Facebook Linkedin Tumblr Twitter
Home Blog Page 14612

enGene Shines with a Host of Big Name Collaborations

By
-
biotech

Shortly after market close on Tuesday, January 12, 2016, Japanese biotech Takeda Pharmaceutical Company Limited (OTCMKTS:TKPYY) announced a collaboration deal that will see it fund the development of two – as yet undisclosed – targets selected from privately held enGene’s pipeline. enGene hit headlines last year with some big pharma deals, and the Takeda collaboration is further testimony to the strength of its proprietary technology. At present, of course, we can’t pick up an exposure to this technology with a direct enGene buy, as its shares don’t trade on the open market. This said, we can get exposure through the company’s various collaboration deals, so let’s have a look at what this exposure entails, and what’s on offer.

The technology that enGene has created is a nucleotide delivery system. The best way to think of nucleotides is as building blocks of DNA – they consist of a number of separate components that we wont go into in too much detail here as it’s not overly important to our thesis, but all we need to know is that these components come together to instruct, and in turn construct, DNA and RNA. RNA is vital to protein synthesis, and proteins play a key role in modulating a cell’s actions.

As an example, we can illustrate with enGene’s lead candidate, a pre-clinical IL-10 drug targeting IBD. IL-10 is interleukin 10, which is a cytokine (just another word for a type of protein) that has long been identified as an anti inflammatory protein. The way it works is by downregulating another type of cytokine called Th1, which is the cytokine associated with the T helper cells that induce immune mediated inflammation. By downregulating these cytokines, IL-10 reduces inflammation – which is the driving factor behind inflammatory conditions such as IBD, Chron’s etc. By delivering RNA to instruct for the synthesis of IL-10 in the gut, a treatment can inhibit inflammation and treat the condition.

So if this is a well know therapy, why is enGene only now becoming attractive? Well, the answer is rooted in delivery. Gastrointestinal treatments are difficult to reach with oral treatments, as by the time the treatment reaches its desired location, it has broken down too much to maintain efficacy. There are some alternative delivery methods, primarily intravenous, but these can be painful at best and dangerous at worst. enGene’s delivery method allows for a maintenance of full efficacy via oral delivery, something that as yet is not commercially available, and it is this quality that has drawn the attention of big pharma. We’ve had a host of preclinical data suggest the drug and its delivery system is safe and effective, and the company is just about to kick of a raft of phase Is with its partners.

So which companies are involved with enGene?

First up, last October, Johnson & Johnson (NYSE:JNJ), through its subsidiary Janssen, put up an undisclosed payment and a share purchase, alongside a $441 million fund earmarked as milestone payments, to pick up exclusive rights to the IL-10 candidate we’ve already discussed. The companies plan to develop it towards an IBD target indication, with clinical trial initiation slated for H2 2016. On top of this IBD indication, Janssen also picked up the right to develop one further target, but we’ve not got any suggestion (as yet) as to what this target might be. Milestone’s to keep an eye on in the Janssen development pipeline are the initiation of phase I, and early stage data from the IBD indication.

Next, and referring back to the deal with which we opened this piece, Takeda has just sigend a deal to develop two of enGene’s candidates. This one is a little vaguer. We do know that the target indications will be gastrointestinal, but that’s hardly surprising given the nature of enGene’s tech. Takeda is going to foot the bill for all development costs, and enGene will take a royalty on the net sales of any commercialized candidate going forward. We also know that Takeda is going to investigate using enGene’s delivery method for antibody delivery, not just gene delivery. Again, a host of preclinical data has suggested efficacy in this arena, and it could be close on the heels of protein synthesis as an anti inflammatory therapy.

As yet, neither Takeda nor enGene have given us any indication as to when they intend to kick off clinical development. With Janssen just about to get the ball rolling, however, don’t expect Takeda to wait too long. The Japanese biotech space is booming at the moment, driven by reforms introduced as part of Shinzo Abe’s reformatory policies, and Takeda will want to ride this wave of activity while it lasts.

Story continues below

Here’s how to get an Exposure to Moderna’s Private Pipeline

By
Roger Hannington
-
Moderna

For many development stage biotech companies, pushing candidates into clinical trials and speeding through an IPO to fund these trials is a vital first step towards commercialization. It’s a tried and tested strategy, and one that history has demonstrated has varying degrees of success. Many companies fail to find funding for later stage trials, be it through further share issue or a big pharma partnership, and discontinue trials as a result. Just as often, if not more so, the drug candidates with which the company justified its IPO prove ineffective, or dangerous, and again, trials are discontinued. It is these two scenarios that make the dev-stage biotech space a risky allocation. Every so often, however, a company comes along that looks to offer a risk mitigated exposure. One such company has just hit headlines in pharma.

Moderna Therapeutics just reported its transition from a preclinical to a clinical stage biotech, with the company getting off to a running start with no fewer than six target candidates slated for phase I this year. It comes after a three-year period of fundraising, deal making and technology-honing – a period that has allowed Moderna to bolster its pre-trial position and mitigate many of the risks mentioned in the introduction to this piece.

Of course, there is a catch. It’s a private entity.

This doesn’t mean we can’t pick up an exposure, however. In fact, there are numerous options for those looking to get behind Moderna. Here’s how.

First, let’s quickly run over the company’s operations and financial position. Moderna operates in the messenger RNA (mRNA) space. As usual, the science behind the technology that the company has developed is pretty complicated, but we can summarize as follows: mRNA is a bunch of RNA molecules that – initially – are present in combination with DNA in the nucleus of a cell. When mRNA uncouples from DNA, it travels to what are called ribosomes, which are molecular complexes (again found in all nucleated cells) responsible for protein synthesis. The best way to think of ribosomes is as a sort of protein making machine, and mRNA as both the instructions and the raw material with which the machine constructs a particular protein. Proteins are one of the most versatile and important biomolecules in our bodies, and the ability to control this synthesis process opens up a whole world of possible therapies, and it is this ability that Moderna has developed. The company has figured out a way to create artificial mRNA, and more importantly, a way to make this mRNA elude the body’s immune system (normally the immune system would recognize the mRNA as foreign and attack it on introduction).

So what does this mean? Well, it means that Moderna can create mRNA to synthesize pretty much any protein, and use these proteins as the basis of therapy. Additionally, the company has developed the first ever intracellular protein synthesis technique. Protein synthesis has been possible for a while through various techniques, but only extracellular (i.e. blood stream) and expressed (i.e. on the outer membrane of the cell). With Moderna’s development, we can now create proteins that stay in the cell, and this greatly widens the potential target indications.

So the company has what amounts to a revolutionary technology, let’s move on to its financial position. At the end of 2015, Moderna reported its cash position as a little over $800 million. The cash has amassed as the result of a couple of financing rounds, totaling $1.2 billion since the company formed in 2011. Throughout 2016, Moderna plans to invest $100 million in each of four separate sub-entities, each of which will target a separate space – oncology, rare diseases, infectious diseases and cancer vaccines – which brings us nicely onto potential exposure options.

Our options lie in the host of big pharma collaborations Moderna has set up over the past few years, and its intentions to carry these partnerships into clinical trials this year. Three big names are available to us – Alexion Pharmaceuticals, Inc. (NASDAQ:ALXN), Merck & Co. Inc. (NYSE:MRK) and AstraZeneca PLC (NYSE:AZN) in rare diseases, infectious diseases and cardiovascular therapy respectively. The three drugs in question are MRK177 (Merck), ALXN 1540 (Alexion) and AZD 8601 (AstraZeneca) – all of which Moderna plans to push into clinical development this year, and all of which have the potential to be game changers in their respective spaces.

So there we go. A direct exposure to Moderna may not be possible as things stand, but an investor looking to buy into the company’s game changing tech, and sturdy financial footing, can do so through an allocation towards one or more of its big pharma collaborators. Final word – Moderna is one to watch throughout 2016.

Story continues below

Ariad is Targeting a Japanese Payday with Iclusig

By
-
Ariad

Investors that have tracked the biotech space over the past few years, and specifically those familiar with oncology innovation, will remember the furor surrounding Ariad Pharmaceuticals Inc. (NASDAQ:ARIA), and its lead product Iclusig. To recap, the FDA approved the drug in a chronic myeloid leukemia indication back in 2012, three months ahead of schedule. Eighteen months later, however, the agency suspended Iclusig for two months, while it ran an investigation into the drug’s safety profile. Reports of serious adverse events, heart attacks and blood clots to name a couple, proved cause for a reevaluation of its risk/benefit profile, and Ariad (and its shareholders) suffered steep losses on the announcement. Before the beginning of 2014, however, Iclusig once again hit shelves, albeit with a revised and reissued black box warning.

Despite the controversy, however, the drug has slowly taken hold of its target indication, and is gradually becoming a winner for Ariad. At the beginning of December, 2015, the company put a sales estimate of around $120 million for 2015, and expects this to inflate throughout 2016.

One of the drivers behind this inflation, and the reasoning behind us taking a second look at the drug in question, is the submission of an NDA to the Pharmaceuticals and Medical Devices Agency (PMDA) in Japan, for an extended global application of Iclusig in the region. CML is a real problem in Japan, and as the nation’s demographics continue to skew towards the elderly, is likely to become even more so. If the company can achieve a decent level of penetration in the Japanese CML space, it’s Japanese revenues could easily, and quickly, outstrip the sum of its global sales. With this in mind, let’s revisit the drug itself, and try to put some timeframes on the drug’s quantitative impact on Ariad.

The drug is what’s called a tyrosine-kinase inhibitor. We’ve dived into the science behind a number of cell inhibition here at Market Exclusive before, so for those reading this who are already up on the way TKIs work, bear with us. For those that aren’t, let’s cover it quickly. Every nucleated cell has a pathway through which signals pass to tell the cell to do something, be it replicate, grow etc. TKs are a type of enzyme that perform phosphorylation (the adding of a phosphate to a protein), which is a key step in sending signals down the pathway. TK inhibitors stop the phosphorylation process, and in doing so, stop the signal reaching the nucleus. This, in turn, stops the cell proliferating.

At the moment, the drug is only approved in cases where standard of care treatments are ineffective. This limits its population to – on average – low to medium double digit percentages of CML sufferers. Ariad is working on expanding this figure, with ongoing trials targeting an improved efficacy and safety profile, but focusing solely on its current application, what is the potential financial implication of an approval in Japan?

Well, adverse events aside, another controversial factor associated with Iclusig is its pricing. On average, the drug costs $116,000 a year, putting it in the upper echelons of expensive cancer drugs. If Ariad replicates this pricing in Japan, and there is no suggestion that it can’t or won’t, then the company could be looking at a real game changer.

Let’s say that 25% of CML sufferers don’t respond to SOC (not unreasonable, perhaps even conservative). There are currently circa 11,000 individuals in Japan suffering from CML, and the disease affects 1 in 100,000 Japanese individuals. With Ariad targeting 25% of the current patients, the company has a population of 2,750 to go after. At its current pricing, this puts a target revenue figure on the drug in Japan of just shy of $320 million – close to three times its current annual (global) Iclusig sales. Of course, this relies on a successful marketing strategy and, before that, a green light from the Japanese health agency. The adverse events that drove the FDA to halt sales a couple of years ago will no doubt play into the decision, and this adds an element of doubt to the situation.

If approved however, there will likely be some immediate upside in Ariad’s market cap, and if the company can execute strongly, it’s bottom line going forward. We’ve not got a set date – the PMDA don’t issue an equivalent of the PDUFA date we get from the FDA – but Ariad has reported it expects a decision in the second half of 2016. Nearer term, keep an eye on updates from the ongoing expansion trials to gain insight into further applications ahead of decision day.

Story continues below

Is Guardant Next in Line for a Big Pharma Suitor?

By
Jennifer Aldershot
-
Rockwell

Shortly after the markets closed in the US on Thursday, we got news that private entity Guardant Health had closed a series D financing that saw the company pick up just shy of $100 million from a host of big name participants. The financing round, led and managed by OrbiMed, a household name in the biotech funding space, brings the company’s total capital raise to date to close to $200 million, and should give the company the capital required to take its proprietary technology to the next level in the industry. What it also does, is paints the company as a potential buyout target – or at least one with which big pharma may look closely at collaborating with. This, in turn, makes it interesting to us. So, let’s have a look at what the company does, and see if we can earmark some potential big pharma suitors.

So, the technology. Before we look at Guardant’s technology, it’s best that we address what it replaces, as this gives us some idea of its potential. Despite what many people think, when a physician diagnosis a patient with cancer there are lots of different treatment options – some of which will work and some of which wont. The difference between those that do and don’t is rooted in genetic mutations in cancer cells, and the impact these mutations have on the efficacy of the treatment in question. As a result, physicians perform a biopsy on the cancerous tissue, or tumor, in an attempt to profile the DNA of the cancer. Through this profiling, the physician can make an informed decision as to which of the available treatment options (i.e. which chemotherapy drug, etc.) is least likely to be susceptible to the resistance imposed by genetic mutation. The problem is, biopsies are risky, expensive and – sometimes – impossible to perform. Further, if a patient has a difficult to reach tumor, say in the liver, then the risk (and pain) associated with the biopsy is amplified.

Way back in the early 1990’s scientists recognized that tumors expressed their DNA in the bloodstream, but only in very very small amounts. The small amount made it impossible to accurately profile the DNA, and so we stuck with the biopsy route. Enter Guardant. The company has developed what it calls Guardant360. Its technology allows for DNA profiling that is more than 1000X more accurate than the current technology. This allows for profiling using a small sample of the patient’s blood – two vials to be specific. The sample provides results that are 99.999% accurate, and offer a tailored approach to oncology diagnostics that isn’t otherwise possible with the current technology. It also provides far faster results than a biopsy.

Essentially, then, this could be a game changer. Anything that reduces the cost and risk of a current procedure – so long as it can maintain efficacy comparable efficacy – is generally quickly snapped up in biotech, and by the healthcare sector as a whole.

So who could be in line to acquire Guardant? Well, the list is pretty extensive, but if we are looking at big pharma, we can throw forward a few potential suitors. The criteria we are looking for is a healthy cash position and an established oncology portfolio and pipeline. Straight off the bat, Amgen Inc. (NASDAQ:AMGN) comes to mind. Amgen had about $3.2 billion cash and equivalents at last count (quarter end Sep 30, 2015) and has a diverse portfolio of drugs with indications ranging from melanoma to blood cancer. It also has some late stage clinical candidates, and an NDA with the FDA for an extension of its blockbuster myeloma drug.

Another potential candidate is Pfizer Inc. (NYSE:PFE). Pfizer has just shy of $3.1 billion cash on hand, and also has a robust oncology division, but perhaps sets itself as a frontrunner through its diagnostics arm. The company is well established in its approach to cutting edge diagnostics, and makes a compelling case for a buyout suitor.

Of course, it’s still early days. The company has developed it’s tech, and is in the process of pushing it to oncology centers throughout the US. Big name investors such as Sequoia Capital and Lightspeed Venture Partners are on board, so for those looking for an early exposure, these funds make a compelling allocation. Longer term, however, expect big pharma to muscle in, and from an equity market perspective, there’s your opportunity.

Story continues below

Amgen is Targeting a Blockbuster SOC Upheaval in Multiple Myeloma

By
ME Staff
-
amgen

In a couple of weeks, the FDA will report its decision on Amgen Inc.’s (NASDAQ:AMGN) latest supplemental application for its lead multiple myeloma product, Kyprolis. The drug has been a solid performer for the company since both it’s first approval back in 2012 and its subsequent expansion approval early last year, generating $124 million revenues at last quarterly count. At present, however, it remains approved only for use in combination with two other treatments – lenalidomide and dexamethasone – and only in patients who have received between one and three previous lines of therapy. Amgen has spent the last few years funding trials to narrow the drug’s restrictions, and in turn widen its potential patient population, and the sNDA set for PDUFA this month is the latest example of such. So, ahead of the decision, let’s have a look at what the company is going for, and what it might mean from a bottom line perspective if the agency gives the green light. Here goes.

Kyprolis is what’s called a proteasome inhibitor. The mechanism of action of this drug, at first glance, seems pretty complex. When broken down however, its really not that complicated. A proteasome is a cellular complex that breaks down proteins in our body. Mostly, these are unwanted proteins, meaning it’s no issue. Sometimes, however, they break down helpful proteins. Those that read our signal inhibition piece yesterday will remember that certain proteins play a key roll in eliciting a particular response from a cell. If proteasomes break down a particular protein, said protein cannot play the role required to elicit this response. In this instance, the proteasome in question is 20S, which breaks down a host of proteins – one of which is the protein responsible for inducing apoptosis. Again, those familiar with yesterday’s piece will remember apoptosis is a type of induced programmed cell death, and is a process that, in most cancer cells, becomes inhibited one way or another. Kyprolis inhibits proteasome 20S, and in doing so, allows for a build up of the proteins it would normally dispose of – one of which is the protein that induces apoptosis in tumor cells. This build up reduces tumor size and has proven an effective treatment for patients with MM.

The drug performed superbly in clinical trials during the early stages of its development, and has continued to do so against the backdrop of Amgen’s attempts at expansion. In the most recently issued update, Amgen reported that its drug had doubled the median progression free survival of what has quickly become the standard of care in the MM space, Velcade, a drug marketed by Janssen, which is a subsidiary of Johnson & Johnson (NYSE:JNJ). Data showed that across close to 1000 patients, randomized to receive Kyprolis and dexamethasone or Velcade and dexamethasone, MPFS was 18.7 months for the former and 9.4 months for the latter. It is this data that forms the root of the NDA, submitted in mid-September and accepted as priority by the FDA shortly thereafter (sNDAs have a shorter time-to-decision than standard NDAs).

So approval looks likely – what might it mean for Amgen’s bottom line? Well, as we’ve already said, Velcade has become SOC in MM, and the latest Amgen data suggests that Kyprolis is far superior. With a close to 50% benefit over SOC, Kyprolis has a real shot at (assuming approval) becoming SOC in the space, and very quickly. Additionally, in its current administration, Kyprolis is administered with two other drugs. If approved this month, it will only require one other drug in combo, which will make it more attractive to patients reluctant to expose themselves to the AEs associated with a triple mix. Velcade brought in a little over $3 billion in revenues for J&J during 2014, and looks set to outstrip that figure for FY 2015. Some of these revenues came from its second indication, mantle cell lymphoma, but the vast majority accredit to MM, and it is this vast majority that Amgen will be in line to redirect towards its own balance sheet if the FDA gives Kyprolis the thumbs up.

So what’s the takeaway? That by the end of this month, Amgen could be gearing up a sales force to target a close to $3 billion market, armed with vastly superior data over current SOC. The company generates a little over $5 billion quarterly, so the chance to chase down a further $3 billion could be a real game changer for Amgen and, in turn, its shareholders. That the sumbmission is an sNDA, rather than an NDA, suggests we wont get an advisory panel review, so January 22nd is the day to watch.

Story continues below

The Who and What of PD-1 and Janus Kinase Inhibition

By
-
biotech

Cell signalling inhibition is one of the most important areas of research and development in the biotech space of the last thirty years. Proteins are at the root of cell behavior, and our ability to selectively stop them from carrying out, or facilitating, their intended mechanism has opened up a whole world of potential therapies, in a range of indication categories. Here’s a look at two of the most advanced inhibitors from a clinical perspective, with a note on which companies to keep an eye on with respect to each type.

PD-1 Inhibitors

This is the inhibitor that has probably gotten the most press over the last couple of years. PD-1 inhibitors inhibit a process called programmed cell death 1 (PD-1) that, as its name suggests, is a protein that codes for cell death. There is a wide range of ways that a cell can die, and this protein is associated with one in particular called apoptosis. When cells reach maturity, or when our immune system recognizes them as harmful, a ligand (think of this as the complex that activates the protein receptor – in this case the PD-1) attaches to the receptor and induces apoptosis, which is essentially the cell rupturing its own outer membrane, spilling out its insides and signaling the immune system to clean it up. In many types of cancer, this process is inhibited through the expression of a ligand called PD-L1, which suppresses PD-1 and – in turn – reduces the rate of apoptosis. This is why cancer cells are so prolific. PD-1 inhibitors inhibit the immunosuppressive action that PD-L1 has on PD-1, theoretically translating to an increased immune (and in turn apoptosic) response to cancer cells. Simple, right? From an investment exposure perspective, the company that is leading the way in this space is probably Bristol-Myers Squibb Company (NYSE:BMY), with its PD-1 inhibitor Opdivo, a lung cancer treatment. Opdivo chalked up $305 million revenues for BMS in the latest reported quarter (Q3 2015), and the company is already at the NDA stage for further indications. Others to watch are Merck & Co. Inc. (NYSE:MRK), with Keytruda and Pfizer Inc. (NYSE:PFE) with its clinical stage avelumab.

Janus Kinase Inhibitors

All nucleated cells have a pathway through which external stimuli elicit a response. These responses range from proliferation, i.e. replication, to cell death (as described in the PD-1 section). The process through which these stimuli reach the nucleus of the cell is called signal transduction, and it involves a cytokine receptor on the outside of the cell membrane, a cytokine to activate the receptor and an enzyme to phosphorylate the receptor. In this instance, Janus Kinase (JAK) is the enzyme. It binds to the receptor, and waits for a cytokine to come along. When one does, and attaches to the receptor, the JAK adds a phosphate to the receptor, and kicks of the signaling process. JAK is associated with a range of things that translate to cell reproduction in various diseases, but it is best well known for initiating what’s called transcription – the first stage of DNA replication (with the remaining phases resulting in a nucleus splitting and forming the root of a new, identical cell. JAK inhibitors stop this process, and in doing so, stop DAN replication in a disease cells nucleus.

So what sort of indications are we looking at with JAKs? Well, again, there are a number of oncology indications that are targets at present. Incyte Corporation (NASDAQ:INCY) has a host of late stage blood cancer trials ongoing with its lead JAK candidate Jakafi, but the real money for JAK (and the primary current focus as a result) is inflammatory diseases.  Gilead Sciences Inc. (NASDAQ:GILD) just teamed up with Galapagos NV (NASDAQ:GLPG) with the latter’s lead JAK candidate filgotinib, a drug which in September 2015 AbbVie Inc. (NASDAQ:ABBV) refused to exercise its in-licensing rights for. A number of analysts are slating this as a dropping of the ball by AbbVie, and Galapogos has gained throughout the new year on the deal. The two companies expect to kick off concurrent phase IIIs, one in a rheumatoid arthritis indication and one in a Chron’s disease indication, before the second half of this year. Both of these indications have blockbuster potential, both in Europe and the US, so both companies stand to gain on the reaching of commercialization of filgotinib in either indication.

And there we go. Two hot sub sectors in biotech, and a host of potential exposure options – from clinical trials to commercialized, established blockbusters. That’s not all, of course. There are plenty more of these cutting edge therapies in the R&D phase, so as we move forward into 2016, keep an eye out for more of our subsector focus exposures here at Market Exclusive.

 

Story continues below

An Off The Radar Industry With A Billion Dollar Target

By
Roger Hannington
-
Bioburden

Oncology, neurodegenerative disease and immunotherapy dominated the biotech space in 2015, and as we head into a fresh year’s worth of R&D, chances are we will see a continuation of this dominance. There are, however, a number of fringe subsectors in healthcare that promise to expand rapidly in the coming few years, and could be a great exposure in advance of their meeting potential. One such sector is bioburden testing. Readers can be forgiven for a lack of familiarity with this sector – it is neither particularly revolutionary from a scientific perspective, nor has it made headlines as late. It’s about time it got one however – and here at Market Exclusive we’re happy to give it just that. A high rate CAGR should see growth to a billion-dollar industry over the next 10 years and big pharma is already gaining exposure to this growth. As early investors, it’s probably a great time to do the same. So, this said, let’s take a look at the space itself, and note some of the current key players.

First then, what is bioburden testing? Well, as mentioned, it’s not really cutting edge science – and as such, not an overly interesting thing to discuss – but we’re here for actionable investment ideas, not just scientific fascination. As with pretty much every industry, and to some extent more so than any other, the healthcare space has a rigorous framework in place to ensure the quality and safety of its component products. Bioburden testing primarily relates to one element of this framework, namely surgical devices (diagnostic tools, surgical tools etc.) However, it also extends to things like transplant devices and hypodermic needles, and even some types of drug products – essentially anything that is is going to come into contact with a patient that might be predisposed to microbes. All of these things undergo what’s called final sterilization before use. However, before this final sterilization step, some also undergo bioburden testing. It is essentially a controlled data collection that results in a stack to show what level of microbes (measured and recorded as “colony forming units”) is associated with non-sterile medical products.

There are a few different methods of this type of testing, but the primary (at present) involves passing a solution produced from a washed device, or a solubilised product, through a filter with tiny holes in it (ones that inhibit the passing of microbes), then measuring the filtrate. This is where the our exposure options come into play.

The Charles Schwab Corporation (NYSE:SCHW) has developed a system it calls PTS-Micro. The system is a bioburden testing unit that users lasers to determine levels of viable microbes, and in turn, determine a product’s bioburden. The aforementioned solution is prepared and inserted into three separate plates, all of which the technology processes simultaneously. Once active, the plates spin, causing the viable microbes to luminesce in the solution. A laser counts the luminescent microbes, and reports within 30 minutes its results. Traditional bioburden testing can take far longer, and teh speed with which this technology paints results puts Charles Scwhab as one if the leaders in the space. In addition, the company acquired the then publicly traded Celcis International for $212 million in July last year. Celsis was a endotoxin and microbial detection (EMD) organization, with a focus on bioburden and other comparable quality analysis assay tech. The takeaway here is that – with the ever growing diagnostics and pharmaceutical tooling sector – Charles Schwab is taking steps to increase its exposure.

Next, another biotech giant – Merck & Co. Inc. (NYSE:MRK). Merck has long been associated with bioburden testing (across both the biotech and pharmaceutical spaces) through its Millipore filtration units. These are very similar to the type of units we described a little earlier, in that they are a (funnel shaped) unit through which a solution passes, and the filter catches the viable microbes. However, and more interestingly, the latest addition to Merck’s quality assay tech is the company’s Milliflex Quantum unit. The technology is similar to the Millipore unit, but it is far quicker, and the substance tested can be recovered. Say, for example, a company is testing a soluble product. When the product is passed through the traditional filtration tech, that is its end. With the Quantum unit, the end product is restored and can be used. This is a cost saving exercise, and should entice industry attention as the space heats up.

Looking at the numbers, the industry is currently worth a little over $350 million. Analysts expect a CAGR over the next ten years at just over of 10%, which would see a 2026 valuation of a little over $1 billion. Beyond that, as biotech advances, expect this growth to expand. All said, it is a nascent space, and one that rarely garners much attention. However, off the radar doesn’t always mean not fruitful – indeed, often the opposite is the case – and we believe it’s one to keep an eye on going forward.

Story continues below

Here are Two Biotech Stocks to Watch in January

By
Jennifer Aldershot
-
FDA

As we head into the new year festivities, our thoughts are already focused on a number of opportunities in biotech stocks during the coming weeks. Here are a couple of stocks with PDUFA dates looming, and a quick look at the drugs in question.

Genmab A/S (OTCMKTS:GMXAY)

First up, Genmab. This company is off the radar for a lot of individual investors, mainly because it’s based in Denmark and trades over the counter in the US, but don’t let that fool you. It has a market cap just shy of 48 billion, and generates nearly $100 million revenues annually from two FDA approved drugs – both of which target oncology indications. One of these drugs, Darzalex, the FDA approved just last month, and on the approval the company’s market capitalization got some swift upside. On January 22, the FDA will rule on Arzerra, for a chronic lymphocytic leukemia indication, and if it gets the green light, Genmad should strengthen again. The drug is part of a family of drugs called monoclonal antibody – a family that has garnered much attention from oncology researchers over the last few years – and works by attaching itself to receptors on the surface of B-cells, the cells in our immune system that become cancerous in leukemia sufferers. Once attached, it signals the rest of a patient’s immune system to attack, and in doing so, initiates an immune response that trials have shown reducers tumor size and kills cancerous cells. It is already approved for a chronic leukemia indication (this one is relapsed leukemia) and so the latest NDA is really just an extension of the current application. Having said this, it’s an extension that will widen the patient market and – perhaps more importantly – open the door for further indication. Indeed, the company is already trialing a number of these applications, with ongoing studies in MS, Lymphoma and neuromyelitis.

With these sorts of oncology candidates, the FDA generally seeks the opinion of an advisory board. With this in mind, keep an eye on any releases ahead of the date in question to gain insight into this board’s recommendation and – in turn – the drug’s chances of approval on the 22nd. One to watch.

Neos Therapeutics, Inc. (NASDAQ:NEOS)

Shifting to the other end of the biotech spectrum, let’s now look at Neos. Neos has a market cap of a little over $200 million, a relatively condensed pipeline, and only one drug commercially available – a combination therapy for pediatric ADHD. It’s a risky one, but there’s also plenty of upside potential, especially if the FDA gives the nod for its lead pipeline candidate next month. The PDUFA is set for January 27, and the drug in question is NT-0202. Just as with the company’s marketed product, NT-0202 is an ADHD target – but this one is proprietary to Neos. The company picked up the currently available product as part of an asset acquisition back in 2014 from its then-rights holder Chiesi USA and Coating Place, Inc.

NT-0202 is an amphetamine product, which is pretty common in the pediatric ADHD space, but what sets it apart is its sustained delivery feature. Sustained delivery reduces the number of doses necessary for effective administration – an especially handy feature in restless kids, and something that has no comparable in the current marketplace.

The latest NDA is actually a resubmission – Neos initially proposed the drug to the FDA back in 2013. However, the agency responded to the initial application with a complete response letter (basically a note that outlines issues with the NDA) requesting some fresh data. Alongside the resubmission, Neos stated that it believes it had met the data requirements, and the FDA issued its standard 6-month resubmission timeframe. Those 6 months are up on Jan 22nd – a date that could mark the end of a highly scrutinized road to approval for Neos and NT-0202. We probably won’t get an advisory panel recommendation on this one, so all ones on the agency going forward. Approval is far from guaranteed – the FDA is notoriously (and understandably) tough on pediatric therapies – but if NT-0202 gets a thumbs up, it will be a big payday for Neos shareholders. Again, definitely one to keep an eye on.

Story continues below

The Science Behind Exelixis’ Billion Dollar NDA

By
Jennifer Aldershot
-
Exelixis

California based biotech Exelixis, Inc. (NASDAQ:EXEL) just submitted a rolling new drug application (NDA) to the FDA for its lead oncology drug, cabozantinib. If approved, it will mark the company’s second US-clinical success for the drug, following the 2012 approval of cabozantinib – marketed as Cometriq – in a rare thyroid cancer indication. Revenues from this initial indication have been pretty slow getting off the ground, but with an expanded indication in Europe, and a pending European submission for cobimetinib (approved in the US early last month) just around the corner, this circa $1.3 billion company could be in for some real gains. With this in mind, let’s take a look at the drug in an attempt to gauge its impact on Exelixis’ financials going forward.

Cabozantinib is an inhibitor of what’s called a tyrosine kinase inhibitor – specifically, it inhibits two kinases called c-Met and VEGFR2. The science behind how these drugs work is pretty complicated, but it’s also pretty interesting, so it’s worth going into it in a little bit of depth.

All cells have what’s called an MAPK/ERK pathway, which connects the outer membrane of the cell to the DNA in its nucleus. This pathway is what allows outer stimuli to communicate with the DNA, and initiate some sort of change, or response, in the cell. The process is called signal transduction. A cell expresses many different types of protein on its membrane – these are the receptors that form the outer section of the pathway. When a particular phosphate attaches itself to a receptor, a signal travels to the DNA and elicits the aforementioned response. Tyrosine kinases are the enzymes that facilitate the joining of the phosphate with the surface receptor. The type of enzyme (tyrosine kinase) that joins the phosphate to the receptor determines the response – EGFR, for example, causes replication and proliferation. This is all ok, so long as it is regulated. The problem comes when things don’t run as they should. Think of the EGFR activated receptor as an on/off switch for cell reproduction. In cancerous cells, it is constantly stuck in the on position. This causes the rapid and (to some extent) uncontrollable proliferation associated with cancer cells. Cabozantinib inhibits two specific tyrosine kinases, and in doing so, stops the phosphate joining to the receptor. In turn, this stops the cell from functioning in the way it would if it’s receptor had been activated. We don’t really need to go into the specifics of the two – that’s a discussion for a much longer article – so for now we’ll just say they are called c-Met and VEGFR, and the response they elicit is angiogenesis and, to some extent, cell migration. Angiogenesis is the formation of new blood vessels, which feed blood to the tumor (promoting growth), and cell migration leads to metastasis.

So there we go – that’s the MOA in a nutshell. Now, what about market potential?

Well, Exelixis is targeting a renal cell carcinoma indication, which is the most common type of kidney cancer. There are about 65,000 new cases each year in the US, and about 14,000 deaths. The initial indication is for patients who have undergone one other treatment without success – so we can be very conservative and suggest that the 14,000 is Exelixis’ initial target market (as we can assume that all of these will have undergone at least one other treatment prior to death). We also have some pretty solid reference points for pricing. The company trialed the drug at a 60mg per day dose – ranging up to 140mg at the high end. Let’s use 100mg as a median, as we are looking at the severe end of the patient population. Fourteen doses of the drug for its already approved indication, thyroid cancer, cost $13,000 at the low end of the market. Let’s assume a patient takes the drug for 12 months, meaning they would need circa twenty-six lots of the fourteen doses, costing $338,000 per patient, annually. With an initial target population of the 14,000 patients that die each year, Exelixis could be looking at a $4.7 billion market. Obviously, there is a long way to go before these revenues materialize, and many drugs with potential blockbuster markets fail to meet expectations – but these are not unrealistic numbers.

So what’s the takeaway? Well, that Exelixis has a potential billion-dollar drug in rolling submission with the FDA. With an expedited process (something the company has applied for) we could be looking at a six-month decision deadline. Keep an eye on the individual section submissions (this is what rolling submission allows) as interim insight.

Story continues below

Two Biotech Companies Rated Strong Buys for the New Year

By
Roger Hannington
-
biotech

Analyst recommendations can be great indicators of a company’s potential. Against the current backdrop of market uncertainty in the biotech space, a highly recommended company can provide a certain level of risk mitigation, and some well needed stability. Here’s a look at two companies that analysts rate as strong buys right now.

Ascendis Pharma A/S (NASDAQ:ASND)

Ascendis is a Danish biotech that you can pick up an exposure to in the US via NASDAQ. The company has a range of indications for a few different types of drugs, but they all revolve around its core technology – TransCon. TransCon is a pretty simple system, which involves an unaltered formulation of a traditional drug being enclosed in what the company calls a TransCon carrier – essentially it’s a C-shaped casing that is designed to release the drug it encloses under and specific temperature and PH conditions. This design translates to an extended, sustained delivery, while maintaining the safety and efficacy profile of the drug being delivered, as there is no reformulation. The company is targeting arterial hypertension, ophthalmology and diabetes with the tech, but its primary and lead indication is growth hormone deficiency (GHD). We got top-line from a phase II in pediatric GHD earlier this year, suggesting efficacy won’t be a problem and reaffirming the safety profile of the delivery system. A multi center Phase III is set to kick off before mid-2016, and should complete within 6 months. Ascendis also completed a phase II for the adult patient population in GHD, but as yet we’ve not got word on when it plans to initiate anything pivotal.

So why do analysts like this one? Well, an approval in the GHD space would open it up to a multi billion-dollar market, and would see the company introduce the world’s first sustained delivery GHD pill. It has a couple of high profile partnerships with industry behemoths Sanofi (NYSE:SNY) and Roche Holding AG’s (OTCMKTS:RHHBY) Genentech, and about $130 million cash on hand against a burn rate of circa $8 million a quarter. With a market cap just just of $18, down on its $19 IPO and a 19% discount on 2015 highs, it looks cheap at current prices.

Five Prime Therapeutics, Inc. (NASDAQ:FPRX)

We covered this company early last month, when Bristol-Myers Squibb Company (NYSE:BMY) announced it had gained clearance for a $350 million upfront deal that saw BMS pick up global rights to Five Prime’s lead candidate, FPA008. The drug is what’s called a CSF1R inhibitor, and is one of the most promising candidates in immuno-oncology, a space that has been at the forefront of biotech investing for the past couple of years, and still draws a lot of attention as its component therapies mature towards commercialization. Since that event, we’ve learnt that the company has dosed its first patient in a secondary, phase I trial with a gastric cancer indication, and Five Prime’s third quarter numbers hit press. When it comes to dev-stage biotechs, net earnings are relatively unimportant – it’s capital on hand that counts. Clinical development is drawn out and costly, and investors will often focus on a company’s the ability to fund the process ahead of its bottom line. From this perspective, and as a direct result of the already mentioned BMS deal, Five Prime looks attractive. At September 30, 2015, the company had a little over $36 million cash on its books. Factor in the $350 million upfront from BMS, and a few million in net receivables, and Five Prime won’t be far off $400 million in the bank. With a burn rate of between $10-20 million, this gives it a run rate of at least five years. Obviously, costs will increase as the company’s pipeline matures, but its still a strong position to be in in – especially in this space. Five Prime’s current market cap sits at $1.18 billion – just 3% off all time highs, but there looks to be plenty of upside on offer going forward as we get interim analysis of the company’s maturing pipeline throughout 2016.

Story continues below
1...14,61114,61214,613...14,629Page 14,612 of 14,629

EDITOR PICKS

POPULAR POSTS

POPULAR CATEGORY

© Market Exclusive 2019