Tuesday, March 27, 2012
I can also be contacted through the new site tim -at- molecularfuture.com
Please stop by Molecular Future.
Thursday, March 15, 2007
-Tykerb represents the first direct competition between a small-molecule (Tykerb) and an antibody (Herceptin). (If you're thinking Sutent & Nexavar vs. Avastin, remember that Sutent and Nexavar target the VEGF receptor, not VEGF itself.) Who wouldn't rather pop a pill versus receive a transfusion? It's not that simple, though, as transfusions increase patient compliance, which is a huge problem in the pharma world.
-Tykerb is priced about 10% less than Herceptin. We're entering a new phase of the evolution of targeted drugs, where price is a dimension of competition.
-Likewise, DNA is in the crosshairs of Tykerb, and a few other 2nd generation kinase drugs. When appraising DNA's stock, the big question is how much will DNA be able to grow it's franchises versus melt due to competitive offerings and/or competitive pricing. It is interesting to think that DNA's valuation in the medium term could be driven less by their own pipeline, and more by the pipeline of competitors.
In other news, this will be the last post to the Xcovery blog. As some of you know, the fact that there's a public blog that shares a name with our start-up kinase therapeutics company, Xcovery, was totally unintended. Xcovery has a brilliant future ahead of it, and I wouldn't want anything said on this blog to be potentially misconstrued or damaging to the company. In a world where there's only about 30 potential partners for Xcovery's products (if that), ticking off one potential partner via a blog posting (whether mine, or someone's comment) is something that we can't take a chance on.
I'll still put forward opinions and analysis on another, anonymous blog that I'll be launching this spring. Look forward to candid stock analysis, a little more attitude and personality, and perhaps a little less focus on kinases. There won't be a direct link from Xcovery to the new blog, for obvious reasons, but if you see a blog with posts that echo the ones you see here, then you'd be on target.
For your fill of insightful kinase and pharma commentary, please visit the very excellent KinasePro and In The Pipeline blogs.
In the meantime, you can reach me by mail at tim (-at-) xcovery.com
I'd like to thank the people who made ~10,000(!) visits to this space in less than 4 months, and especially those who added to the blog via comments. I started this outlet for my analysis for my own enjoyment, but I'm happy to say that I've gained tremendously from all of the interactions and learned alot from you. I hope that I've been able to do at least a little bit of the same for you.
Thursday, March 08, 2007
SGX's 3 main programs target Bcr-Abl, c-Met, and JAK2.
The Bcr-Abl compound was partnered last May (NVS), which garnered a $25M upfront - though I can't find it on their financial statements - , and $9M in guaranteed research support. Last month SGXP announced a 3Q07 target for an IND filing, which probably triggers a milestone payment.
Under the NVS deal, SGX is responsible for all activities thru the completion of Phase I, and retained US co-promotion rights.
The c-Met program (SGX-523) is unpartnered, and slated for IND filing "within 12 months." Also, SGXP revealed that SGX-523 has "1000-fold more selective for MET over more than 200 human kinases."
The JAK2 program is very early - the press release makes it sound like it has been HTS'd but not much else - with an IND target in 18-20 months.
SGXP has a market cap of $80M, which is a bit better than just a month ago when I last posted about SGX ($61M), including $33M in cash on hand.
The conclusions then are still valid, and are augmented by some info that SGXP published in their year end financials. Specifically, they projected 2007 cash burn at $16-$18M, prior to any partner payments. This suggests that SGXP has about 2 years of cash left, meaning that for investors, you're betting that one or more of SGXP's programs will advance enough to replenish the cash position sometime in the next 2 years.
Using the payments from NVS ($25M upfront, $4.5M in r&d) as a guide, it would only take one deal over the next 2 years for SGX to just tread water. Two development deals in 2 years, or clinical progress by the Bcr-Abl program, or success in a new program started sometime in the next two years would drive value, and only add to the favorable risk equation.
The other prominent CDK inhibitors in development are from Cyclacel, who does not appear to have publicly identified which CDKs are are in their sights. (AZ also has a CDK4 program.)
The concern with targeting CDKs is that they are so fundamental to cell function that any therapy needs to be very, very well targeted, with above average biological knowledge to compensate for off-target effects.
Not to mention the fact that as nuclear proteins, delivery for a-CDK compounds is much more complex than say targeting RTKs.
Perhaps success by Sunesis or Cyclacel will increase interest in CDKs as targets.
Tuesday, March 06, 2007
It's fun to see STIs show up in the mainstream media, especially when they're already here, though there are no approved STI therapies for brain tumors. At least there's Gliadel.
Sunday, March 04, 2007
kinase drugs with key dates in 2007
-label expansions for DNA (Avastin (breast) and Herceptin), IMCL (Erbitux for colon, lung, head/neck, pancreatic.)
kinase compounds in trials with key dates in 2007
-GSK's Tykerb (FDA approval decision in just 2 weeks)
-Wyeth Torisel (FDA approval decision in jless than a month)
-Ariad's mTor phase II data
-Phase II data on 4 EXEL compounds (XL647,784,880, and 999). (Should be a big year for EXEL.)
Not appearing on Feurerstein's calendar: FDA approval for Lilly's Arxxant, NVS' Tasigna, and perhaps the AZ's Zactima and NVS/Bayer PTK/ZK. I'd also expect to see the results of label expansion studies for Sutent, Nexavar, and Tarceva.
The link above goes to Feurerstein's article. Here's a Link to calendar
While you're there, check out Adam's columns. He's accurate, timely, and insightful, and definitely "gets it."
Thursday, February 22, 2007
-it's early, but it doesn't look like Vectibix negatively affected Erbitux.
-For an eight year old drug, Herceptin's nearly half-billion dollar revenue gain is very impressive. (Uh, actually, a half-billion dollar revenue gain is great for anyone, anytime.)
-Earning honors as "First KD to drop off the list," Macugen probably will come very close to zeroing out in 2007, as OSI is exiting the business, as detailed today....
-.....because of Lucentis, which had an amazing introduction in 2006.
Wednesday, February 21, 2007
To a CEO, there's probably few things messages more dreaded than a call from Carl Icahn. (With the possible exception of the classic "I saw your daughter on Springer last night.")
King Carl apparently has developed a taste for biotech, following his experience with ImClone.
This month's lucky recipient of a call from Icahn is David Mott, CEO of Medimmune. Congrats, Dave!
I don't know Medimmune's story well enough to comment on what Icahn's interest in MEDI means and what actions might follow, but it's a good opportunity to see what this means for the industry.
One view might be that Icahn's involvement is likely to hurt the biotech industry as his activities might scuttle 2 viable biotech companies (IMCL and MEDI), either thru their outright sale, or by sacrificing R&D in order to increase short term earnings.
I tend to think, though, that Icahn's involvement is very positive, at least for the industry, if not for IMCL or MEDI. Here's 10 reasons why:
1. Interest by corporate raiders validates the biotech industry as viable businesses, rather than a collection of high-risk experiments.
2. Raider interest will attract other sources (non-alternative investments) of capital sends the message that biotech may be volatile, but not necessarily risky. (As opposed to the current notion that biotech is risky, but not necessarily volatile.)
3. Corporate raiders will keep biotech more slim and agile versus big pharma. (Though I've heard rumblings that some hedge fund could take down a pharma one of these days, so maybe this edge won't hold for long.)
4. Raiders force target companies to focus on "what's next," rather than complacently focusing on the sales and marketing of existing products.
5. Raiding will bring about needed consolidation among mid-sized biotechs, as the raiders view the overhead for companies at this size as a bad investment.
6. Raiders will increase the amount of business discipline within the industry. (And likely instigate management turnover, which could also be management evolution.)
7. Raiders will increase attention on the biotech industry.
8. Biotech has (and probably will always be) a game of capital raising. Raiders will bring more capital to the biotech industry, though the capital will tend to be higher-velocity.
9. Attention to financial returns by biotechs will increase among industry folks, as raider interest is in part related to the very high margins earned by biotechs. The high margins decrease risk for raiders, and can generate large amounts of incremental cash to justify raider transactions, if the margins are believed to be improvable.
10. Raiders (and other private equity types) may innovate new vehicles to finance biotech. One of these 'innovations' is quite old, but new to the biotech industry: dividends. (Icahn, in particular, often presses target boards to increase their dividend to drive stock prices.)
One other wildcard thought: there could be other angles to Icahn's involvement. What if Icahn were to instigate the combination of IMCL and MEDI (and perhaps others)? Ignoring the specific stories of IMCL and MEDI, there could be a nice cash flow generated from combining any mid-sized biotechs, with the surviving entity succeeding much like BiogenIdec. Hmmmm.
Note: these comments come from an N=2, but I tend to think that Icahn's pursuit of biotechs is representative of what's to come for the industry.
With the release of OSI's 4Q and year-end financial statements, the sales results for all 12 kinase-targeting drugs are finally available for the year 2006.
And what a year it was.
Kinase-modulating therapies (KDs, or kinase drugs) generated $8.5B in revenue in 2006, with 53% growth over 2005. Both figures are especially impressive given the fact that five of the drugs have been on the market only since December, 2005, with ex-US approvals for these and others still growing.
A subset of these drugs with anti-angiogenesis effects totaled $4.6B, with 80% year over year growth. Drugs specifically targeting VEGF as cancer therapies totaled $2.1B, representing an 88% growth rate.
A quick glance at the 4th quarter indicates $2.5B in KD sales, equating to an annualized $10B. Assuming a simple organic growth rate of 20%, we're looking at $12B in sales, prior to expanded approvals and new product introductions.
New KD introductions could include, at a minimum, Tykerb (GSK), Torisel (WYE), Arxxant (Lilly), and potentially Tasignia (NVS). (Tykerb and Tasignia could cannibalize some existing sales.)
All told, we might see KDs contributing nearing $15B in annual sales in '07, with greater growth still to come.
Thursday, February 15, 2007
"Forty-two blockbuster drugs will lose their patents in 2007." - Wow, I didn't realize it was that many.
Biotech industry thoughts from Gary Pisano as he plugs his very excellent new book.
Science Business: What Happened to Biotech?
Speaking about the fundamental business flaws of the biotech industry: "biotech suffered from a basic mismatch between the objectives and requirements of science and those of business. Specifically, Pisano argues, the business side of the industry was continually challenged by three characteristics of science: profound and persistent uncertainty, the complex and heterogeneous nature of the scientific knowledge base, and the rapid pace of scientific progress. "The health of the sector depends on how well it can cope with all three of these challenges," writes Pisano."
Making Biotech Work as a Business:
"R&D lead times—the time from clinical development to trials—increased from slightly less than thirty months in 1989 to around seventy months in 2002."
Update: Milkshake chips in his related thoughts here.
Wednesday, February 14, 2007
Based on public info, IVGN bought BREL for about 6X sales, and sold them 3 years later for 1.9X sales.
This news makes it onto this blog 'cuz:
1) IVGN, thru the former Panvera is the second best provider of kinase specificity testing,
2) the GM of BioReliance is an Upstate alum. (Good luck, Ted.)
3) This allows me to yet again tweak my friends at IVGN, Sue and Chris. Sue, still using that snorkel I sent you to find your IVGN stock options?
Monday, February 12, 2007
Read the linked article for something to ponder, though. ONXX partner Bayer projects PEAK Nexavar sales at ~$650M even WITH a liver cancer (5th most common cancer) approval, even with ~$130M in sales in the less than a year that Nexavar has been on the market. (And selling at a current annual run rate in excess of $150M.)
Is this yet another example of underestimating the market potential of targeted drugs? (Remember how Daniel Vasella said at introduction that NVS expects Gleevec sales of a few hundred million dollars a year? (vs. $2.6B in 2006.))
Thursday, February 08, 2007
SGX - with ~$37M in cash on hand, is valued at ~$61M (incl. cash), valuing their entire platform and pipeline (the Met program and a pre-clinical bcr-abl program) at $24M. Sadly, this values a pre-clinical lead at around $10M.
This makes SGX either a zombie, or prone for a big upward explosion sooner or later, as it wouldn't be hard to imagine SGX being scooped up by a bigger fish, given interesting data. Strictly speaking, SGX intends to file 2 INDs in the next 12 months, each worth ~$100M each (= a gain of $180M above the value already built), meaning that if SGX delivers and the industry norms hold, SGX stock would quadruple (though some cash and value would be burned over period leading up to the filings.)
Of course, this all depends on the math holding, and there's a significant downside, as with any drug development.
But the SGX story is more interesting than that - SGX has a service business (contract structural genomic analysis) where SGX resells access to their beamline facility. In the first 9 months of '06, SGX earned $13M in service revenue.
The same 9 month income statement shows a loss of $23M on that $13M revenue, but a large part of the loss is due to spending on a now canceled late stage clinical program. A naive guess says that of SGX's $35M in R&D YTD, $25M or more related to the canceled program, meaning that SGX COULD be at least breakeven on an ongoing basis, which is a good thing, since I don't think they're going to raise any cash soon.
Saturday, February 03, 2007
Somewhat related, Forbes comments on IMCL - "Nowhere to go but up." Gotta think that IMCL's future hinges on what happens with BMS. Another point: this article reflects thinking that IMCL's valuation is solely based on financial performance, meaning no one really is putting any value on the pipeline.
Research and Markets says Discovery to IND takes 6.5 years and 40% of the total R & D budget for a program. Gotta think these numbers reflect the requirement to discovery a target, as well as a compound.
Monday, January 29, 2007
One interesting question for DNA: will their solutions also be biologicals, as most of their current oncology offerings? They certainly have the expertise to do so, but you could argue that other companies (particularly Amgen) have a big head start in this area.
The other interesting stat in this article: DNA went 15 for 15 in it's critical trials (Avastin, etc.), which the company pegs the odds of success at 1 in 300,000,000.
Not to diminish anything that DNA has accomplished, but I think this stat would only be correct if these 15 compounds were developed in one insanely profitable month of serial chemical synthesis. The 15/15 1:300M odds are built on a probability of one success at 1 in 9155 (.0109%), which I think is Genentech's parallel for the old saw of "1 in 10,000 compounds ever receive FDA approvals."
The best analysis would be to identify which starting point these 15 success all have in common. For fun, let's assume the accomplishment is 15 straight compounds to go from IND to FDA approval. If you believe as some do that an IND compound has a 1 in 10 chance of FDA approval, then Genentech's accomplishment has odds more like 1:32768. (I'm a little rusty, but I think the chance of doing anything 15 times in a row is 2 (to the) 15th (32768) times the probability of one success. Anyone want to check my math?)
UPDATE, based upon actual math that works: 1:300M represents 15 consecutive successful trials each with a ~27% chance of success, which is probably DNA's assumed success rate for a compound reaching Phase I trials. (The Milken template suggests 20% for NCEs, and acknowledges that biologicals have slightly higher success rates.)
It's more likely, though, that the 15 trials cited by DNA include multiple trials for single compounds, and various stages of trials (i.e. does this figure include Rituxan trials for RA? If so, Phase 1 trials really weren't risky (or perhaps even necessary).
No matter the math involved, DNA's accomplishment is impressive!
Friday, January 26, 2007
Unfortunately, following the article, Scios' compound ran into tox issues, so it never made it to market (particuarly for it's first application, RA), but at least it appears that the CEO is still alive and kicking - a quick GOOG search shows news articles about him in 2006, so presumably he's very healthy.
Wednesday, January 24, 2007
-gene target interest is very broad. I counted at least 25 different gene targets as article themes.
-well-understood targets draw the most attention: Bcr-Abl and EGFR papers were the theme of at least 12 of the 100 papers.
-the most popular article subject without a drug yet developed: PI-3 (6 articles)
-the most popular article: Dario Alessi's seminal LKB1 article.
-surprising attention: DAPK (though with only 3 articles, one shouldn't read too much into this.)
-notable for it's absence: RAF (only article #100), popular RTK targets VEGFR and PDGFR. Also, I think there was only one Aurora-themed article, and little attention to cell cycle kinases in general.
The Kinase Research Portal has a cool application (linked in the header to this post) that shows kinase publication history and allows you to see target-specific publication trend graphs. Here's an example showing p38 publication trends (with a surprisingly steep upward trajectory.)
-over all diseases, 42% of leads failed P3, slightly worse than most models anticipate. (The Milken Model anticipates a 33% failure rate at this stage for small molecules.)
-of the failures that could be studied, 50% failed due to efficacy. (Kinda late to find that out, eh?)
-biology still matters in P3 - novel mechanisms of action generated a disproportionate amount (2X) of drop-outs, even in P3.
-quantitative endpoints (biomarkers) improve the likelihood of P3 success.
I wonder if OSI can buy back their product from Genentech, perhaps financed by a big pharma sugar daddy like NVS. If you slap DNA's P/E on Tarceva, the price would be something like $21B (versus OSI's valuation of $1.9B) so I can't imagine this happening soon. Unfortunately, OSI's current valuation doesn't really argue for an acquisition by DNA, and that doesn't even take into account the potential anti-trust concerns of such a merger.
Tuesday, January 23, 2007
DNA - or perhaps the Google of biotech - just reported another solid quarter and full year.
DNA's '06 accomplishments bear repeating: 8 FDA approvals in '06, a slew of in-license deals, and a 40% rise in revenues.
Just to dwell on Avastin for a moment, '06 revenue increased 54% to $1.75B, with fourth quarter growth of 36% (or 13% sequentially - a good year in one quarter!) Results like this make it hard to remember that the product is less than 2 years old, and approved in only 2 indications (MSCLC and Colon), though likely to show benefit in many other solid tumors. I haven't found any analysts willing to project >$3B in revenue for Avastin, but I'd take the "over" on that bet.
(btw: the market has ALWAYS been behind in Avastin appreciation. In less than 2 years, Avastin has already busted some analyst's peak projections.)
'07 and beyond look great too - company issued guidance puts EPS growth at 25-30%. (Versus fourth quarter's 75% EPS growth.) Using this as a marker for revenue growth suggests that DNA growth is declining basically only because of the law of large numbers, as the growth range puts new revenue for '07 roughly equivalent for '06 ($2.6B in '06, $2.3B-$2.8B) Yep, DNA is likely to deliver >$2B in fortress-like* revenue growth, without any substantial new product introductions (I think.)
(* fortress-like, as the majority of the revenue is derived from young biological products unlikely to face generic competition for a while, with a wide moat of clinical trials data keeping competing products at bay. DNA has more than 250 different clinical trials ongoing using existing products.)
Across all industries, it's been my experience that growth stories eventually play out one of two ways: shallow growth stories eventually peter out, after a period of management attempts to maintain growth momentum thru financial levers such as M & A (Invitrogen), fraud (Healthsouth and MCI come to mind), or, with skeptics mounting, a high quality team delivers as promised, and then some (see Google, Commerce Bank, or White Mountain Insurance.) DNA sure looks to me like a company that ultimately belongs in the latter category.
The only problem is valuation. DNA has a very GOOG-like TTM P/E of 51 and a forward P/E of 30, based on '07 consensus of $2.94. (This might not reflect earnings revisions issued in the last week).
By comparison, Merck - valued at roughly the same as DNA - has 2.3X as much revenue and P/Es of 19.5 and 17.5 (forward).
But with the monstrous growth provided by existing products, extensive upside from >250 clinical trials, and monstrous R & D expansion (which could be throttled back to make EPS numbers in the future, DNA is and will continue to be the GOOG of biotech, making it a great choice for the future.
Thursday, January 18, 2007
Wednesday, January 17, 2007
These figures are for 2004, so much of the progress in targeted therapies is not yet reflected in the statistics. However, the biggest %age drop in death rates occurred in colorectal cancer, which could be influenced by the use of Erbitux and Avastin - both approved in 2004.
One stunning nugget from the ACS stats: males have a 45.3% chance of developing a cancer during their lifetime. (Women: 37.8%)
Monday, January 15, 2007
Also: "Even high-risk patients have close to a 70 percent chance of getting to what we call a complete cytogenetic response, which is an optimal response to the drug. That is still six or seven times better than they ever could have hoped for with the previous standard therapy. So, even for high-risk patients, the likelihood of responding is quite high."
Gleevec is being followed by nilotinib (NVS) and dasatanib (BMS), and will hopefully improve these numbers. What I can't make sense of, though, is the choice of this disease (and these drug targets) as the main focus of a number of other biotech companies.
I understand and appreciate the scientific merit, and there is perhaps a business boost thru the validation that the preceeding therapies provide, but just off the top of my head, I can name several entrants:
even a DoD funded team at VCU
(plus, I feel like I'm blanking on one or two more)
I really hope this effort results in the eradication of the disease, but surely, even if that is accomplished, 3 to 5 companies will swing hard and create a drug therapy, but ultimately wish that they'd spent their time on something else instead of coming in 3rd or 4th in a 2-horse race.
Is this a call for government regulation of R & D targets? Not quite, especially since I'm a raging libertarian, but you can't help but make parallels to the days before government regulation of the electricity distribution business (early 1900's) when as many as 20 different companies' wires serviced some neighborhoods, pre-regulation.
- The targeted drugs temsirolimus and sunitinib (Sutent) were shown to help people with advanced kidney cancer, which is notoriously difficult to treat, and seemed to have fewer side effects than conventional therapy.
- Another study found that the investigational drug lapatinib (Tykerb) could slow tumor growth in women with an aggressive form of breast cancer that grew despite treatment with trastuzumab (Herceptin).
- Dasatinib (Sprycel) eliminated or decreased the number of abnormal blood cells in people with chronic myelogenous leukemia (CML) who could not tolerate or had become resistant to treatment with Gleevec (imatinib).
- Adding cetuximab (Erbitux) to radiation therapy for head and neck cancer slowed the growth of the cancer and helped patients live longer.
It's a great view when you can take a year-wide view. It is also educational to realize from these articles that targeted therapies are not yet first line therapies (mostly; congrats to ImClone for the recent approval of Erbitux as a first line therapy). It's also easy to forget that many clinicians haven't yet fully integrated targeted therapies into their practice, and that it's articles like these that are helping to spread the news.
A couple of good quotes for the general public emerged from the article linked in the header:
'Targeted therapy is "one of the most exciting new themes in cancer therapy," according to José Baselga, MD, chief of the medical oncology service and director of medical oncology, hematology, and radiation oncology at Barcelona's Vall d'Hebron University Hospital......."Cancer cells are not as resourceful as you would think," explained Baselga. "If you can hit them in 2 critical pathways, you can destroy them, so if you can combine 2 or 3 therapies, you can cause profound cell death."
And some interesting Gleevec stats were revealed by the Guru of Gleevec, Brian Druker: "If you look at the data overall, 18% of patients [on Gleevec] have some progression event at 5 years, and another 5% discontinue because of side effects," he explained.
Wednesday, January 10, 2007
'543 is a combo EGFR + ErbB2 small molecule inhibitor in a Phase 1 started a year ago, so data is due soon, but I think it's premature to boost this stock until ARRY publishes results. (Which I'm guessing pharma is waiting on as well.)
If effective, '543 would be a blockbuster, unless you're in the crowd that believes that medicine will demand single-target inhibitors to provide the most custom tailored treatment (versus multi-kinase inhibitors with potentially negative ON-target effects), but this debate is really a few years off.
ARRY is valued ~$510M, with about $100M in cash on hand.
Quick, back of the envelope calculations suggest ARRY's pipeline is worth the $410M difference.
Interestingly, ARRY's value didn't really change following DNA's partnering with EXEL on XL-518 (MEK) (deal: $40M @ IND, suggesting ARRY's product - now in phase II for melanoma - is probably two years ahead and worth an additional ~$100M, depending on a number of factors. I would have guessed that the endorsement and imputed value from the DNA deal would have goosed the stock $25-50M or 5-10%.
ARRY's most recent corporate summary.
Assuming the undisclosed sale price was driven by just one strong buyer (instead of an auction), I'm led to wonder 1). why an outright sale from Amphora's perspective? 2) why an outright purchase by DNA? and 3) what does Amphora have that DNA doesn't? 4) what does this mean for other small biotechs?
Outright sales are rare - I can't find too many other examples of a company selling a lead outright (some exceptions are companies closing up, like Triad's p38 program sale to Novartis.) From Amphora's perspective why sell outright if there's a chance at long term value (royalties or milestones?) One reason might be a need for $$$ to support their numerous other programs, or, perhaps DNA made them an 'offer they couldn't refuse.'
From DNA's perspective, why buy when you can license which would reduce near term risk, not to mention address the implicit message that the lead can't be that good (otherwise, why would Amphora sell?)? One reason you buy: if you don't want to commit to any long term development of the program purchased. This might especially make sense if DNA is shepharding multiple leads to a target thru a competitive development.
No matter which of the above is the case, it's a safe bet that there isn't enough (any?) compelling data on the program sold to DNA, otherwise DNA would manage the financial risk and impact thru a license, and Amphora would want to be rewarded by clinical success.
One might guess that DNA purchased with the intent to 'flip' the lead, but that would be greatly out of character for DNA. Another guess here is that the leads are so early, but Amphora so wanted a partner, that the only deal that was worth DNA's time was a sale. (Or, in a slight twist, Amphora wanted to maximize short term cash inflow, but why didn't that scare off DNA?)
Is DNA doing some bargain shopping? Are they buying a piece of data that in DNA's make/buy calculations seems cheaper thru Amphora?
Ultimately, in a twist of biotech logic, the LEAST risky deal for DNA would be a purchase, as no future commitment is created.
My guess is that Amphora needs cash badly (I didn't see any press releases detailing VC), and the validation of a transaction with DNA, while DNA saw a program sufficiently novel enough to spend some pocket change on.
What this means to small biotech is:
1) You CAN sell lead programs to the best biotechs to fund other priorities, but you'd better not expect much $$$ in return.
2) Either: in this seller's market, no deal form is out of the question OR: DNA is using it's buyer's leverage to drive very favorable deals. (My guess is the former.)
3) DNA is diversifying it's pipeline not just by indication or target, but also deal type. This is the sort of thing a 'lead dog' can do with great confidence (versus the competition playing catch-up.) This suggests a lot of faith by DNA in future corporate growth.
Plus 1 'perhaps': perhaps this deal indicates that not everyone believes in the industry models where an IND lead is worth (on average) $100M, as assuming the sales price was small, discounting this figure either suggests that DNA got a steal, or Amphora discounted the present value very, very far.
addendum: KinasePro think it's Amphora's Akt program that was sold.
Monday, January 08, 2007
Friday, January 05, 2007
Congrats to Pharmacopeia on their JAK3 deal with Wyeth. $5M upfront, $9M in research funding (3yrs), $175M in potential milestones, plus double digit royalties. JAK3 program sounds preclinical, though I think it's been active at PCOP for a while. Looks like a low-risk deal from WYE's p.o.v. Interestingly, PCOP's valuation increased less than $3M today on the news ($2M less than the upfront), to $95M (with about $30M of that in cash). PCOP, with a partnered p38 and now JAK3 program might be a good stock to watch, if you believe that a single IND program is worth $100M. The negative case is that PCOP appears to have less than two years of cash on hand, before accounting for clinical trials expenses. Still, any clinical success here by PCOP (or partners) should send this stock flying.
Genentech announces successful results from a P2 combining chemotherapy & Omnitarg err..... Pertuzumab, an HDI or HER dimerization inhibitor. Good news in the fight against ovarian cancer.
Aveo licenses a clinical VEGF program from Kirin Brewery? KRN951 for RCC is targeted to enter P2 this summer.
(Incidentally, here's a picture of the headquarters of the Asahi Brewery that I saw in Tokyo last summer while cruising the Sumida River. The taller building is meant to resemble a glass of beer. The shorter building also represents something beer-related that I can't recall.)
Forbes expects change in the pharma industry in '07. Not that the pharma industry was uncompetitive prior to now, but, the article points out that competition, Congress, and internal shake-ups will jolt pharma.
MD Anderson (MDACC) has been productive recently, reporting good results from a P1/2 trial of the Merck/Vertex aurora inhibitor (MK-0457 / VX-680) in CML, ALL, and MPD. How much of this is due to VX-680's FLT3 inhibition?
Separately, MDACC's ABT-737 - a Bcl-2 inhib - works well in AML, even killing AML stem cells.
Wednesday, January 03, 2007
"For the first time ever, sales of oncology (cancer) drugs in 2006 will outstrip sales of the anti-cholesterol drugs that have been the industry's best sellers, according to market researcher IMS Health. In 2007, sales of cancer drugs will grow nearly three times as fast as drug sales overall, while sales of anti-cholesterol drugs will creep ahead by just 1% to 2% in 2007. That's a drop from projected growth rates of 6% to 7% for anti-cholesterol drugs in 2006."
"As the world ages, more and more people are surviving the diseases that once killed them before they had a chance to develop cancer. So as the world ages, cancer is a bigger problem for more and more of the world's population.
But this market wouldn't be growing so fast if it weren't for another huge change: More and more anti-cancer treatments work. Survival rates have improved so much that some cancers can be considered treatable chronic diseases, and others are on track for treatment as preventable conditions. All this will lead to 20% growth in the oncology drug market in 2007. Remember that the drug market as a whole is projected by IMS Health to grow by just 5% to 6% in 2007 and the anti-cholesterol market by 1% to 2%."
In addition to last month's BMS deal ($60M upfront + $20M each for 3 INDs selected by BMS.) EXEL has just optioned to Genentech XL518 - a MEK inhibitor just filed as an IND last month.
From the press releases, this looks like a great deal for both sides. It appears that EXEL is on the hook for all phase I expenses, and DNA can then decide whether to execute a pre-negotiated license prior to phase II. Assuming conversations have been going on for a while, DNA waited until IND-ready, and still is only obligated to spend the upfront payment on the program - depending on terms, DNA might be thinking it's worth the upfront fee just to control the rights to see the Phase I data on a compound targeting a 'new' kinase.
From EXEL's side, their financial risk is the phase I trials expenses, which I'm sure that they can handle financially (if it's not less than the DNA upfront), while booking a partner early on for a pioneering program. (It seems a law of biotech that I'll have to put some more thought into before writing too much that you should partner early on novel leads to novel targets, and partner later for novel leads to established targets.)
DNA is offering $40M in upfront and milestone payments. I'd REALLY like to know the split on that - $20M signing (based on BMS precedent last month) + $10M @ exercise + $10M for P2 milestone?)
(It could be as high as $40M upfront and after nominal milestones, as the press releases speak of additional payments should DNA exercise (after phase I).)
Kudos to EXEL for retaining US sales rights. They've drawn a top-notch partner to XL518, without tieing themselves so tightly to the partner that they become a single-buyer M&A candidate (like ImClone or Onyx.)
(EXEL seems to have done a great job to date in spreading around their connections (and future M & A interest) via partnerships with BMS, DNA, and GSK, to name a few.)
Friday, December 22, 2006
Thought provoking BusinessWeek interview with Gary Pisano about pharma/biotech dynamics, particularly saying that biotechs really don’t create value, mostly because they’re “science-based businesses., rather than businesses that do science.
In Pisano's words, the deck is stacked against start-ups as biotechs lack “the scale, the capability, and the experience across the constellation of technologies to do it effectively.” He also says that integrating all of the pieces is impossible for a start-up.
Pisano goes so far as to suggest that
Pisano goes so far as to suggest thatstand alone public biotechs will cease to exist, and that biotechs will tend to form deeper relationships but with fewer partners.
Thursday, December 21, 2006
Sunday, December 17, 2006
I don't think this is old news, as statistics tend to lag events by a few years, so it wasn't really , likely due to reduced
One side effect of this news: the patient population for Herceptin (Erb-b2+) will happily decline slightly. Even with the reduced incidence rate, Genentech and BMS will still have good markets for their targeted products (Herceptin and Tykerb, respectively.)
This by extension suggests that inhibiting Akt1 has an immune-supressing effect, and perhaps inhibiting other genes in the Akt pathway have the same effect.
Tuesday, December 05, 2006
Other interesting item from the article: 10% of Nexavar use is off-label.
btw: I'll be out of town for a week starting tomorrow, so no posts likely in the meantime.
Thursday, November 30, 2006
Axitinib - Sutent successor, firstly for RCC, with picomolar potency vs.VEGFR 1, 2 & 3 and nanomolar potency against PDGFR-beta and KIT, which, according to Forbes is "moving soon into final stage trials for thyroid breast and lung cancer."
CP-751871 - IGFR-1 Ab for prostate and lung cancer, now in P2.
CP-690550: JAK3 inhibitor for RAI'll dig into Pfizer's news to see what else they're touting.....
Hmm....time to expand those market projections
Access is an emerging problem:
"Nearly one-fifth of office-based oncologists are planning to limit treatment of Medicare patients in the next 12 months.
Office-based oncologists report that 16% of their Medicare patients who are candidates for targeted therapies fail to undergo treatment for cost- related reasons, most frequently because the patient cannot afford the copayment or coinsurance," said Mary Argent-Katwala, Ph.D., analyst at Decision Resources. "The extent of this problem varies between therapies: oncologists estimate that 10% of eligible patients fail to receive Avastin because patients cannot afford the copayments or because the drug is not available on the formulary for the desired use; for Sutent, the corresponding figure is 52%."
Reimbursement: I wonder if the difference in uptake between Sutent and Avastin is largely explained by Avastin's ~15 month earlier FDA approval, meaning that the drug has had enough time to be added to most formularies. (Or is it the difference between options available to treat CRC (Avastin) vs RCC (Sutent.))
Patient opt-out for treatment based on $$$: I'd be real curious to know if this is an example of patient self-rationing (i.e. they don't see a good cost/benefit return for Avastin or Sutent extending life by a few months), or, is this a consequence of American's poor savings habits, as there is interest in treatment, but no cash available?
Wednesday, November 29, 2006
"Many scientists have realized that blindly screening millions of compounds in the lab and hoping for a hit or a lead is an irrational drug design process that rarely pays off,"
"HTS starts at approximately $1 million per project, with no guarantee you'll find anything useful. "
"Structure-guided design helps to localize subtle features and different conformations in the binding pocket."
"The protein kinases exemplify a family where the potential exists to accelerate lead discovery and optimization by inferring between the massive amount of structural and chemical data from gene family members."
AZ is working on CDK4
Incidentally, good RA summary: "Rheumatoid arthritis is a painful, chronic autoimmune disorder, characterized by inflammation of the lining of the joints. It affects more than 2 million Americans; up to half of those with the disease are disabled after 15 years due to disfigured joints. Standard therapy for rheumatoid arthritis now includes agents that suppress the immune system, but many patients do not benefit from such treatments. They do not get adequate reduction in the symptoms and signs of disease; they may also continue to have damage to their joints or develop side effects that make continued use of such therapies impossible. Thus, new approaches are needed."
-Merrimack Pharmaceuticals has developed a computational model of the ErbB receptor network.
-Cellular Genomics' drug discovery platform incorporates several proprietary tools to characterize specific cell signaling pathways. The company is currently targeting several kinases involved in angiogenesis, such as the EphB4 receptor.
"The focus on single purified kinase inhibitor screening has lead to poor efficacy in development, because of the ability of tumor cells to compensate and circumvent a block of a single node in the signaling network. Hence, there is a need for a systems biology approach to assay the activity of the signaling pathways downstream of the kinase targets," says Steve Horrigan, Ph.D., interim vp of research at Avalon Pharmaceuticals (www.avalonrx.com).
When added to the problem of genetic mutations, over the long term, can anyone beat the cancer's survival instincts?
Also interesting is how one company (Biotica) seems to exist to develop derivatives of rapamycin, seeking greater efficacy and stability.
Monday, November 27, 2006
Stats that justifies the blog posting:
"the average biotech take-out premium has jumped to 62 percent this year from an average of 49 percent over the past eight years."
"average returns from trade sales are now around 2-1/2 times higher than those from IPOs."
Interestingly, the article highlights two deal examples that have totally contradictory rationale: Shire - definitely a products company vs. Sirna, which seems to me to be more of an enabling technology company (or perhaps even an IP play.)
Also, I didn't realize it, but NVS' Gleevec successor is now dubbed "Tasigna." I wonder why they didn't build off the Gleevec recognition? (Gleesigna?)
Clinical data for Tasigna looks great, per the press releases.
Separately, NVS has announced an intent to file for Tasigna approval before the end of the year.
Monday, November 20, 2006
Last week, Lilly released information on Arxxant - a oral small molecule PKC-beta inhibitor. The data look positive: Arxxant patients were about half as likely to have deteriorated vision due to diabetes complications than placebo patients. No toxicity was reported.
PKC - beta has been linked to blood vessel damage to the nerves, eyes, and kidneys of diabetes patients. The application under trial was diabtes retinopathy, a disease affecting ~4M Americans.
Analyst estimates for peak Arxxant sales (in 2010) range from $200M to $650M.
I don't know Lilly's target revenue per patient, but if the US market represents half of the world market (we're fatter), it seems like peak sales are likely to be higher given a modest price and assuming continuous, chronic dosing (i.e. an accumulating patient base - similar to the Gleevec effect.)
Consider these findings from Iressa trials:
"EGFR inhibition response rate to Iressa was 27% in Japanese patients compared with only 10% in non-Japanese patients, but that this difference was not as significant as the differences in response rate favoring women over men, patients with adenocarcinomas over squamous carcinomas, and healthier patients over less healthy ones (“performance status”, or the ability to perform the activities of daily living without assistance or significant symptoms). The US-based IDEAL-2 trial also showed women receiving iressa to be more likely to have symptomatic improvement (50% vs. 31%) and significant tumor shrinkage (19% vs. 3%) compared with men, and also that patients with adenocarcinomas were more likely to have symptomatic improvement (43% vs. 30%) and tumor shrinkage (13% vs. 4%) compared with those who had squamous tumors. "
Good news (in terms of tumor shrinkage, but NOT survival) if you're a non-smoking Japanese woman with an adenocarcinoma, bad news if not.
Kind of amazing that this sort of knowledge is only coming to light ~3 years post-FDA approval. (I'm not suggesting that approval be delayed, just that with any approval, there's still many important outstanding questions.)
This also brings to mind the question of who is likely to sponsor the development of the relevant intelligence and diagnostics to further segment patients. You might guess that the makers of EGFR inhibitors would, but is it in their best interest to EXCLUDE potential customers? (Plus, there's enough competitors among EGFR inhibitors that no one is likely to want to pay to develop this market for the benefit of their competition.
(That being said, I'm pretty sure that I've seen press releases announcing that AZ has sponsored EGFR biomarker development, with CST, I think.)
Thursday, November 16, 2006
The linked article suggests Tykerb will peak at $2B in annual revenue, which seems a bit large.
A small molecule dual EGFR + Her2/neu inhibitor, Tykerb could supplant Herceptin (~$750M in 2005 sales) and potentially Tarceva, meaning that Genentech is solidly in GSK's cross hairs (not to mention other EGFR product makes like ImClone/BMS, and Amgen.)
IMHO, DNA needs to rev up Tarceva marketing ASAP.
Researchers at Ohio State have developed a new oncology therapeutic derived from the same chemical structure as Celebrex, which was previously noted to have an anti-cancer effect. The derivative compound (lead: OSU-03012) shares lineage with other COX-2 inhibitors.
It turns out the new compound and Celebrex inhibit Akt, which has long been a target of interest for pharma. (I don't know why prior Akt efforts have failed - was it toxicity? If, watch interest in Akt ramp up with the identification of safe Akt inhibitors based on COX-2 inhibitors.)
Wednesday, November 15, 2006
It’s been long talked about that cancer and inflammation are linked diseases, with some even suggesting that they’re the same disease (and managed by IKK kinase), so the Nexavar finding isn’t shocking, but it’s most important implication may be an extended application for this class of drug.
In spite of this news, stock in Onyx (Nexavar's maker) dropped 1.8%. I still think Onyx is a buy, as I detailed here:
The news that DNA is raising Tarceva pricing is interesting given that about a month ago, Genentech (DNA) announced a cap on per patient costs for Avastin, especially since both medicines are anti-angiogenic solid tumor fighters (though targeting different genes.)
There's probably 2 reasons for the difference:
1) Avastin is a monoclonal antibody, and much more expensive to produce.
2) Avastin is wholly owned by DNA, while Tarceva is partnered with OSI. OSI probably doesn't need to send the same social message that DNA does, and therefore is not as interested in capping costs. Or, OSI wants to raise prices to increase Tarceva's profile within DNA (and hence profitability).
(It's pretty clear that DNA is pushing Avastin harder than Tarceva. I'll illustrate this in a future post. Tarceva may be the better product in the long run, strictly due to patient compliance costs in consuming a small molecule (pill) versus weekly injections (Avastin.)
It's still hard to accept why OSI and DNA are both partners and competitors in this space and wonder how long this will last - with either DNA buying OSI, OSI buying out of the DNA agreement.
OSI has small molecules in development that could/would supplant Avastin, but they're years away
Somewhat related: NICE (UK health cost/benefit agency) just determined that Tarceva is not cost effective, and is therefore not available in England as part of NHS (public) medical care. Tarceva is, however, covered by the NHS in Scotland.
The decision isn't final, though.
This brings up a deep moral question. I guess I shouldn't be shocked that Britain has coldly run the numbers on Tarceva, and are willing (and able) to tell people who could benefit from Tarceva that the government doesn't find their additional time on this Earth, or improved quality of life to be a good investment.
Story: NICE gives thumbs down to Tarceva
Monday, November 13, 2006
SUPG has an interesting selection of targets. Pim, Plk, and Axl aren't yet of wide interest, meaning that SUPG is taking on enormous target biology risk in addition to the native chemistry/drug development risk.
SUPG is valued at ~$275M, with cash on hand of ~$75M.
If so, from a business perspective, BMS just became a bit more valuable. Analysts predict annual sales of $500M for dasatanib (Sprycel), but it if this article is right, may be more like Gleevec's $2.2B annual revenue.
Does this suggest a Novartis buy-out of BMS?
BMS is trading at $24.50.
Note, Cyclacel also said CYC116 was just about to IND this time last year, and while CYCC has ~$60M in cash on hand, the company's market value is only ~$90M
Thursday, November 09, 2006
BIBF-1120 - targeting VEGFR, FGFR, and PDGFR
BIBW-2992 - targeting EGFR and Her-2
BI-2536 - targeting Plk-1
What I found interesting about the announcement:
-BI comes VERY close to saying that all 3 are in Phase II trials. But not quite. It really looks (after a database search) like only BIBF-1120 is actually in phase II.
-BIBF-1120 does not appear to also target Kit or (likely) Flt-3, which multi-TK inhibitors often do. This might be by design, or just something that BI isn't willing to disclose.
-This is the first Plk-1 compound in clinical development (that I'm aware of).
-No Src inhibitors under development - is that due to lack of interest, or discovery success?
-it is now stacking up that every serious pharma has (at least) two anti-angiogenic multi-TK compounds in development. Typically, one targets VEGFR (and associated receptors (most frequently PDGFR)), and the other targets EGFR.
BI is firmly in the race!
Tuesday, November 07, 2006
It's probably too early to declare a winner (the winner may be determined by who does the best, quickest job expanding the label), but Sutent (Pfizer) almost doubled Onyx/Bayer's new revenue for the quarter.
I suspect that Onyx stock may take a hit based on the comparison to Sutent, but these figures actually put Onyx on track to surpass '06 Nexavar sales. A good 4th quarter with 33% growth to $59M would put Nexavar '06 sales in excess of $160M. I'm pretty sure that consensus estimates were around $140M.
Sutent results really look strong, especially considering that Pfizer has a not-yet-mature oncology sales force.
Monday, November 06, 2006
Simple math says average $9M upfront and $116M in potential milestones per program, though it's probably safe to assume that ~$2M-$5M in cash is to cover Ambit's contract screening. The result is a slightly below market bounty per program for Ambit, but this could easily be offset by a contribution of effort by Cephalon to the development of the 2 programs.
One thing to keep in mind: all trials data relates to GIST, which is probably not the target market for AMG 706 (or Sutent, for that matter.)
Other interesting details:
-daily dosing, so little tox worries.
-125mg dose - seems large, indicating reduced potency?
-still only about a third of all patients demonstrated a clinical response.
-pretty high rate of adverse reactions (nausea, hypertensions,etc.) affecting it would seem nearly all participants.
-explicit mention of further inications/trials (NSCLC and breat, in particular) and monotherapy targeting of medullary thyroid cancer, which has no effective treatment.
IN all, AMG 706 sounds like a very competitive product.
Friday, November 03, 2006
Wednesday, November 01, 2006
Tuesday, October 31, 2006
Monday, October 23, 2006
Researchers from the Medical College of Georgia and colleagues published in Nature that soluble VEGF receptor 1 promoted avascularity and optical clarity in the cornea of mice by serving as a "trap" for VEGF-A, a stimulator of angiogenesis. They believe soluble VEGF receptor 1 (also known as soluble FLT1) can be used to prevent or treat neovascularization, and they said it may serve as a target for inducing angiogenesis for pre-eclampsia, wound healing, stroke and heart disease.
Friday, October 20, 2006
Thursday, October 19, 2006
$245M in potential downstream payments. ($40M for phase 3 initiation, $70M for marketing approval, $135M in sales milestones beginning at $200M in annual sales.)
Shared development expenses.
Shared ex-US profits.
For ex-US rights to a phase II compound targeting an indication that there's already one approved remedy (Macugen) and another pending (Lucentis.)
Tuesday, October 17, 2006
Thursday, October 12, 2006
Tuesday, October 10, 2006
In 2005, the four major marketed drugs targeting the EGFr pathway, trastuzumab (Herceptin; Genentech), cetuximab (Erbitux; ImClone Systems); erlotinib (Tarceva; OSI Pharmaceuticals), and the now withdrawn gefitinib (Iressa; AstraZeneca), generated worldwide sales of more than $3 billion. The recent entry of panitumumab (Vectibix; Amgen) into the USA market and the possible approval of Tykerb, create new challenges in clinical use and marketing of these agents.
Oncology Drug Development Update - Targeting the Epidermal Growth Factor Receptor (EGFr) Signal Transduction Pathway: "In 2005, the four major marketed drugs targeting the EGFr pathway, trastuzumab (Herceptin; Genentech), cetuximab (Erbitux; ImClone Systems); erlotinib (Tarceva; OSI Pharmaceuticals), and the now withdrawn gefitinib (Iressa; AstraZeneca), generated worldwide sales of more than $3 billion. The recent entry of panitumumab (Vectibix; Amgen) into the USA market and the possible approval of Tykerb, create new challenges in clinical use and marketing of these agents."