting operating expenses. Compared to 2010, they are now in a more precarious situation.

What about clinical progress? The Telintra Phase II trial in SCN patients was terminated 2Q11 due to a lack of patients. $TELK does expects data from the Phase I dose-ranging study in combination with Revlimid (lenalidomide) in patients with non 5q-deletion MDS by YE11. This is now our value driving event….P1 combination data.

During 2Q11, they also initiated a Phase II trial to evaluate Telintra in patients with lenalidomide refractory or resistant, deletion 5q myelodysplastic syndrome, or del 5q MDS, though according to ClinicalTrials.gov, the study is not yet open for enrollment.  Suffice it to say that they are testing a hypothesis based on a total of four patients from their previous Phase II trial in MDS patients and that our first look at the interim data analysis will not occur until early 2013.

Today, $TELK has a market cap of just $16.7 MM, at $0.31/share (9/8/11). Like many small biotechs, $TELK faces several challenges going forward. Most pressing is the need to raise capital, but at the current valuation, they will need to do it in tranches and tie them to the achievement of certain milestones. All this rides on the back of Phase I dose-ranging data. This is an ugly story. A brain fart – indeed.

What to expect:

10-18-11: Need to comply with NASDAQ listing requirement
YE11: Telintra, Phase I dose-ranging data in combination with Revlimid, non-deletion 5q low-to-intermediate risk MDS pts
YE12: Complete enrollment in an investigator sponsored trial with Telcyta in refractory mantle cell lymphoma pts
early13: Telintra, 1st Phase II interim analysis, Revlimid refractory/resistant pts; trial initiated Jun11, but has yet to enroll pts

Posted in What did I do - lessons | Tagged , , , , , , , , | Leave a comment

$INHX, inhibited?

Posted on September 1, 2011 by BioChef in Training

So, what do you do if you want to get some exposure in the hot HCV space? A space where competition is steep and filled with big-time players such as Roche, JNJ (Tibotec), Bristol-Myers, Merck, Boehringer, and even Pharmasset at roughly $132/share (8/31/11; closer to $66 after the two-for one forward split, but still a ~ $5 B company)?

For the simple person (ahem, someone like me), who desires greater upside at value pricing, you have to look at smaller, riskier names, such as Idenix ($IDIX), briefly discussed the other day (found here). Another player here is Inhibitex ($INHX), who is also going after the NS5b HCV target.

Like $IDIX, $INHX is also developing a small molecule, guanasine-based, nucleoside-analog targeting the NS5b polymerase, but is a bit behind in its clinical development. On the flip side, $INHX also has a Phase IIb program (FV-100) in the works for treating shingles pain, which is caused by the chicken pox virus, varicella zoster virus (VZV). While I’m not sure how this asset will ultimately be developed for approval, it does show that $INHX has the in-house expertise for developing chain-terminating anti-virals. Of course, there are other small companies developing HCV therapies, such as $ACHN, which has a pan-genotypic protease inhibitor, and $ANDS, which is testing a NS5b non-nuc inhibitor, and I hope to post those at some time.
Chart forInhibitex Inc. (INHX)
Source: Yahoo! Finance, 9/1/11

The 1-yr chart for $INHX generally looks pretty good for a biotech company, growing from $1.42/share on 8/31/10 to $3.41/share today (8/31/11), and even better if one goes back to their post-Lehman low of $0.20/share in 2008 (11/13/08). What happened in the past year to create value? Two data points.

The first data point was a short-term bump in value when, “promising top-line results from Phase II trial” of FV-100 were released December 2010. A bump because, to my eye, the data showed no efficacy advantage over current standard of care, valacyclovir, but has advantages with respect to dose, 200-400 mg versus 3000 mg daily, and schedule, once daily versus three times daily. They are currently chatting with the FDA on a Phase IIb design that could support an indication for the reduction of shingles-associated pain and/or incidence of PHN. I’ll have to look over the full data (has it been presented?) set at some point down the line, but hope that they just find a partner take over the program in order to focus on HCV.

The second data point has been better able to sustain value and was announced in April when they presented 7 day INX-189 P1b single agent data in HCV GT1 patients at EASL. When stacked up against their peers, this is what the data look like:

(Hmm…my table did not transfer. Not sure how to create a table here).

Mean HCV RNA reduction (log10 IU/ml), 3  or 7 days monotherapy

$INHX – INX-189, 100 mg QD
-1.53     3 days monotherapy
-2.33    7 days monotherapy

$IDIX – IDX-184, 100 mg QD
-0.74     3 days monotherapy
n/a        7 days monotherapy

$VRUS – PSI-7977, 400 mg QD
-3.65     3 days monotherapy
-4.69     7 days monotherapy

After 3 days of monotherapy, INX-189 looks better than IDX-184, but not as good as PSI-7977. After 7 days of treatment, PSI-7977 remains the leader, though we do not have IDX-184 data for a comparison. While PSI-7977 has not been discussed here, presentations of their data can be found on their website. PSI-7977 does appear to be the undisputed leader at present, with 12-wk exposure data in combination with pegylated interferon/ribavirin, robust and sustained efficacy in patients, as well as activity across multiple genotypes, GT1, 2, and 3.

INX-189 monotherapy data is promising, but does require additional study. For instance, they have not reached the maximum dose – it is not known if doses greater than 100 mg could have resulted in increased viral load reduction. Safety and efficacy of triple therapy (combination with standard of care, pegylated interferon/ribavirin) at any time point is not known; are there changes in viral kinetics? As an example, IDX-184 had the least impact on viral load after 3-days of monotherapy; however, after 14-day triple therapy, viral load was reduced by -4.2 log. As we add in standard of care, we are also entering uncharted territory from a safety and tolerability perspective.

To me, the development process feels a bit rushed. $INHX initiated a 12-wk Phase II trial in GT2/3 HCV patients mid-August, with only 7d monotherapy data, and expects to get interim RVR (after 4-wks of dosing) data 1Q12. (It is too bad they decided not to test a higher dose cohort during the trial.) This will be our first look at safety and efficacy in triple combination therapy. The magnitude of viral load reduction will be important for competitive reasons, but given the limited patient exposures, safety and tolerabiliity will be on the top of my list – let’s hope we see no difference with standard of care. Thus far, IDX-184 (through 14 days) and PSI-7977 (through 12 wks) look safe and tolerable.

Using $IDIX as reference, can I estimate what $INHX should be worth today, without building an rNPV model? $INHX currently has a market cap of $275 MM ($3.51/share, 9/1/11 x 78.2 MM shares outstanding, 2Q 10Q 8/4/11) versus $IDIX, whose market cap is $534 MM ($5.55/share, 9/1/11 x 96.2 MM shares, 2Q 10Q 7/22/11).

Prior to the IDX-184 clinical hold AND 14-day data presentation, $INHX was worth c.$437 MM, with 3-day HCV data (and potentially value attributed to their partnered HIV program). As they made progress in the clinic and along the regulatory front, they traded between $200-300 MM. It certainly feels like $INHX is getting the benefit of doubt for safety and efficacy; perhaps that’s what you get for riding the $VRUS train. I’m not a buyer here and will see how IDX-184 interim data fares later this year; I’d also like to see how any back-up compounds are proceeding in the lab.

No current positions in $INHX, $IDIX.

Posted in Research | Tagged , , , , , , , , , , , , , | 2 Comments

No, I didn’t. Yes, $IDIX.

Posted on August 29, 2011 by BioChef in Training

A little late to the story, but what a ride for $IDIX over the course of the year.

Chart forIdenix Pharmaceuticals Inc. (IDIX)

Source: Yahoo! Finance, 08-29-11

About this time last year, $IDIX was a $437 MM market cap company (c.73M shares outstanding x $5.99/share, 9/3/10) cruising along developing their lead asset, IDX-184, a liver-targeted guanasine-based pro-drug for HCV. What makes the story interesting is that they hit a bump in the road in September, when IDX-184 was placed on clinical hold, dropping its value 47% to $232 MM ($3.18/share, 9/7/10), and then continued to slowly erode over the next week or so, reaching a low of $198 MM ($2.72/share, 9/16/10).

Lucky (?) for shareholders, AASLD Liver Meeting abstracts were released just a couple of weeks later (10/1/10), and they were given an oral presentation to discuss 14-day combination data of IDX-184 + pegylated interferon/ribavirin. This allowed the stock to regain some of its value, reaching $306 MM ($4.20/share, 11/1/10) after the data was presented. The rise in market cap is somewhat misleading, in that value appears to have been been priced into the stock (since mid-Oct) and no additional gain was observed after the data were presented.

It is likely that without the clinical hold, additional value could have been created with the data set. So, what happened? The clinical hold was a result of a 14-day drug-drug interaction (DDI) study with IDX-320, a HCV protease inhibitor (now discontinued), where three serious adverse events (SAEs) of elevated liver function tests were reported while on study, but not on treatment. The SAEs were ultimately attributed to IDX-320, and not to IDX-184, but this still needs to be confirmed. I wonder if the combo trial was the smartest thing to do first, given that they had only recently begun a 3-day single agent Phase I/II trial with IDX-320.

Without diving into the 14-day combination data with IDX-184 + pegylated interferon/ribavirin, suffice it to say that the data presented appeared favorable and showed a 4-log mean reduction in HCV RNA and with up to 50% of the subjects achieving undetectable viral load when dosed with 100 mg IDX-184 QD. While viral load reduction was fairly consistent through 200 mg QD, the percentage of patients with undetectable HCV was just 25% at the higher dose – I would have liked to have seen 50%. Overall, the data was comparable to $VRUS PSI-7977, the cool kid on the block. IDX-184 also appeared safe and tolerable with an adverse event profile comparable to placebo. A potentially promising asset for someone who might lose out on PSI-7977.

The clinical hold was lifted in February this year, but the stock (surprisingly) lost value, losing about $75M in market cap (from $293 MM at $4.01/share on 2/9/11 to $219 MM at $3.00/share after the news on 2/10/11). While losing value on relatively positive news is a bit surprising, I guess the bad news of a clinical hold being placed on an out-licensed HIV program, announced at the same time, held more weight with investors.  In retrospect, if one believed in the 14-day data, news of the clinical hold being lifted to a partial hold, could have been a good time to buy some shares.  You know the phrase, the one about hindsight…

So at the end of the first quarter 2011, where did we stand? Positive clinical data for efficacy and safety. CHECK. Regulatory. CHECK. Funding. Uh-oh. At the end of 1Q11, they reported a cash balance of $31 MM, and with company’s cash burn of close to $20 MM/Q prior to the clinical hold, they needed to raise cash. And wouldn’t you know it, some smart investors believed in the data and financed the company with an additional $60 MM in April to give them $78M cash, as reported on their 2Q filing.

$IDIX is currently running a 100-pt Phase IIb trial in combination with pegylated interferon/ribavirin, with an interim analysis to be held after the first 30-pts have been treated for 28d, which is also a nice time point for RVR. More details about the clinical trial can be found here. Interim data is expected by year end, so we should get a sense for 4-wk efficacy and just at important, safety.

Two things do bother me about the trial. First, they are going straight into a 12-wk treatment course, skipping a trial testing the 4-wk treatment paradigm. You would have thought that after the 14-day DDI experience, they would have a bit more patience. Second, in their June presentation at the Jefferies conference, they presented an amended protocol, whereby some eRVR+ patients (those with undetectable HCV at wks 4 and 12) can continue on pegylated interferon/ribavirin under certain conditions. Just a few weeks earlier in their May presentation at the Bank of America conference, as long as eRVR was established after 12-wks, and following an additional 12-wks of pegylated interferon/ribavirin, patients were allowed to come off treatment and be followed for SVR. The protocol changes make sense, given their lack of 4-wk data, but amendments mid-stream always makes me more cautious.

I am also curious as to what $NVS do with their 35% $IDIX stake. They have already declined an opt-in to IDX-184 and are developing DEB025, a cyclophilin inhibitor, which was in-licensed from Debiopharm. Could they consider combining the two? Does it make sense to combine the two?

At the close today (8/29/11), $IDIX was priced at $6.05/share with c.96M shares outstanding, a $581 MM market cap. With a bit of dilution and 14-day data, $IDIX has created close to $144 MM in value.  If data are good at year end, could we have the early beginnings of another $VRUS?

No position in $IDIX.

Posted in Research | Tagged , , , , , , , , , , | 1 Comment

Value in Pharma’s Toss-Offs?

Posted on August 24, 2011 by BioChef in Training

Dear BioChef…it has been several weeks since my last post with the intervening time filled with excitement, betrayal, and reflection.

OK, that was a little therapeutic, and today is a new day.

No posts about any specific stock(s) today, not even after news of $UTHR’s Phase III FREEDOM C(2) trial missing its primary endpoint (again) and desire to file – surprise!

While many things can and have been said about biopharm and the drug development process: blockbuster drugs and pharma’s patent cliffs, billion dollar molecules and annual price-tags of $400,000 per patient, the challenges of drug reimbursement and health care reform, sales/marketing driven management teams vs research/development-driven management teams – what I am thinking about today is a Chorus of companies, spun-out or out-licensed from BioPharm, as a result of their need to “focus”.

Shouldn’t there be some seeds of innovation being planted today that might be ripe for picking a few years from now?

If pharma is down-sizing, becoming “more efficient” and focusing on “core therapeutic areas,” then there should be to be a pretty rich group of assets that could be out-licensed. Of course, the interesting assets are those programs that have demonstrated some signs for clinical success, has targeted a novel pathway or indication, or perhaps has robust biomarker data. If we add-in a talent-pool of laid-off biopharma folks, the wheels of progress can continue to turn.  So, what’s missing? Right…getting investors and entrepreneurs interested in the assets, to provide the grease that allows the wheels to turn.

I’m sure there are many examples to study, but must admit, can’t think of any off the top of my head right now. Hope to be back soon with examples of successful out-licenses/divestures to biotech. Wonder if $AEGR lomitapide counts…they licensed the asset from UPenn, which got it from Bristol. Hmm. A single, single-arm trial for regulatory approval.  You tell me, what are the odds of success here?

While this ends a bit shorter than I had expected, the question remains, will we see more products discarded from pharma in advanced stages of development 3-5 years from today?

Posted in Drug development | Tagged , , , , | Leave a comment

$SGPY…where is the Synergy?

Posted on July 4, 2011 by BioChef in Training

First: Happy Birthday to Home Sweet Home, the US of A!

I thought it would be fun to take a look at Synergy Pharmaceuticals ($SGYP) to see how they could represent the intent of its namesake.  By definition, synergy is the interaction or cooperation of two or more organizations, substances, or other agents to produce a combined effect greater than the sum of their separate effects. Any company adopting synergy as its name must have lofty aspirations – we all know that biotech is filled more with disappointment than with success.

$SGYP is a bulletin board company that was spun-out from, yes, you may have guessed it, another bulletin board company, $CLSP (Callisto Pharmaceuticals), which still owns close to 50% of $SGYP (48.1% from 10K, 3-12-11). I must say, this was not a great way to start the session. Tread lightly in this name, unless you love to play bulletin board stocks. Company presentation from 1-10-11 is here.

What first caught my attention was the crazy valuation achieved back in June 2010, when the stock reached $11/share, and a corresponding $973M valuation (88.4M shares, 5-6-10)!!! Yes, it is a thinly traded stock and has a low float, but wow, a billion dollar market cap…with just Phase I data at the time…come on! The company traded back down to reality during the 3rd quarter 2010 and is currently trading in the $4s ($4.19/share, July 1 for a $390M market cap). So, one year after hitting their high, they are a bit further along the development path having generated promising 14-day P2a data from 78 evaluable chronic constipation patients to create additional value. The bizarre movement in the stock is a nice case for not investing and holding long-term bulletin board stocks.
                    Yahoo! Finance

On the flip side, I guess, the question is, what is a company like $SGYP supposed to do? The company believes that they have the potential to be “Best in Class” vs “First in Class”, which goes to $IRWD’s linaclotide; both are guanylate cyclase C receptor agonists. Linoclatide has completed 2 x P3 trials each for both in chronic constipation, and in c-IBS, is partnered with $FRX and should file an NDA this quarter.

What could some “Best in Class” claims include? From my quick read through, the bet would be on a potential lower incidence of diarrhea (15-20% with linaclotide) with comparable efficacy claims in chronic constipation (they still need to run trials in c-IBS). Maybe – the P2a data suggests side effects comparable to placebo, with respect to diarrhea, but one should also keep an eye out for nausea and bloating, down the line.

If they reach the market, not only would they compete against linaclotide, but also $SCMP’s lubiprostone (Amitiza; US commercialization rights with Takeda), possibly $MOVE’s (now part of $SHPGY) prucalopride (Resolor), which has been approved in Europe, as well as molecules targeting other MoAs, such as ghrelin agonists ($TYZM), that are in the pipeline.

The company estimated that they would burn $31M in 2011, presumably most of that would go towards running the P2b/3 trials.  Unfortunately, they have yet to raise these funds and it looks like it could be a long slog for them.

What a mess – I didn’t find any synergies here, just lots of distractions. From the outside, and admittedly, after a very superficial look into the company, I wouldn’t be betting on a big pharma partner, or even a spec pharma to save the day, at present. Maybe the best thing to do is find a shell with some cash, and negotiate attractive merger terms, or perhaps, work out an back-ended deal with a GI-focused entity, such as $SLXP, to help get the ball rolling.

No positions.

Posted in Up and Down | Tagged , , , , , , , , , , | Leave a comment

$MSB.AX, no thanks. I’d rather have miso-soup

Posted on June 20, 2011 by BioChef in Training

I wasn’t planning to post another stem cell article so soon after my quick peak into the neural stem cell space, but when I saw that Mesoblast ($MSB.AX), an Aussie-based stem cell company, had a market cap of A$2.4B, or $2.5B US, I was intrigued…well, more like shocked. Their current valuation puts them in the same league as $AMLN, $CBST, $IPN.PA, $ONXX, $MRX, and $MYGN (and others), companies with pretty meaningful revenues, as well as with other development stage companies, such as $INCY and $SGEN, which have novel development candidates with strong data sets and established partners in their targeted (oncology) space. So, where/how does $MSB.AX fit?

Well, to jump straight to the point, I call uncle. I can’t seem to figure out what justifies their $2.5B valuation. In the six years between their IPO (December 2004) and December 2010, they had generally traded between A$0.50 and A$2.50 per share as an orthopedic-focused regenerative medicine company. Over the past 6-months, they closed their acquisition of Angioblast (they were already 32.8% owners prior) in Dec10, adding a cardiovascular franchise, and also became strategic partners with $CEPH (now being acquired by $TEVA), which is not generally recognized for their expertise in the cardiovascular or orthopedics space. While partnerships can drive value, I don’t see how this in itself can explain $MSB.AX share appreciation to A$8.42/share. Just look at $INFI and how they have fared with their Purdue relationship.

Can data since the alliance explain this? What did we learn that we did not know before? On Jan 10, 2011, they announced interim 6-mo data from a controlled 60-pt P2 trial in CHF patients (15 patients with NYHA Class II to IV and EV <40% per cohort x 4 cohorts, 3 doses vs control) receiving standard of care plus a single infusion of active or control. This is from their Jan 10, 2011 press release:

There have been no cell-related adverse events in any of the 45 patients treated with Revascor™, demonstrating that all three doses of the cell therapy product are safe over both the short and medium term.

Analyses of time-dependent hard efficacy endpoints showed that a single injection of Revascor™ significantly reduced the number of patients who developed any severe adverse cardiac events over the follow-up period from 93.3% in the control group to 44.4% in the treated patients (p=0.001). Revascor™ also significantly reduced the number of patients who developed any major adverse cardiac events (MACE, defined as the composite of cardiac death, heart attack, or coronary revascularization procedures) from 40% to 6.7% (p=0.005). A single injection of Revascor™ reduced the overall monthly event rate of a MACE by 84% compared with controls (p=0.01), and every dose tested demonstrated a similar protective effect. Death from cardiac causes was reduced from 13.3% to 0% over this period (p=0.059) and the overall monthly rate of cardiac-related hospitalizations was reduced by 48% (p=0.07).

OK, their stem cells look safe…just like everyone else…with some positive efficacy signals, just like everyone else…alright for a small sample size, some of their data does look better than what I have seen/remember from their competitors. What I am unsure about is how the FDA will view stem cell therapeutics in CHF patients – will all cause mortality be needed or will improvement in cardiac function or reduction in adverse events be sufficient for approval? Final 1-yr data should be presented early July, so we’ll get another look shortly.

It can also be noted that investor reaction to the news was light, with a presentation at the JP Morgan Healthcare conference* on the 12th dominating trading activity. Sorry, still need to work on formatting tables here.

Date                                                  Volume                          Price

Jan 14, 2011 779,500 5.76
Jan 13, 2011 1,072,800 5.65
Jan 12, 2011* 1,399,800 5.33
Jan 11, 2011 608,400 4.88
Jan 10, 2011 200,800 4.62
Jan 7, 2011 198,900 4.55
Jan 6, 2011 52,400 4.54

Yahoo! Finance

Was that it? Might as well be. We also got a subset analysis data earlier this month from 22-pts (out of the original 60 CHF-patients) who had reduced myocardial blood flow (can’t tell if this was a pre-specified endpoint). This is from their June 6, 2011 press release:

In a subset analysis of the ongoing 60-patient United States trial of Revascor™ for congestive heart failure, 22 patients were found to have reduced myocardial blood flow at baseline by SPECT perfusion scan, indicating the presence of ischemic heart muscle. Of these, 17 were randomized to receive treatment with Revascor™ while 5 were randomized as controls. Six months after treatment with a single injection of Revascor™ there was significant improvement in blood flow to the ischemic heart muscle, with 51% reduction in myocardial ischemia (p=0.01). In contrast, no change in blood flow to the ischemic heart muscle was seen at six months in the controls.

These improvements in blood flow and in myocardial ischemia in patients treated with Revascor™ were accompanied by a 75% reduction in the risk of Major Adverse Cardiac Events (MACE) over a mean follow-up period of 21 months compared with controls with myocardial ischemia and no change in blood flow. MACE are defined as a clinical composite of death due to cardiac causes, non-fatal heart attacks, or revascularization episodes.

Once again, there could be potential, but we are talking about even smaller sample sizes and do not have access to detailed data (e.g., we do not know how patients were distributed by NHYA Class and have to assume that their was an even distribution). So, in my book, the data does not help explain the valuation.

Are there expectations driven by their peer group? Here are some of their peers in the mesenchymal stem cell space:

Company Symbol Shares outstanding Price per share (as of 6/17/11) Market Capitalization ($MM)
$CYTX 52,470,226 $4.76 $250
$OSIR 32,821,083 $6.75 $222
$ASTM 38,620,850 $2.51 $97
$ATHX 23,502,581 $2.69 $63
$BHRT.OB 42,989,019 $0.09 $3.9

There are others, including the privately held, Aldagen. They had raised about $60M from their venture backers back when they first attempted an IPO in 2008, which was subsequently withdrawn. In July 2010, they refiled to raise $80M on the second attempt, and withdrew again in April 2011.

Each company does have a different special sauce for their stem cells, and are looking to target different patient populations and indications, though there is some overlap. Broadly speaking, there are no easy apples-to-apples comparisons. But, if we just look at them in the aggregate, not one of them comes close to $MSB.AX’s current valuation.

So, here I am.  I don’t get it.  Give me some miso-soup…that I get.

No position in $MSB.AX, but looking forward to see what happens to share price, when Angioblast lock-up expires in December. Haven’t looked, but what is the short interest here?

Posted in I don't get it | Tagged , , , , , , , , , | 1 Comment