Full steam ahead for $AVEO

Posted on June 15, 2011 by BioChef in Training

$AVEO is raising cash…surprised? Not really. It was matter of necessity. I first wrote about them in an post last month and thought that a financing was coming, though I thought they would take advantage of a somewhat slower summer season to announce a deal.

On their most recent 10Q they reported $232.6M cash, which includes a $125M upfront payment from Astellas (net $97.6M to them). As part of their guidance, they estimated that they would have $125M at the end of 2011, which would take them through 2012. Simply stated, by the end of this year, they will have 1-yr of cash.

(I still can’t figure out where the burn is going, though @maverickNY suggested that $AVEO is conducting a tremendous amount of biomarker research, which could contribute towards higher R&D costs – anyone know how much big biotech spends here? What about in-house antibody production in disposable units for testing – could this be a factor?)

The announcement while surprising is understandable, as no one wants to raise when they have to raise; better to raise when you can. Can one assume that their models for tivo, suggest fair value or close to fair at present, for them not to bank on a run-up into P3 tivo data (expected 4Q11)? or is it simply better to be prudent and raise without the pressure of pending data? or how about a skeptical bear – an alarming safety/efficacy signal has manifested?

Math. Assuming another $125M cash burn in 2013 – they’ll also need sales and marketing support for launching tivo in 2013 – they have reached their goal:

Centocor Ortho Biotech partnership, raised $15M, and with today’s financing:

5.75M shares x $17.50/share = $100.6M gross,  $94.4M net
862.5K over-allotment shares x $17.50/share = $15M gross, $14M net

Total: $123.4M, pretty darn close to estimated 2013 cash needs. Throw in some potential milestones and other deals, and they are well covered.

Plus, no one says they can’t raise cash again when P3 tivo data is released either.

Miscellaneous

Updated share count (from today’s prospectus, Centocor alliance and financing):

35,913,276 shares outstanding (3-31-11)
3,779,674 options @ $7.59
311,841 warrants @ $8.87
438,340 shares issued to Centocor (5-31-11)
5,750,000 issued, financing (6-15-11)
862,500 over-allotment shares, financing (6-15-11)

FD there are 47,055,631 shares, with options and warrants, well in the money

Milestones (not inclusive)

4Q11 (revised; delayed from mid-11): P3 TIVO-1 topline results
YE11 $125M cash
1Q12E File tivozanib NDA
2012 Topline data P2 ficlatuzumab
4Q12-1Q13E Tivozanib PDUFA
YE12E $123M cash with today’s financing
1H13E Tivozanib launch

While $AVEO is out of my target range, I still like tivo and the company seems to be on a roll.

On a side note: I guess if $ZIOP reports $124M cash 1Q11 so that they can run a P3 and get them through 2012, then if you are $AVEO, with tivo under your belt, you gotta have more!

Posted in Spinning wheels | Tagged , , , | Leave a comment

Expect the unexpected

Posted on June 13, 2011 by BioChef in Training

In biotech, always expect the unexpected.

Over the past 9-mo, Savient Pharmaceuticals ($SVNT) has seen its market cap explode to $1.6B with Krystexxa (pegloticase) approval for treatment refractory gout, only to see its value fall past its pre-approval valuation of ~$1B, and is now down to ~$490M, as of last Friday.

High investor expectations were apparently crushed when the blushing pegloticase bride could not find a sales and marketing sugar daddy, a big pharma to take her under their wing. Throw in some previously unseen personality flaws, such as unsightly manufacturing hurdles, reimbursement challenges, and a series of sales and marketing missteps and here we are today, a company with a market cap equivalent to its enterprise value:

EV = Market cap – cash + debt
EV = $490M (71M shares (5-5-11) x $6.96/share (6-10-11)) – $268M cash 1Q11 + $230M debt
EV = $498M 1Q10

Compared to its post-approval $1.6B EV

EV = $1.5B (67.6M shares (8-3-10) x $22.97/share (9-30-10)) + $78M cash – $0 debt)

at the end 3Q10, this is quite a change, given that nothing about the product itself has really changed, except the marketer. While $SVNT is due for a slow and painful 2011 ramp, they expect activity to increase during 4Q11 and roll into 1Q12, when they expect a specific J-code for reimbursement. You can read their most recent thoughts on commercialization efforts here (May11 conference call).

In the future, there will likely fewer total refractory patients available for treatment, thanks to Ardea’s ($RDEA) lesinurad (RDEA594; more below), an oral, once daily pill, but this was known at the time of approval and did not temper investor enthusiasm for pegloticase.

With lesinurad’s commercialization several years away, and a rather inconvenient dosing schedule (2-hr iv infusion every 2 wks) for Krystexxa, would/could rheumatologists warehouse patients (similar to what hepatologists/gastroenterologists did with their HCV patients to wait for the telaprevir and boceprevir) or would patients simply wait for or select other available treatments?

As summer approaches, there are no near term catalysts, just an increasing EV as they burn through cash. The question is, “How low can they go?” At present, if I assume 50K-100K treatment refractory gout patients, a 10% penetration rate and $62K annual cost, that’s already $310-$620M in peak revenues, as long as the new management team executes. I’d be curious to learn what others think about physician/patient uptake – is 5-10K patients be too many? what if lesinurad is approved? or is the upside, much higher?

Could there be a few former suitors out there breathing a sigh of relief and possibly considering a potential return to the altar?

Lesson: don’t get caught up in the hype.

I mentioned $RDEA above and think that they have a fun story. $RDEA has its roots in the old IntraBiotics, which had failed developing iseganan, an anti-microbial for ventilator-assisted pneumonia. Just four and a half years after acquiring three R&D programs from $VRX in December 2006, they have grown from a $42M valuation (10.9M shares (12-31-06) x $3.90/share (12-21-06)) to a $636M (26.7M shares (4-29-11) x $23.81 (6-10-11)) company today. And to top it off, their value driver is not even one of the acquired assets!

In 2007 $RDEA began testing their lead asset, RDEA806, an NNRTI, for HIV patients. While they reported encouraging data, including positive viral load reduction in HIV-infected patients, someone must have noticed increased urate excretion from the healthy subjects and patients enrolled in their trials and decided to figure out why.

And thus, the discovery of RDEA594 (now lesinurad). It was a non-active metabolite of RDEA806, which had no effect on viral replication, but was able to inhibit URAT1, and increase urate excretion. While uricosuric drugs are not new (e.g., probenecid, benzbromarone), there are no currently approved drugs targeting URAT1.

Making the connection to gout and having the courage to shift gears and pursue a completely new corporate direction was key for $RDEA. An unexpected effect, which likely created greater value than their original parent program. This is why biotech is fun.

My initial take after reading through the some of the existing data sets (I have not downloaded/read/analyzed all of their poster/presentations) in different gout populations leads me to believe that lesinurad can be used across a greater population of patients, not simply treatment refractory, but including allopurinol intolerant, inadequate allopurinol responders and those restarting allopurinol therapy, by simply adding another pill. This could be a large market opportunity.

On the downside, lesinurad will likely need another 2 years to run and complete two P3 trials, and another year for regulatory approval, if successful. Patients and physicians will need to wait until 2015 for a launch if all goes well, giving $SVNT some time to establish a footprint and solidify its position for all treatment failures, and maybe bump up the price as well.

Gout has been full of surprises – and that’s not even including Takeda’s Uloric (febuxostat), which the UK’s NICE recommended only for people who are intolerant of allopurinol…OK, that wasn’t really a surprise.

No position in $RDEA or $SVNT at present.

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

No ASCO news here, just new oldies

Posted on June 4, 2011 by BioChef in Training

Thumbs-up to the bloggers who post regularly. It is not as easy as it appears, especially after holidays – good thing I decided to get a degree in the biological sciences instead (?!).

Hard to believe, but ASCO has arrived. Thousands of people are migrating to Chicago this weekend to finally learn what all those abstracts really mean. Much has been written and said about the latest cancer therapeutics in anticipation of the meeting and it is now time for the unveiling. Plenty of smart commentary and analyses will be written over the next several days by those who are actually at the meeting, so I am looking forward to seeing what nuggets they feel compelled to share.

So, instead of cutting edge cancer research with new molecules and pathways, I thought I would take a look at the opposite end of the drug development spectrum and look at companies that tweak existing FDA approved drugs. There appear to be at least two distinct models, those that re-purpose and those that look for improved profiles/delivery.

Several companies have gone the re-purposing route, looking for new applications/combinations for existing tried and true drugs. Some examples include Nuedexta (quinidine/dextromethorphan; $AVNR), Vimovo (naproxen/esomeprazole; $POZN/$AZN), Silenor (doxepin; $SOMX) and Contrave (naltrexone/buproprion; $OREX). While interesting and cost-effective, this approach does not appear to have translated into commercial success.

There was a recent posting on Seeking Alpha from Martin Shkreli highlighting the Top10 slowest pharma launches and surprise, surprise, three of these were on the list. There are rationale hypothesizes for the lack of traction: Nuedexta is challenged by the unfamiliarity of disease by clinicians (pseudobulabar affect), patients can take cheap generics instead of Vimovo, and Silenor, well, it is just another sleeping pill, isn’t it? Contrave is a bit different in that it has not been approved by the FDA and the odds for approval look grim. All in all, this strategy does not appear to have been a homerun, thus far.

(Anybody know which re-purposed products/combinations have had the best launches?)

Other teams have looked to lower risk drug development strategies by seeking more straight-forward paradigms by improving delivery, PK profile, or other similar characteristics. While many of these companies are not too exciting ($BDSI and $ANX come to mind), I came across two companies, which peaked my interest: Raptor ($RPTP) and Unigene ($UGNE).

$RPTP believes they have made significant improvements in cysteamine delivery by developing a delayed release q12h formulation. Its predecessor is Cystagon, an immediate release cysteamine given q6h. It is used in patients with nephropathic cystinosis, an inherited metabolic disease with orphan drug status, which is fatal in childhood if left untreated.

The primary benefit to this new formulation is to not having to wake up growing toddlers and kids in the middle of the night to take a unpleasant tasting medicine. Other potential advantages include a 30% lower daily dose than Cystagon, resolution of GI distress, nausea, and vomiting and the potential for reducing complaints of bad taste and halitosis (Roth conference presentation, March). Improved quality of life plays a major factor here.

Assuming positive P3 data, they plan to follow $BMRN’s model, and charge $70K/pt/year. $RPTP estimates that there are 500 patients in the US (2000 ww), so maximum US sales would be $35M, with 100% adoption. Curious to know the number of patients currently being treated.

How does pricing that compare to Cystagon? A Google search found this price: $1200 for 500 x 50 mg tabs (anyone have more reliable pricing from RedBook or other source?). Cystagon is dosed by weight, so for someone who weighs more than 110 lbs, 500 mg q6h is the recommend dose. Next, math. 2,000 mg daily = 14,000 mg weekly = 280 pills/week = 1,204 pills/mo = 2.4 units/month = $3,000 monthly = $36K yearly. Thus, this new formulation could cost 2x more than Cystagon. But, for a grand total of 500 potential patients, I can’t imagine payers making too much of a stink over this, especially if kids are involved and with potentially better outcomes.

Just a few weeks ago, they were valued at $109 MM (32.5M shares (3/31/11) x $3.36/share (5/11/11), but after a typical “run-up” into pivotal data (expected end of this month), they now have a $187 MM market cap at $5.76/share (6/3/11); or $263 MM (fully diluted) and seem a bit rich to me. I’m thinking more about the FD number because of the run-up, but do need to check strike prices.

In addition, with just $12.9M cash at the end of May (estimate based on $16.5M cash (2/28/11), burning $1.2M/mo) and an S-3 filed to raise an additional $50 MM, it gives me a bit of time to research a bit more on NASH and look for alternative entry points.

$UGNE has embraced a different approach and hopes to hang their hat on oral peptide delivery. In particular, they are looking to convert subcutaneous delivery of calcitonin and parathyroid hormone (PTH) into oral delivery and improve compliance (perhaps efficacy, as well). Both agents are used in the treatment of osteoporosis and must be injected on a daily basis (note that calcitonin can also be delivered intra-nasally).

Oral delivery of peptides are typically hampered by low absorption and degradation in the gut. According to the company, their technology does four things: 1) an enteric coating prevents digestion in the stomach at low pH allowing transit to the small intestines; 2) the enteric coat dissolves in the small intestines; 3) protease inhibitors, permeability enhancers and peptide are released; and 4) the peptide is absorbed across the intestinal wall via paracellular transport.

There are partnerships for oral calcitonin with Nordic Bioscience (through Novartis) and Tarsa (funded by MVM Life Science Partners, Quaker BioVentures, Novo and $UGNE). There is also a partnership for oral PTH with GSK. These partnerships lend some credibility to the technology.

But more importantly, in March, Tarsa reported a positive P3 controlled trial (ORACAL) showing non-inferiority of oral calcitonin to nasal calcitonin spray in increasing bone mineral density at the lumbar spine after one year of treatment. This should bode well for their P2 oral PTH program, which could report controlled data (vs. placebo and Forteo, injectable PTH) in Oct/Nov this year.

Just a note, calcitonin is a single, linear 32 amino acid peptide, while PTH is a 42 amino acid, that needs to dimerize (84 amino acids total), so size permeability and functionality remain of concern.

With a $97M market cap (92.5M shares (4/26/11) x $1.06/share (6/3/11)) and cash through 2012, this could be a sleeper. Just beware, this is a bulletin board stock and volume is light.

No positions at present.

Posted in Old drugs made new | Tagged , , , , | Leave a comment

I-FOS, U-FOS, We-all-FOS…

Posted on May 23, 2011 by BioChef in Training

Pretty striking difference in the value created between $THLD and $ZIOP in just over two short years. Both were trading at similar valuations roughly two years ago, but $ZIOP has simply outperformed $THLD.

Chart forThreshold Pharmaceuticals Inc. (THLD)

Source: Yahoo! Finance, 2yr comparison chart accessed 5-22-11

A little over two quarters post-Lehman, when the biotech world was still in turmoil, $THLD was valued at $25.5M (15.2M shares outstanding x $1.68/share, 4-30-09) and $ZIOP, a hair smaller with a $18.6M valuation (21.85M shares outstanding x $0.85/share, 5-14-09). Today, $THLD is valued at $89M, but its share price has languished at $1.81/share (5-20-11), whereas $ZIOP is now worth $449M, with shares trading at $6.59 (5-20-11).

So, what happened? Both companies have Phase III ifosfamide-based therapeutics for soft tissue sarcoma with $ZIOP ahead by roughly a year. Quick refresher (mostly for me): ifosfamide is an old-school nitrogen mustard alkylating agent used in cancer. It is a prodrug that must be activated along the cytochrome P450 pathway to generate its active metabolite, chloro-isophosphoramide, which is unstable, but in doing so, also creates other metabolites, such as acrolein, which is nephrotoxic, and chloroacetaldehyde which is thought to contribute towards neuro- and nephrotoxicity.

Both companies have designed molecules aimed to sustain the efficacy of ifosfamide (IFOS), but without the corresponding side effect profile. $ZIOP has bet on palifosfamide, a stabilized form of the active agent (chloro-isophosphoramide), which eliminates the need for activation and circumvents ifosfamide’s toxicity profile. $THLD has designed TH-302 to accomplish two things: 1) site-specific activation under hypoxic-conditions, which releases, 2) a chloroacetaldehyde analog, as its payload, also without the formation of toxic metabolites. Between the two, TH-302 requires an extra-step for activation, which could potentially be of concern, but otherwise, pretty similar mechanistic hypotheses.

What about the pipeline? Following the failure of glufosfamide in 2007, $THLD focused exclusively on developing TH-302. In contrast,  $ZIOP had been pushing forward multiple compounds, including indibulin and darinaparsin, through the clinics. However, to be fair, $ZIOP did not appear to invest heavily in these programs post-Lehman – possibly as a precautionary measure to conserve cash and make a focused bet on palifosfamide. So it would appear value creation was not from a pipeline perspective.

The difference? It looks like $ZIOP’s investment in a controlled Phase II trial (and positive results) has paid dividends for their investors, while $THLD’s decision to conduct a single arm trial could not provide sufficient evidence/confidence for investors, especially after a Phase III trial failure on the current management team’s watch. Given that Phase II trials are generally small and are supposed be the template for Phase IIIs, I am quite puzzled as to why $THLD (and many other development stage companies for that matter) try to rush through clinical trials without a control arm. Are they crunched for cash? Trying to meet some sort of timeline? Have they drunk their own Kool-Aid? Is there some sort of clever pipeline PR ploy involved? Maybe I’m simply just not sophisticated enough to understand the subtle nuances behind the disease and its treatment paradigms.

Lesson. Please run controlled trials. We will entering an age where comparative effectiveness studies are becoming the norm, so why not start sooner rather than later?

As I think about value proposition, $ZIOP feels a bit rich (almost half a billion market cap, no revenues, and a Phase III trial looking at PFS as the primary endpoint – against FDA guidance, but will follow for mOS), but does $THLD make the cut? Being a year behind in sarcoma with uncontrolled, single arm data gives me pause, so I wouldn’t put my marbles in that bag. This leaves me with pancreatic cancer, which is expecting data from a controlled Phase II trial YE11.

My understanding of pancreatic adenocarcinoma is that it is a fast-growing tumor. This means that the inner “guts” of the tumor does not have its own vasculature and must rely on diffusion for metabolic processes resulting in a hypoxic cellular environment. As long as TH-302 can reach this region and release its payload, it should have an effect and kill from the inside out. The clinical data suggests that this is possible. They have reported PFS of 5.9 months and mOS of 8.5 mo from 43 evaluable patients (January 24, 2011) – both parameters appear superior to historic controls. Gemzar was approved with a +1.2 mo disease progression advantage over 5-FU (2.1 mo vs 0.9 mo) and a +1.5 mo survival advantage (5.7 mo vs 4.2 mo). I am always wary of single-arm data, especially in cancer, but if the Phase II data are positive, this could allow $THLD to create the value $ZIOP has accomplished over the past two years.

No position in either company, but if I wanted to take a flyer on positive Phase II results, I would be patient and make sure they at least complete enrollment by MY11 (as guided). Further, I would need to research how the newer molecular targets (e.g. mTOR inhibitors) compare to old school IFOS.

Posted in How did that happen? | Tagged , , , , | 1 Comment

$CYTR: $INNO and out with chaperones

Posted on May 17, 2011 by BioChef in Training

It has been an interesting couple of years for $CYTR. Their lead asset heading into 2008 was arimoclomol, a small molecule thought to activate Hsp70, which was placed on clinical hold (January 2008) over potential toxicology concerns in rats. While the clinical hold was subsequently lifted in December 2009, the high bar for success in neurodegenerative diseases, such as in ALS, as well as unproven MoAs for their pipeline assets, likely encouraged a strategic rethink in priorities.

At the same time, $CYTR was in the process of spinning-out $RXII, their RNAi-based therapeutics subsidiary, which suggested that they did not want to rally around RNAi as their value proposition. I don’t know the exact reason, but in March 2008, $RXII was off and running in the public markets, with $CYTR decreasing its ownership stake from from 85% to less than 50%. They have now exited their entire position – their decision to not focus around RNAi path, was in hindsight, probably not such a bad idea.

In September 2008, we learned what they had in mind. Old neurodegenerative $CYTR was no more. New, $CYTR was to be an oncology company and it only cost them 2.6M in equity. Before the announcement was made, they had been trading at $0.45/share, so it cost a whopping $1.7M in stock (plus future earn-outs, of course, to be paid in equity or cash) to acquire four clinical stage assets – just like that.

The bride was Innovive ($INNO), a struggling clinical-stage oncology company, which had started off with some excitement and then whimpered away. I’m not sure what what caused all their problems – poor execution? poor decision making?  In any case, investors appear to have thought similarly, with minimal impact on share price.

With today’s news of the licensing of arimoclomol and their molecular chaperone program, their transformation is complete – $INNO assets has $CYTR’s full attention and  and the old $CYTR has completely vanished.

So, what’s up next for $CYTR? For the most part, the stock reached current levels in early June 2009 (some excitement at ASCO?) and hasn’t created any sustained value since. They have a ~$90M market cap, $30M cash 1Q11, and at least three shots on goal.  Could they be a jewel in the rough? Time to check under the hood to see how these assets stack up and what might be in store for 2011.

No position.

Posted in Jewel in the rough? | Tagged , , , , , | 1 Comment

Sell in May, and go away?

Posted on May 12, 2011 by BioChef in Training

While some investors might heed the “Sell in May, and go away” mantra, if you’re a little guy looking for ideas in biotech, going away in June is probably more realistic. Better for me, as it coincides with the end of the pre-college academic year. I say June, because May is when folks are probably finalizing their investment theses or trading strategies going into ASCO, the B-I-G oncology meeting of the year beginning June 3, so going away in May could result in a lost opportunity.

The Mar-May time frame is always busy with 4th quarter/year end results flowing straight into 1st quarter updates, but this year felt more chaotic and I can’t seem to place a finger on it quite yet. Unless, of course, you count the tall middle one, the one that seemed to be taunting me with some stories that just don’t make any sense.

For instance, take $OXGN, which has 7M shares outstanding and is trading at roughly $5/share, a $35 MM market cap company. Yup, a whopping $35 MM, a microcap company for sure, but just about a month ago ago, they were even smaller, at a $12 MM valuation! What makes it weird is that their story has not changed over the past month, no new data, no new investors, no new management team – zilch, nothing to even feign progress. Broadly speaking, their story hasn’t really changed since 2009, when Symphony Capital exited Zybrestat (their vascular disrupting agent) for oncology and ophthalmology. So what’s the fuss? No clue.

As an aside, I am hopeful that perhaps survival data from their P2 FALCON trial in NSCLC will prove to be positive at ASCO (maybe the insiders know something we don’t?) and justify the recent gains, but there doesn’t appear to be much attention in the form of late-breaking ASCO abstracts and the like, so likely not. I do hope it fares better than $ASM’s ASA404 to provide some hope to patients.

The traders appear to have done well with $OXGN, riding a nice run up, but it sure does take some courage to be holding now. A nice friendly follow trade if you identify it early, I guess – just wouldn’t want to be the last person owning a part of the company into earnings tomorrow. With less than $5 MM cash at the end of last year and earnings call tomorrow, traders will likely make money on the way down as well. The joy!

Here’s another oddball. I’ve always considered $RXII an RNAi company (co-founded by Nobel laureate Craig Mello), but on the turn of a dime, they have instantaneously transformed themselves into a peptide-based immunotherapy company for breast cancer by merging with/acquiring Apthera, which has been static since 2008; June 2009 if you consider working towards a SPA progress.

I believe that you should build from your strengths, and I don’t see the relationship between peptide-based therapeutics and RNAi-based (nucleic acid) therapeutics, nor do I see overlap between breast-cancer and fibrosis. Yes, there is an immunology link, but we are talking about different pathways.

If you were on the Board and wanted to keep your RNAi option, wouldn’t it have made more sense to find an acquisition or project that is related to your existing lead RNAi target (anti-scarring)? Otherwise, quit the pretense, and invest fully to become the next $CLDA or maybe even, $DNDN. Playing the role of second-guesser here, they have made for lively conversation around the water cooler on portfolio management and corporate strategy.

How about a company with a product, like $ALTH? When Fotolyn was approved in 2009, they were the talk of town, the first approved agent for refractory PTCL and charging close to $30K per month of treatment. Unfortunately, it doesn’t extend survival, so the cost/benefit doesn’t seem to add up. I’d like to understand their premium pricing strategy and which consultants they used. Simple: Orphan indication, Yes. Novel pathway, No (DHFR inhibitor). Extends life, No.

It’s not entirely their fault, over the course of 2010, we have learned that outcomes matter – for them to change pricing strategy now would not be a bad thing. Heck, look at what happened with $KVA – they realized their mistake on Makena and reduced pricing.

Back to finding the next gem. Small cap biotech companies are truly entertaining.

There are many sites with good research (and free) on these drugs and companies, so check out their sites for more in-depth coverage. Once in awhile, I expect to publish parts of my own research, but I hate to be redundant.

No position in any company named today.

Posted in Why did they do that? | Tagged , , , , | 1 Comment

Brain, on cells.

Posted on May 9, 2011 by BioChef in Training

I thought I would take a quick break during the week’s biotech earnings calls and before May’s run into ASCO data in June to quickly catch-up with a couple of stem cell companies. But, which ones? There are a dozen or more publicly traded companies, many privates and larger biotechs that are working across the spectrum of stem cells, from induction to production.

There are at least two broad technological categories, those that work with embryonic cells, such as Geron ($GERN) and Advanced Cell ($ACTC.OB), which have been lightning rods for the media, and those that work with adult stem cells, such as Aastrom ($ASTM) and Cytori ($CYTX), which can be attractive appear to traders. Others in the mix include: Athersys ($ATHX), Biotime ($BTX), International Stem Cells (ISCO.OB – does parthenogenesis count?), NeuralStem ($CUR), Osiris ($OSIR), Pluristem ($PSTI), ReNeuron ($RENE), StemCells ($STEM) and Stem Cell Therapeutics ($SSS); not included are those folks working on induced pluripotent stem cells (who did I miss?).

What caught my interest today was the neural stem cell segment, probably because $STEM reported 1Q11 results last week and also announced a 30% reduction in work force; wIth 74 FTEs reported at year end 2010, this means that 22 folks can now be added to the unemployment rolls.

$STEM looks like the “old-man on the (neuro) block” having been around since 1988, but not fully committed to stem cell development until 1999. From 1999 through 2010, $202 MM was pumped into the company through stock offerings, using paid-in capital as my measuring stick, so they spent an average of $16.8 MM over 12 years. Doesn’t sound too bad for a biotech company, does it?

As a fictional $STEM shareholder in 1999, after 12 years I have a company that is worth ~$110 MM, safety data from 10 Batten’s patients injected with stem cells into the brain (which could not continue due to lack of eligible patients), and two new trials in different cell types, a P1/2 in chronic spinal cord injuries and a P1 in myelination disease, in the works. Should I be disappointed? Yup.

Next up, $CUR, which was incorporated in 1997 for regenerative medicine, so in stem cell years, they are more senior to $STEM. It has been 14 years and they are presently in P1 trials in ALS patients injecting the lower spinal cord with neural stem cells, and expect to have 12-pt data by summer, so that they can test injections into the cervical spinal cord.

Compared to $STEM, I’d feel much better spending $93 MM, less than half of $STEM, and having P1 data from lower spinal cord injections by summer. I still don’t know if it has any therapeutic benefit, but for my $70 MM company, I feel better than $STEM. Perhaps ad revenues from the bottom of their home page is offsetting some of their cost (http://www.neuralstem.com/index.asp?pgid=1, accessed 5-5-11).

Lastly, $RENE. They are the newbie of the group having gone public on the AIM in 2005, but in existence since 2003 (maybe earlier). Their program in stroke is just kicking off with 2-pts treated as of March 2011, and the trial is expected to continue through 2012.

Being the 3rd player to the party has some advantages of learning from its predecessors. They have the smallest market cap of the three at GBP 32.6MM (USD 53 MM), but have been most efficient with their investors cash with a retained deficit of GBP 43 MM (USD 70 MM), having recently raised GBP 10 MM (USD 16 MM) for P1 data still to come.

Well, there we have it, three different neural stem cell companies and three different target areas: the brain, the spine and the cerebrovascular system.

I wonder if anyone knew at the outset, that it was going to take 10 years to get into clinic and that it would be even longer before we know if it is efficacious. On the flip side, what would have happened if the technology stayed within academia? Would we have better tools for testing? Would we be more efficient in development costs? Unclear. There has got to be a better equation for knowing when to let the technology loose into the world and when to baby it just a little bit longer.

No position in any neural stem cell company named. I don’t see any near term catalysts and would short on random spikes if shares were available.

Posted in Spinning wheels | Tagged , , , , | 2 Comments

$ICGN, “I can use more time”

Posted on May 3, 2011 by BioChef in Training

Nifty. I was thinking about posting this later this week after $ICGN’s 1Q11 results tomorrow, but then they go ahead and announce a research deal with Yale and $PFE to study the role of Nav1.7 in inherited erythrinelalgia (IEM) – you would have thought a partnership like this would have already been established. So, here’s to piggybacking on news. If I were a biotech company and needed cash – this would be the time (up 10% this AM)!

I was looking at companies whose lead molecules had failed and looking to see what they might have in their back pocket as interesting long-term (speculative) ideas. One company that popped up was Icagen ($ICGN), a company that has had its fair share of failures – remember senicapoc? First for sickle cell, then asthma, and then, well you get the picture.

What struck me about their current clinical assets is that the targets selected have a connection to a known human condition. It’s too bad they couldn’t have started with these two programs. While not a guarantee for success, at least we have a known human action for the target. A bit more sophisticated than $LXRX and their mouse KO models, wouldn’t you say?

Without getting too detailed, the first molecule in the clinic targets Nav1.7 (SCA-9a), a sodium channel, which when blocked blocks pain, and when open constitutively increases pain. Pretty cool. It is partnered with $PFE, who has control over development, so we won’t likely hear much about it unless it passes muster a couple of years from now. Give credit to $PFE, they have partnered with biotech on some pretty nifty pathways – $ADLR with its delta opioid program, and $RNVS/$EVT with its VR1 program. $PFE could use a win here.

Quick summary of disease: http://www.ncbi.nlm.nih.gov/books/NBK1163/

ICA-105665 (‘665) is a second molecule in clinical development and targets KCNQ, a potassium channel. Potassium entering cells restores membrane potential and quiets them down, so ‘665 is designed to activate this receptor, with hopes of quieting neurons from over-firing, as a treatment for patients with epilepsy. The human connection? Benign familial neonatal convulsions.

Quick summary of disease:
http://www.ncbi.nlm.nih.gov/books/NBK32534/#bfns.KCNQ2

It should be noted that clinical development was placed on hold back in Sep10 due to a SAE at one of the higher doses, but the hold was lifted early this year (Feb). A P2b is expected to initiate later this year, so I’ll look forward to the final trial design then, but thus far, they have said: 60-pts currently taking three or fewer epileptic drugs treated for four weeks to evalute safety and seizure frequency.

Nuts and bolts. On their most recent 10K, they had 7.3M shares outstanding; for all practical purposes the 677K options and 652K warrants listed are both way out of the money. Trading at $2.72/share (4-29-11 close), market cap is ~$20MM.

With $12M in the bank YE10 + $1.2M drawn from their ATM facility earlier this year, pro forma cash is $13.2M. MGMT has guided a net cash burn of $1.5M/Q, which gives them $11.7M cash 1Q11. They have budgeted $4M for the P2b 665 trial, so they could spend $8.5M over the next 9-mo, and will need to raise cash.

No position. Interesting long-term potential with no news for NAV1.7 and initiation of ‘665 P2b until later this year.

It is too bad these types of companies don’t delist, go stealth privately, and then re-emerge…hmm

Posted in Jewel in the rough? | Tagged , , , | 1 Comment

Spending fast and furious

Posted on May 2, 2011 by BioChef in Training

First, two thumbs up to our military and intelligence services! While the march towards peace and stability continues, this feels good.

Now, back to learning about drugs that can benefit mankind and the companies that develop them.

Someone needs to walk through $AVEO’s cash burn to me. They reported $236MM cash 1Q11, and have guided at least $125MM cash by YE11. This means that they are on track to spend $111MM over the next 9-mo! Further, the cash on hand at year end is expected to take them through 2012, so they will spend another $125MM in 2012. Where is the cash going?

The biggest clinical expense this year is for TIVO-1 in P3 RCC, which is already more than halfway through to completion and is partly paid for by their partner, Astellas. I don’t recall the exact numbers, but If I am pretty generous (and why not, May is here, and we are one month closer to summer and BBQ season) and assume that the all-in cost per patient in an oncology trial is $50K/patient/trial, then for 500-pts, we are talking $25MM total. With data is expected later this year, I would guess that much of the trial costs have already been incurred.

So, what about their first internally developed asset, ficlatuzumab? Well, there appear to be two P1/P2 trials enrolling a little over 200 pts, so that can’t be it. They also spent $10M to purchase ficlatuzmab inventory from $MRK, they returned rights back to $AVEO last September, so mAb manufacturing/supply shouldn’t be the source of significant spend.

For the sake of discussion, let’s go wild and crazy, and pretend they spend an additional $25MM for TIVO-1/tivozanib development and another $25MM for progressing additional clinical programs, $10MM for research, and throw in $20MM for G&A (they spent $15MM in 2010), that still gets me to only to $80MM. These are pretty robust numbers, and I still can’t reach $100MM…for a single year.

One area I could be grossly underestimating is in research. Specifically, I wonder how much it costs to maintain a vivarium to house their nifty mouse models. If $LXRX taught us anything, it was that generating and housing all those mice could result in significant overhead costs for our furry little friends – maybe that’s where the burn heats up?

In any case, the PIPE investors back in October must see understand/something and it can’t be simply tivozanib in RCC (my crude assumptions/guess gets me to US $200-400MM peak sales – subject to revision and not supported by any primary research), otherwise, they would not have kicked in $61M for ficlatuzumab, would they?

To be fair, I think tivozanib has a pretty good chance for success in RCC and can be better than sorafenib with a better side effect profile (hypertension), and potentially sunitinib, though there won’t be any head-to-head data.

I’d just like to know how they spend so much capital so that I can better understand where future opportunities may lie.

No position

Posted in Why did they do that? | Tagged , , , , , | 1 Comment

Lesson 1

Posted on April 29, 2011 by BioChef in Training

Aha! 1st lesson on Posts vs Pages. Looks like I created a New Page with my Welcome and Disclosures section.

Posted in Uncategorized | Leave a comment