Congrats to GSK for the approval of Tykerb, another kinase targeting blockbuster, with predictions of up to $2.5B in peak sales. While some have undersold Tykerb as a late-comer to the HER-2+ market that Herceptin already dominates, this approval is important for additional reasons:
-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 15, 2007
Thursday, March 08, 2007
A quick, closer look at SGXP
SGX posted their 4Q06 and FY2006 figures, so it's a good time to take a look at them.
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.
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.
Congrats to Sunesis....
....who entered Phase I with SNS-032, a multi-CDK (2, 7, & 9) inhibitor for blood cancers.
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.
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
"Signal transduction inhibitors are a decade away."
That line was just uttered by "House," the main character in the very excellent TV show of the same name on Fox. House, an MD, is suffering from an inoperable brain tumor.
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.
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
Biotech Dates to Remember
Adam Feurerstein at TheStreet.com has published an excellent summary of expected drug approval and clinical development news.
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."
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
A couple of extra thoughts from 2006
-Anybody else surprised that Iressa racked up nearly a quarter billion in revenue? I thought AZ was just maintaining Iressa in the hopes that biomarker/personalized medicine research would fully characterize responders with significant sales to come only after conclusive studies, but Iressa is still achieving good levels of revenue.
-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.
-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
Wanna scare a CEO?
Just say these 7 scary words: "Mr. Icahn is holding on line 2"
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.
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.
2006 kinase drug performance
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
Interesting reads
PWC: 7 health care trends for 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.
"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
How do you make $210M in 3 years?
Easy, if you're Invitrogen: start with $500M and buy a drug discovery services company (BioReliance).
Guh!
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?
Guh!
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
Nexavar vs. liver cancer: the winner is......
Frankly, me, and every other ONXX shareholder, as data strong enough to stop the trial has boosted ONXX by 95% so far today.
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.))
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
Pre-IND= ~$750,000
SGX announced that they've selected a Met inhibitor for pre-clinical development - SGX-523, which apparently is worth $750k, as SGX stock rose $.05 on the news.
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.
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
Miscellany
Forbes, with an assist from In the Pipeline thinks BMS and Sanofi shouldn't pair up. I'm really surprised that more people haven't looked at the historical performance of pharma M & A - it's overwhelmingly not pretty.
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.
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
DNA making big immunology bet
I hadn't realized that DNA had raised their immunology efforts to such an explicit priority as mentioned in this article (and why would they?)
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!
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
Interesting story of Scios' CEO and p38 program
I think in the news biz they'd call this a human interest story: Scios' then-CEO's battle with multiple myeloma inspired the company to try their p38 inhibitor in multiple myeloma.
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.
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
Top 100 2006 Publications
The Kinase Research Portal has compiled what they consider the 100 best/most popular articles of the last year. The list (via the linked header for this post) is could be used as means of taking the pulse of kinase research.
Takeaways:
-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.
Takeaways:
-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.
Way cool kinase target popularity charts
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.)
Why drugs fall short in late-stage trials
Kick-ass article from McKinsey reviewing why drugs fail in P3, based on >650 small molecule trials since 1990.
Notes:
-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.
Notes:
-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.
Tarceva: running in place?
One other note from the DNA earnings numbers: Tarceva sales grew 27% year over year and 7% sequentially (total: $107M). Very bad news for OSI. DNA is more motivated to push Avastin for solid tumors, so Tarceva is probably undermarketed by something between $500M and $1B.
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.
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
Aurora
Crimson Canary has an unbelievably good summary of Aurora kinase efforts, totally obviating a similar list that I kept in a messy excel sheet.
Hat tip to the Maestro of Mean Med Chem, the Sultan of Cynical Solubility, KinasePro :) .
Hat tip to the Maestro of Mean Med Chem, the Sultan of Cynical Solubility, KinasePro :) .
DNA keeps rolling (4Q earnings)
DNA is no doubt an outstanding company with exceptional near and long term growth prospects, but is it a good investment?
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.
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
Cancer death rate falls again!
For the 2nd year in a row, cancer death rates in the US have fallen. Researchers cite changes in behavior (smoking, etc.) as the main driver for the improvement
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%)
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
Speaking of Gleevec....
Long term study results from early targeted therapies are starting to come in. In CML, some 95 percent have survived the cancer after five years due to treatment with Gleevec. (I don't have the pre-Gleevec survival rates, but will try to track them down.)
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:
Ariad
BMS (dasatanib)
Breakthrough Therapeutics
Chemgenex
Curagen/Topotarget
Innovive
Merck/Vertex
Novartis (Nilotinib)
Structural Genomics
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.
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:
Ariad
BMS (dasatanib)
Breakthrough Therapeutics
Chemgenex
Curagen/Topotarget
Innovive
Merck/Vertex
Novartis (Nilotinib)
Structural Genomics
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.
Targeted therapies: 2006 and beyond
A flurry of 2006 year-end/year-in-review articles cited the strides that targeted cancer therapies made in 2006, specifically:
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.
- 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
BoA likes Array
Based on expected clinical progress of ARRY-543 driving partnering success...
'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.
'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.
Curious deal....(Amphora to Genentech)
Amphora sold an oncology lead to DNA for an undisclosed amount. (Amphora's pipeline here.) The target was undisclosed, except that it is active in multiple indications. (One intriguing prospect is Amphora's "AA-GFR", a combo VEGF+EGFR drug.)
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.
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
Correction: Omnitarg: not so much
Sharp analyst word parses and gets DNA to admit that Omnitarg/pertuzumab didn't meet the primary endpoint in the ovarian cancer trial just mentioned. Between this treatment and perhaps the name change, is there a whitewash underway @ DNA? DNA loses big points for not being candid.
Quick hits
ImClone starts P1 trials of an a-PDGFR alpha mAb. (IMC-3G3 for solid tumors.) This may be the first mono-target PDGFR therapeutic. Curious to know how long this program has been in development - will check old IMCL annual reports.
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.
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
Pop. media: cancer drugs lead to sea change in pharma
Investment oriented article with a few chestnuts:
"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.
"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%."
Exelixis is like butter.....
because they're on a ROLL!
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.)
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.)
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