There is an interesting article from the Wall Street Journal that I want to turn my attention to for now. It's from 8/3 entitled, "Big Pharma Won't Wait in Rush for Biotech's Drugs".
This is very intriguing for someone like myself who follows a majority of small-cap biotech firms who are in the market for partners and licensing deals. Is it just me or does paying more for a Phase 1 product than a Phase 2 product seem a bit odd? There is a substantial difference between them and their purpose.
Phase 1 trials are just initial studies to determine the metabolism and pharmacologic actions of drugs in humans, the side effects associated with increasing doses, and to gain early evidence of effectiveness; may include healthy participants and/or patients.
Phase 2 trials are controlled clinical studies conducted to evaluate the effectiveness of the drug for a particular indication or indications in patients with the disease or condition under study and to determine the common short-term side effects and risks.
Why pay more based on Phase 1 studies when Phase 2 studies weed out those drugs which are not efficacious? The number of Phase 1 studies that sound attractive are endless, but those with Phase 2's under their belt shrinks the list down considerably.
It all depends on what kind of time frame and niche group a large pharma is looking to fill. Obviously, they have needs now and 5 years down the road. There is an inherent shift for more personalized medicines, since they can garner higher asking prices from insurers and are more likely to succeed in clinical testing. This is definitely something to remember as you scan companies that could be interesting M&A targets.
Specifically, the section I found interesting was:
"The average upfront payment for a Phase I asset was 68% higher in 2009 than a year earlier at $46 million and 39% higher at $37 million for a phase II product, according to data from research firm EvaluatePharma. Total deal values, which include payments for hitting development targets and royalties on eventual sales, also rose.
Tim Worden, a partner in the life-sciences group at law firm Taylor Wessing, said drug makers still have the upper hand. Even if licensing a product at an earlier stage is riskier than doing a deal when the evidence is clear, the only thing really at stake is the license fee, which they can afford.
One pharmaceutical company that currently has a keen interest in bringing in more early-stage drug candidates is London-based AstraZeneca PLC.
Like other Big Pharma firms, AstraZeneca is hunting for promising medicines to broaden its portfolio and offset the loss of patents on older drugs, said Shaun Grady, vice president of corporate business development at the Anglo-Swedish drug maker.
Mr. Grady said the pharmaceutical industry's interest in earlier-stage assets has been spurred by frenetic licensing of biotech drugs with knockout clinical data or marketing approval. Simply, there are few attractive late-stage assets left to license. "When they do come to market it is usually extremely competitive and the price can be pretty eye-watering. That pushes people to look a little bit earlier," Mr. Grady said."
SOURCE - WSJ ( Full text available here if you dont have a WSJ subscription)
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I think DNDN's latest attempt to mislead shouldn't come as a surprise to many out there. Everyone gets these at some point. I find it a little more interesting in DNDN's case considering the recent uproar coming from the NEJM editor and Centers for Medicare Services coverage.
DNDN's maniacs(eg. Biotech Stock Research) have come out to support them in defense of Dr. Longo's questions. Yes, his numbers on the cost appear off, but their failure to address the scientific questions begs for more attention.
Specifically, Dr. Dan Longo states that,
"The findings in this study raise a few questions. First, a better control group would have included patients receiving PBMCs incubated with GM-CSF alone so that the main variable between the two study groups would be the tumor antigen. The current design does not allow one to conclude that the tumor antigen is a key component of the therapy. Second, the prolongation of survival without a measurable antitumor effect is surprising. It is hard to understand how the natural history of a cancer can be affected without some apparent measurable change in the tumor, either evidence of tumor shrinkage or at least disease stabilization reflected in a delay in tumor progression. This lack of tumor effect raises concern that the results could have been influenced by an unmeasured prognostic variable that was accidentally imbalanced in study-group assignments. As the authors point out, differences in subsequent treatments (e.g., docetaxel) do not appear to account for the survival differences, but methods for assessing such effects are imperfect. New prognostic variables such as statin use,4 the duration of the first off-treatment interval,5 circulating tumor cells (as assessed as EpCAM+CK+CD45− objects),6 and new prognostic algorithms may need to be accounted for in assessing therapeutic effects."
Basically, DNDN is saying "Immunization is a funny mechanism that works sometimes in mysterious ways." They really offer no explanation to the reasoning for prolonged survival. Personally, I find this a bit confusing. This is what Dr. Longo is pointing out, which it appears many have overlooked and is a very valid point.
Additionally, their trial data support the conclusion that Provenge is really only useful if you older than 65.
"Patients younger than 65 from any arm of the trials had a median survival of 28-29 months, compared to 23.4 months for the Provenge patients over 65, and 17.3 months for the placebo patients over 65."
The absence of survival difference between treatment arms in patients <65 (~one quarter of all patients) is inexplicable if Provenge works by its proposed mechanism.
Provenge has never been shown to have anti-tumor effects either in vivo or in vitro despite a decade of efforts to shed light on how it might be working. Thus to believe Provenge works is to admit that our understanding of the immune system in cancer is extremely limited.
I am not trying to stir up a bunch of DNDN maniacs, but it seems there are some unexplained questions surrounding Provenge that should be talked about. Please feel free to leave a comment and explain.
SOURCE - Reuters / NEJM DNDN article
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Their recent presentation at the Wedbush Securities Life Sciences Best Ideas Management Access Conference on Tuesday, August 3rd highlighted some great points investors should remember about Avanir Inc(NASDAQ:AVNR) and why it could be a great play for October. Wedbush currently has AVNR rated as "Outperform" and placed a $9 target price on them. Wedbush has had some updates regarding their coverage of AVNR.
Specifically, AVNR is their top small-cap pick in 2010. They have a great combo of a small-cap biotech with a pending FDA approval for a product with significant market opportunity. Zenvia is wholly-owned by AVNR and they have every intention of marketing it to the maximum degree.
The significant market opportunity really sets AVNR apart from the biotech crowd. Zenvia in other indications outside of PBA will be for 2 types of neuropathic pain. Those are diabetic peripheral neuropathic pain, pain secondary to MS and agitation secondary to dementia or Parkinson's related dyskinesia. These are all very large markets that have an unmet medical need.
Wedbush has compared the opportunity for AVNR to investors with Acorda in 2005. Both had similar market-caps and potential. Acorda now has a market-cap of $1.5 billion.
Also, investors should be aware that AVNR has a conference call before market open on Thursday, August 5, 2010. It will be releasing unaudited fiscal third quarter financial results for the three and nine months ended June 30, 2010
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Today, Depomed Inc.(NASDAQ: DEPO) cleared some potential legal hurdles in their pipeline and investors cheered. After-hours they released news confirming that Pfizer Inc. would not file a patent lawsuit against DEPO under the Hatch-Waxman Act, which would have initiated a 30-month stay on the FDA's ability to approve the DM-1796 NDA, has expired.
DM-1796 is an extended release, once-daily tablet formulation of gabapentin for post-herpetic neuralgia developed by Depomed. Abbott Products is obligated to pay the Company royalties of 14 to 20 percent of net product sales, depending on the level of product sales. Depomed is also eligible to receive milestone payments for acceptance and FDA approval of the NDA for DM-1796 for post-herpetic neuralgia , and sales milestone payments upon reaching certain sales milestones. The company noted that the acceptance of an NDA triggered a $10 million payment from their licensee Abbott Products.
Depomed, Inc. is a specialty pharmaceutical company with one product candidate through Phase 3 clinical development (DM-1796 with a NDA for post-herpetic neuralgia), another in Phase 3 clinical development (Serada for hot flashes), two approved products on the market (Glumetza for diabetes and Proquin XR for urinary tract infections) and other product candidates in its early stage pipeline. Depomed formulates its products and product candidates with its proven, proprietary Acuform® drug delivery technology, which is designed to improve existing oral medications, allowing for extended, controlled release of medications to the upper gastrointestinal tract.
We should note they are working on an SPA with the FDA for Serada, which we should news out on in the next 1-2 months. On June 29, 2010, the Company held a meeting with the FDA to discuss the FDA's further guidance received on April 30, 2010. Following the meeting, the Company resubmitted the protocol for Breeze 3 to the FDA pursuant to the SPA program. Because the resubmitted Breeze 3 protocol reflects the FDA's two prior reviews of the Breeze 3 protocol under the SPA program and guidance from the FDA received at the meeting, the Company does not anticipate any further comments from the FDA on the Breeze 3 protocol. Accordingly, the Company expects to receive a final assessment of the Breeze 3 protocol in August 2010 and begin enrolling patients in Breeze 3 trial in September 2010.
As an update on GLUMETZA 500 milligram recall that was announced in mid-June, Depomed has informed Santarus Inc(NASDAQ:SNTS), their partner for Glumetza, that they expect to recommence shipping GLUMETZA 500 milligram product by mid-August, assuming Depomed’s current testing and re-supply activities are successful. SNTS reports strong sales for Glumetza in the 2Q. SNTS expects to report total revenues of $125 million to $130 million for 2010.
With an anticipated $1.75 to $2.15 in cash before the end of the year there will be no dilution from additional stock offerings in the near future. That would translate to about 60% of its current CAP being cash by the end of the year. Q1 sales were up 56% to 15.4 M and sales should be at least $60 M over the next 12 months. DEPO pays SNTS 80% of gross margin of sales with a current annual run rate of $63m in sales and a net product margin of 13-14%. It has the greatest share of the market for metformin products.The slide below illustrates a general timeline for how this great company will grow.
The DEPO business strategy of using its patented Acuform technology to modify existing drugs already approved by the FDA translates to a shorter and less expensive end run FDA approval rate. This is a brilliant strategy that cuts down on the money and time necessary for approval of investigational drugs that most pharmaceutical companies encounter. More and more companies simply do not have the funds to pay for FDA approval of investigational drugs. DEPO has more than enough capital to develop new drugs, because of its business strategy and Acuform technology. Nevertheless, the company does believe in finding partners for development and marketing.
We should stressing the potential for Glumetza. This drug is an Acuform modification of Metformin, the drug of choice today of most physicians for the approximately 20 million Type 2 diabetics in America. Because of the Acuform modification, Metformin in the form of Glumetza can now be tolerated in larger doses than previously. The market potential for Glumetza is in the billions. It is probably just a matter of time before Glumetza becomes the drug of choice for Type 2 diabetes. This company is rated bullish. DEPO has a strong future ahead of them and are establish a great pipeline with products that are making sales.
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Cardium Therapeutics, Inc. (AMEX: CXM) appears to be finally waking up from the slump it has been in for the past month. CXM currently has a 510(k) currently under review with the FDA for their Excellagen(TM) product. This was filed in December 2009. (Since this is a 510(k) application, be aware no specific action date from the FDA can be guaranteed.) The Excellagen(TM) product line covers ExcellagenXL(TM) and ExcellagenFX(TM), advanced wound care management medical devices comprising customized collagen protein-based topical gels designed for patients with dermal wounds. Their Phase 2b study specifically looked at diabetic foot ulcers(DFU). This market has a current unmet need for first in-class therapies.
The market for the Excellagen product is quite substantial. With an estimated 25-30+ million diabetics, CXM estimates about 1.26 million annual foot ulcers. This market is estimated to be in the $1.5-2.4 billion in the US alone. The main product on the market for diabetic foot ulcers is Regranex. In CXM’s Phase 2b study, they found complete wound closure by 12 weeks at 34% with Regranex. Excellagen had complete wound closure by 12 weeks at 45%; that’s more than 30% better than Regranex with no side effects. Also noteworthy is that Regranex currently carries a warning label about the risk to develop cancer. Excellagen could become the first line treatment given those issues. The June 2010 presentation on Excellagen can be found here.
With regard to Excellagen, as part of the final steps required by the FDA for regulatory clearance for Excellagen, CXM expects to have final market-ready product material and process testing completed and submitted to the FDA sometime during the third quarter(3Q ends September 30 since our fiscal year-end is December 31). Once this crucial step has been completed, CXM could see approval somewhere in the next 1-3 months.
Hopefully by then we have heard word of a potential partnership for Excellagen. CXM’s management has made it very clear they plan to license the Excellagen product line. Cardium is focused on late stage product development opportunities and is not a fully integrated sales and marketing organization. Based on their business model and long-term strategy, they plan to place their product candidates into larger organizations or with partners having existing commercialization, sales and marketing resources. The potential licensing deal could be in the several hundreds of millions of dollars based on roughly 500-600k diabetic foot ulcers per year in the US and $500-600 per treatment. This is also ignoring its broader use as a general wound healer. Once approved, this product could easily do $300 million in revenues per year.
Investors shouldn’t forget that CXM has another potential blockbuster in Generx. Generx is a DNA-based angiogenic growth factor therapeutic being developed for the potential treatment of patients with advanced coronary artery disease. Generx is designed to stimulate the growth of supplemental collateral blood vessels in the heart in order to enhance myocardial blood flow (perfusion) in patients who have insufficient blood flow due to atherosclerotic plaque build up in the coronary arteries. The product has gone through a number of trials and is currently wrapping up Phase 2b/3 trials. They are also aiming this treatment at those who do not have access to expensive, advanced care therapy in developing countries. Investors should read the presentation covering most info about Generx.
As of March 30, 2010, CXM had had $11.8 million in cash and cash equivalents and $1.4 million in restricted cash. As of May 6, 2010, 77,852,154 shares of Cardium's common stock were outstanding. They have solid institutional and insider holding for a small-cap biotech. This will be another interesting story to follow over the next couple of months. October is shaping up to be a blockbuster month in biotechs!
DISCLOSURE: No positions.
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- More frequent meetings and correspondence with FDA to discuss the drug’s development plan, trial design and ensure collection of appropriate data needed to support drug approval
- Eligibility for Accelerated Approval, i.e., approval on an effect on a surrogate, or substitute endpoint reasonably likely to predict clinical benefit,
- Rolling Review, which means that a drug company can submit completed sections of its New Drug Application (NDA) for review by FDA, rather than waiting until every section of the application is completed before the entire application can be reviewed.
Over the next couple of weeks, there are several companies to keep an eye on that I haven't necessarily talked about or mentioned in a news recap. It appears most have good things in the works and I have future articles tentatively planned for them
Cleveland BioLabs Inc. (CBLI) - They recently announced that CBLB502, a drug under development for the treatment of Acute Radiation Syndrome (ARS), has been granted Fast Track status by the U.S. Food and Drug Administration (FDA). You should check out their recent 10K.
Cyclacel Pharmaceuticals, Inc. (CYCC) - At these levels, I think CYCC is a good buy. I think 3-6 months from now, they should be back at the $2-3 levels. Everyone is still waiting to hear news about an SPA for sapacitabine in AML and MDS. I think the more recent news regarding orphan drug status for sapacitabine (CYC682) product candidate for the treatment of both acute myeloid leukemia (AML) and myelodysplastic syndromes (MDS). This could be hint of things to come, but who knows. I will watch closely for it to retest the low 1.50's.
Depomed Inc (DEPO) - They are a very strong biotech that has good revenues and a lot of cash on hand. If their recent NDA submission for DM-1796 clears any potential legal hurdles, this thing should take off. A lot of investors seems worried that a potential lawsuit from Pfizer Inc.(PFE) could derail it. The 45-day waiting period should be up soon for PFE to take action. I also imagine Glumetza sales will be a little low because of the recall of the 500mg, but they still have money coming in. They scored $10 million for submitting DM-1796 to the FDA.
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