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Aerie Soars on FDA News: Here’s Why

By
ME Staff
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Aerie Pharmaceuticals

On April 23, 2015, Aerie Pharmaceuticals (NASDAQ: AERI) reported that the company had missed its primary endpoint in its phase 3 registration trial for Rhopressa, a novel once-daily triple action eye drop targeted at lowering intraocular pressure in glaucoma patients or patients with ocular hypertension. The trial missed despite the endpoint being nothing more than non-inferiority when compared to a twice-daily treatment of current standard of care timolol, a drug marketed and sold by Oak Pharmaceuticals, Inc., A subsidiary of Akorn, Inc. (NASDAQ: AKRX). On the news, the company’s stock collapsed as investors rushed to reduce exposure to a trial that Aerie executives had played up as being pretty much a sure thing just a couple of weeks before. This week, however, the companies announced that it will be restarting a fresh trial (phase 3) with the same primary endpoint (non-inferiority) but with one key difference. This time around, the study is “to include patients with baseline intraocular pressures ranging from above 20 mmHg (millimeters of mercury) to below 25 mmHg. The former range for the primary endpoint of above 20 mmHg to below 27 mmHg will now represent a secondary endpoint range for Rocket 2.”

So, with all this said, what is the treatment in question, how does it work, and what can we expect from the upcoming trial? Let’s take a quick look.

Rhopressa, as mentioned, is a daily eye drop used to treat ocular hypertension. It works by inhibiting what’s called Rho Kinase, which is a kinase involved primarily in regulating the shape and movement of cells through the cytoskeleton in the eye. By inhibiting this kinase, Rhopressa is able to increase fluid outflow through the structure responsible for fluid drainage in the eye – the trabecular meshwork. Basically, this is a complicated scientific way of saying that the treatment drains fluid and – in doing so – reduces pressure in the eye.

So why are we seeing the share price boost at the moment? Well, markets are perceiving the new and altered primary endpoint as more achievable than the previous failed endpoint. In the previous trial, the treatment demonstrated success in the range that now serves as the primary endpoint that – if demonstrated again – will render the trial successful. This range is 20 mmHg (millimeters of mercury) to below 25 mmHg, compared to the previous range of above 20 mmHg to below 27 mmHg, the latter of which now serves as a secondary endpoint in the trial.

Vicente Anido, Jr., Ph.D., Chairman and Chief Executive Officer of Aerie reported confidently on the announcement, stating:

“We are extremely pleased with the outcome of our communications with the FDA. If Rocket 2 results resemble those of Rocket 1, we believe we may have a much greater opportunity for success in meeting the clinical endpoint of non-inferiority to timolol. We are also very appreciative of the thoughtful guidance provided by the FDA, and believe their feedback will prove very useful as our programs progress. Looking ahead, we expect to commence our next Phase 3 registration trial for RhopressaTM, named Rocket 4, in the third quarter of 2015. Rocket 4 is expected to be established with a primary endpoint range of above 20 mmHg to below 25 mmHg.”

So, with all this said, what can we expect going forward? Well, we will be looking for the results of the upcoming trial to mirror those for the range that achieved success in the first trial. Data released purporting to this success could be the primary driver in Aerie shares over the coming 12 months, and – despite the run-up we have seen over the last 24 hours in the company’s share price – they’re still looks to be an opportunity to buy in at what currently looks like a discount rate. Ocular hypertension is a billion dollar market, and if approved, revenues from the treatment (especially if it can show superiority over current standard of care) could outnumber Aerie’s current market by a factor of two to one. From a technical perspective, $25 flat will likely provide a bit of resistance, but if we get a break above that we could see a run towards yearly highs just ahead of $35 on any positive news.

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Another Win for RedHill – What’s Next?

By
ME Staff
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Redhill

At market close on Monday, June 15, Israel-based biopharmaceutical company RedHill Biopharma (NASDAQ:RDHL) announced the results of a phase 3 study of its lead candidate RHB-105 for H. pylori Infection. The results were overwhelmingly positive, with RedHill reporting that the topline data demonstrated the successful meeting of the trial’s primary endpoint, and – as a result – we saw a 16% increase in the company’s market capitalization during the day. With this said, what are the details and implications of the trial for RedHill going forward, is the percentage increase justified, and is it too late to take a position in expectations of further gain?

First, let’s take a quick look at the treatment candidate and the science behind it. RHB-105 is a fixed dose oral, combination therapy, meaning it incorporates two different types of treatment. The first type consists of two different antibiotics, rifabutin and amoxicillin, which most of you will already have heard of. These work to eradicate a bacteria called H. pylori, which plays a critical role in gastritis, peptic ulcers and gastric cancer, and is estimated to affect up to 40% of people in the US alone. The second type of treatment included in the orally administered pill is what’s called a proton pump inhibitor. In the human body, the gastric proton pump of the gastric parietal cells are responsible for gastric acid secretion. A proton pump inhibitor blocks this system, and reduces the amount of acid present in a patient’s stomach.

At the moment, the rapid rate of antibiotic use globally is leading to a high rate of resistance to more standard treatments, and this opens up an opportunity for RHB-105 to stand in as a second line treatment for patients resistant to current standard of care. Further, with it being a combination therapy, it also has the potential to become a first-line treatment farther down the line.

Adding to the allure of RedHill and its candidate RHB-105 as a potential investment opportunity is the latter’s status of being a coveted Qualified Infectious Disease Product (QIDP). QIDP status is granted to treatments that target pathogens with a high degree of unmet need, as identified by the Center for Disease Control (“CDC”) in the US. The benefits of this program includes fast-track development, priority review, and an extended market exclusivity to – in this instance – a total of eight years. Analysts currently put the market potential for the treatment at approximately $1.45 billion in the US, and $4.83 billion respectively.

So what did the latest phase III trial reveal? Topline results from the study demonstrated an 89.4% efficacy in completely eradicating the H. Pylori infection. Primary endpoint was to demonstrate superiority over historical standard of care efficacy (70%), meaning the trial met and far exceeded its goal. Further, no serious adverse events were reported or noted in the study. What’s next? RedHill expects to have its clinical study reports completed and submitted in Q3 2015, and is currently planning a meeting with the FDA to discuss the clinical regulatory path for approval of the treatment as a first-line therapy.

So where do we go from here? Well, this company could be something of a rollercoaster over the coming 12 months – but this presents us with an opportunity to profit from any event driven volatility. Another of its candidates – RIZAPORT™ (RHB-103) for Migraines – is currently being assessed in both Europe and the US, and any press releases that address the status of these assessments could dictate a medium-term bias in RedHill’s market capitalization. The company submitted a response to issues cited by the FDA relating to the treatment in March 2014, and – according to its latest presentation – expects approval subject to satisfactory resolution of the securing of a compliant source of raw material for the drug. Feedback from the European assessment is expected in the final quarter of this year.

So what’s the takeaway? Simply, that this is going to be one to watch this year. Data from the most recent announcement has proven efficacy, and – with a number of other promising candidates in the pipeline – RedHill has the potential to be a rewarding allocation in any portfolio. Obviously there are risks associated with investing in development stage biotechnology company such as this, and investors should be aware of these risks before taking a position, but the late stage success of the aforementioned trials gives us something of a mitigation of this risk, at least when compared to other companies with a similar market capitalization.

Looking for an IPO play? Find out our thoughts on Pieris (OTCMKTS:PIRS) here.

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Up-listing Could Prove Pivotal for Pieris

By
ME Staff
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Pieris

On June 10, 2015, we learnt that Pieris Pharmaceuticals (OTCMKTS:PIRS) had filed for an IPO that would see it shift from its current pink sheet status on the OTCQB to a NASDAQ listed company, as well as raise approximately $35 million to fund ongoing capital expenditure. The company currently has a relatively small market capitalization (circa $100 million) but a successful IPO could prove the catalyst behind an upside revaluation in the company’s worth, and in turn, present an investor the opportunity to draw a short-term gain from yet another IPO in the biotech space this year. So, with this said, what is Pieris all about, where does the company stand with its lead candidate’s, and what will the NASDAQ listing (if successful) mean for Pieris going forward? Let’s take a look.

First, let’s have a quick look at the company itself. Pieris develops treatments based on its proprietary Anticalin therapeutic. Anticalins are artificial proteins that bind to antigens, which can be either proteins or small molecules. They are based on what is called a lipocalin – essentially a protein that carries molecules from one part of the human body to another. You can think of them as a type of basket that encases and then bends to encapsulate and tighten around molecules, meaning they can targets certain diseases very specifically when artificially synthesized. Pieris’ current lead candidate is an Anticalin called PRS-080, which is an Anticalin against hepcidin that targets the treatment of anemia. How does it work? Well, in anemic patients, hepcidin levels are elevated. Hepcidin traps iron in stores (pockets) in the body, which leads to a functional iron deficiency. PRS-080 neutralizes hepcidin, which not only reduces the level of inane storage but also increases the efficacy of utilization by the body.

Pieris is currently in phase 1 trials of PRS-080, and the company reported data just yesterday with regards to progress in the trial. In the announcement, Pieris reported that it had completed dosing in healthy volunteers in the program, conducted at a single site in Germany. The company treated thirty six out of forty eight total candidates with varying doses of Anticalin, ranging from 0.08 to 16 mg per kilogram, and no dose limiting toxicities were observed, while no maximum tolerated dose was reached.

Stephen Yoder, President and CEO of Pieris, had this to say alongside the announcement:

“We are pleased to have completed enrollment of this clinical trial, which is the second Anticalin to be dosed in humans… With drug supply on hand, we look forward to rapidly advancing PRS-080 into patient studies.”

A secondary candidate is being trialed in the company’s novel Anti-CD137 and HER2 Bispecific Immuno-Oncology Program, data for which Pieris presented at the UBS conference back in May. The data revealed that several characterized CD137-engaging Anticalins exhibit agonistic properties through target cross-linking. In short, the drug demonstrated efficacy. This is exciting, as, while preclinical, we should get a number of updating announcements over the coming quarters that could drive volatility in Pieris. An aggressive investor may play this volatility to draw short-term profit from any market-driven action in the company’s stock.

Looking at its pipeline aside from the two candidates already mentioned, Pieris also has a few partner programs – all of which are currently in their preclinical stages. Two of these are in collaboration with Daiichi Sankyo Company, Limited (OTCMKTS:DSNKY), with initiations back in April 2010 and discovery phase already complete. Both are Anticalin investigations, and both are targeted at Daiichi Sankyo indications. The third is an Anticalin drug development program in collaboration with Sanofi (NYSE:SNY) designed to expand a novel multi-specific program under the existing framework of an agreement first announced back in 2010. Once again, these programs should drive a certain amount of volatility if we get any preclinical updates with regards to progress over the coming 12 months.

So, what’s the takeaway? Well, Pieris has a number of candidates currently in early-stage trials, across a range of incidences that – if successful – could generate large revenues for the company. Obviously, it is still early days, but with the pending NASDAQ listing and a number of partnerships with incumbent bio pharmas, this could be a space to watch over the coming few years. As a final thought, and as mentioned in the introduction to this piece, Pieris is valued at circa $100 million at present. If just one of its candidates makes forward into phase 2 phase 3, this is likely to change quickly.

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IPO Watch: ABIVAX in the Spotlight in Paris

By
ME Staff
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abivax

At the end of February, 2015, Parisian clinical biotech ABIVAX announced that it has recruited patient number one for an Asia-Pacific based phase IIb-III clinical trial for investigation into the efficacy of a vaccine therapy for chronic hepatitis B. Three months later, the company filed for an initial public offering (IPO), with the goal being that the funds raised would meet the capital requirements of two trials, one for the aforementioned hepatitis vaccination and another for a small molecule inhibitor of HIV replication. Now, the company has just released more details about its IPO, and we have learnt what ABIVAX expects to price itself at on public launch. So, with this said, is this a hot IPO, and is it an opportunity for investors to pick up and early-stage exposure to the company with two promising lead candidates in late stage trials? Let’s take a look.

First, let’s have a quick look at the two treatment candidates, and the market potential for each. First up is ABX203, a therapeutic vaccine against chronic hepatitis b. A therapeutic vaccine is a vaccine used on a patient that already suffers from a disease, rather than a prophylactic vaccine, which is the more traditional “use in advance” type vaccine. In this instance, a payload of both HBS and HBC antigens is delivered into the patient, stimulating an immune response to the disease.

There are currently 350 million HBV carriers worldwide, and about 1.5 million people die each year from complications of the chronic hepatitis B virus infection. The disease is a global, but its prevalence is highest in sub-Saharan Africa and East Asia. In a study conducted by the hepatitis B foundation of Pennsylvania back in 2011, analysts reported the annual cost of approved HBV therapeutic treatments is being approximately $18,000 annually, with the lowest at $5000 and the highest at $35,000. The World Health Organization the rights HBV prevalence into three categories – more than 8% (high) between 2% and 8% (intermediate) and less than 2% (low). In Asia, where ABIVAX is looking to gain approval, prevalence is high.

ABIVAX is currently recruiting participants for its hepatitis B trial, with the estimated study completion date at December 2017 and primary completion date at December 2016.

The second ABIVAX candidate is ABX464, a novel small molecule inhibiting HIV replication. This treatment inhibits the biogenesis of viral RNA, the riboxy nucleotide that is required for the replication of the HIV virus. Currently, when somebody suffers from HIV, the HIV virus invades the immune cells that would normally protect the body. The virus then uses the machinery of the cells to reproduce. Synthesis of new viruses occurs when RNA is produced by the nucleus. Cellular machinery then reads the code present in this RNA and produces viral proteins. A protein called REV mediates the transport of viral RNA out of the nucleus, and it is this protein that ABX464 serves to inhibit. The market for HIV vaccines is substantial, with more than 35 million people living with HIV globally, and nearly 5,000,000 people becoming infected each year.

As with the hepatitis B trial, the ABX464 is also recruiting already, and is expected to complete more quickly than the previous, with both study completion and primary completion slated for December 2015.

So, what are the details of the IPO? ABIVAX is targeting a midpoint share price of $23.91 per share, with about 2 million shares registered and another 300,000 set aside for its underwriters. This values the IPO at just short of $50 million. The company has an overall allotment allocation that could see it raise a further $15 million, with the total funds raised assuming the overallotment allocation comes through being $64.8 million at midpoint share price.

So, what’s the takeaway? Well, the biotech IPO space has been an exciting place to be over the past 12 months, and we have seen a number of successful public introductions across a range of treatment areas. If ABIVAX can go public successfully, it should raise enough capital to fund both of its lead trials through to completion, and could be marketing both treatments (assuming approval) before the end of 2017. With such massive markets targeted, even if just one drug gains approval, we could see a large upside revaluation in ABIVAX shares going forward. Further, with two pivotal clinical trials ongoing, there is plenty to drive volatility in ABIVAX’s market capitalization over the coming 12 months, and an aggressive, speculative investor could benefit from playing this volatility moving forward.

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Celgene Realigns Bluebird Collaboration; Good or Bad?

By
ME Staff
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bluebird

At market close on Wednesday, June 3 2015, bluebird bio, Inc. (NASDAQ: BLUE) announced that there had been an amendment to its CAR T agreement with biopharmaceutical behemoth Celgene Corporation (NASDAQ: CELG). During the session that followed, we saw – at its peak – a 10% decline in bluebird’s market capitalization, and it looked as though markets had interpreted the news as bearish for the company. However, we are now trading at a level not dissimilar to that which preceded the announcement, and pre-market open trading on Friday looks to have closed the gap entirely. So, with this said, what was the announcement, what does it mean for Bluebird, and what can Bluebird shareholders expect going forward? Further, is this recent dip and consolidation a good time to buy in to the company for those who do not yet have any exposure? Let’s take a look.

So, first, the announcement. Bluebird announced that its existing collaboration with Celgene had been amended and restated to focus on developing product candidates targeting B-cell maturation antigen (BCMA). Under the terms of new agreement, the two companies will work together on an initial phase I clinical trial (expected to be enrolled during 2016), and Bluebird will receive a $25 million payment from Celgene to fund phase I development. So why is this bad news? Well, back in 2013, Bluebird announced a global strategic collaboration with Celgene to advance its gene therapy programs in oncology. The collaboration was to focus on advancing its chimeric antigen receptor (CAR) T cell program, and the deal included an upfront payment (undisclosed) and up to $225 million per product in potential option fees and clinical regulatory milestones. The amended agreement sees this $225 million per product in option fees effectively scrapped, and it looks as though Celgene is no longer involved in bluebird’s other CAR T programs. The bearish momentum came as a result of markets questioning why Celgene no longer wished to be involved, and why they would switch so suddenly to involvement in BCMA, an as yet undeveloped program.

Chief executive officer of Bluebird, Nick Leschly, had this to say on the announcement:

“We have successfully achieved the initial goal of our collaboration with Celgene —identifying a promising lead development candidate in the CAR T cell field — and we are excited to focus our Celgene collaboration on the development of anti-BCMA products”.

So, then, this would suggest that Bluebird executives consider the move a positive one, and consider their initial agreement with Celgene complete and successful. They have not yet however reached the successful development stage that would command a $225 million payout, and so this optimism could perhaps be a masking of the real situation. Investors have to ask themselves why Celgene would agree to fund the development of a brand-new candidate, rather than see through the already identified lead candidate for bluebird’s CAR T pipeline.

Regardless, however, any speculation as to what we will see going forward is just that – speculation. Markets, especially when it comes to biotech, are notoriously volatile and driven pretty much exclusively by interpretation of market news that can have numerous different influences, and so, with this said, is it worth getting into Bluebird at this stage in advance of the new collaboration with Celgene?

Well, this is where things could get interesting. The announcement means that – over the next 24 months – we will likely get a stream of preclinical updates related to the new investigative trial, and – if we get any positive insights – we could see some upside momentum build in bluebird shares. The company has already been one of the darlings of the biotech space year-to-date, up more than 100% since January, and we are currently trading about 5% off yearly highs – primarily as a result of the decline driven by the Celgene announcement. This means that an aggressive investor could gain exposure to the new Celgene collaboration at a discount at current rates.

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Xanthopoulos Steps down, Trouble Brewing for Regulus?

By
ME Staff
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Regulus Therapeutics

On June 1, 2015, Regulus Therapeutics (NASDAQ:RGLS) announced that its president and chief executive officer Kleanthis G. Xanthopoulos was stepping down. The announcement came as a surprise to markets and shareholders alike, and translated to some steep downside in the company’s market capitalization during Monday’s session. The question now is whether the exit of Xanthopoulos is indicative of wider problems in the company’s pipeline, and – further – whether these problems are likely to have a material effect on Regulus going forward. So, let’s try and answer this question.

First, let’s start off with two quotes.

Quote one:

“I am extremely proud of our achievements at Regulus and am excited about the future of the company and microRNA therapeutics as they become a new and major class of drugs. RG-101, our GalNAc-conjugated anti-miR-122, is moving rapidly into Phase II and our ‘Clinical Map Initiative’ strategy is on track to create multiple clinical programs… I am truly honored to have been a part of building this great company.”

Quote two:

“I am proud of our accomplishments at Anadys and excited about our current clinical programs and deep pipeline… I am honored to be part of that.”

The first is an Xanthopoulos quote that accompanied yesterday’s announcement reporting his departure from Regulus. The second, a comparative quote reporting his departure from biotech Anadys, a company he founded, back in 2006. The similarity is clear to see. You ask, however, why this is an issue? Both statements seem like a perfectly reasonable parting comments. Well, the reason is that two weeks after Xanthopoulos left Anadys, the company announced it had dropped one of its lead pipeline candidates – ANA975 for hepatitis C – citing an intense immune stimulation in early animal studies.

So, naturally, the concern here is that we will get a mirroring of the Anadys situation, and that Xanthopoulos is bailing out of a so-called “sinking ship”. Obviously, this is pure speculation, and at the moment, nobody really knows the reason for the Xanthopoulos step-down, but in the biotech space, speculation can be a real driver of volatility, and – as a result – Regulus is down more than 17% on its daily open for Wednesday, no doubt driven by the latest revelation.

Adding fuel to the fire is a report last month that Xanthopoulos sold a large number of shares in an insider sale of Regulus stock. On April 21, 2015, Xanthopoulos sold 200,000 shares at a per share price of $17.1, totaling the sale at $3.42 million. Subsequent to the sale, he now indirectly owns 80,216 shares and directly owns 3,705 shares, meaning he unloaded more than 70% of his shares in the sale. Again, it would be pure speculation to attempt to uncover Xanthopoulos’ motives for the sale, but in light of the recent announcement, it doesn’t look too good.

So what can we expect going forward, what does all this mean for Regulus shareholders? Well, in recent announcements we have seen the company suggest a range of its RG-101 pharmacokinetics clinical trials have been promising, with healthy volunteer testing suggesting safety and tolerance and some efficacy in mice infected with genotype 1A hard to treat a genotype 3A hepatitis C virus. While promising, and especially in light of recent events, markets will be looking for updates on these trials before any real confident buying can return to the fore.

Takeaways: the recent announcement has hit Regulus hard, and both the company’s shareholders and wider markets will be reluctant to add to any – or initiate any – positions before the dust settles on the CEO departure. Xanthopoulos has expressed his confidence in the company’s pipeline, but we have seen him do this in the past, only to then see a lead candidate dropped from trial shortly after. Further, we saw an insider sale of the majority of Xanthopoulos’ shareholding in Regulus just a few ago, and this seems to contradict his reported confidence in Regulus’ ability to expand going forward.

Disclaimer: the author has no position in any of the stocks mentioned and any inference made by the content of this article is purely speculative in nature.

 

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Clovis up on Ovarian Cancer, Lung Cancer Reports

By
ME Staff
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Clovis

On Sunday morning, 9 AM Eastern Daylight Time in the US, Clovis Oncology, Inc. (CLVS) reported a host of updated results for its non-small cell lung cancer treatment rociletinib. The data, reported as “consistent and promising” comes just 24 hours after the announcing of even more promising updates from the company’s concurrent phase 2 study of Rucaparib in treating ovarian cancer. Both announcements are likely to translate to some upside momentum in Clovis stock and so, with this said, what are the treatments in question, and what could it mean for Clovis going forward?

First, let’s take a look at the treatments themselves.

Rucaparib is an oral treatment designed to inhibit a protein called poly (ADP-ribose) polymerase (“PARP”). When cells divide – both tumor and normal cells – the DNA of those cells must replicate correctly or the cell will die. Oftentimes there occur breaks in these cells during replication, but in a normal situation, the body will repair these breaks and the process will continue as normal. The PARP protein plays a key role in one of two primary methods used in the body to repair these DNA breaks. Using a biomarker test, Clovis identifies ovarian cancer tumor cells that are sensitive to PARP inhibition, and the treatment targets these cells. Essentially, the drug stops the body from repairing DNA breaks that occur during cell replication for ovarian cancer cells, and in turn, slows or stops the growth of tumors.

The other treatment is Rociletinib. Rociletinib is designed to inhibit protein called epidermal growth factor receptor (EGFR). When EGFR activates on cancer cells, it signals the cancer cells to grow and replicate. When taken orally by a specific type of lung cancer patients (those with EGFR mutation-positive non–small cell lung cancer) Clovis believes that Rociletinib blocks the EGFR signaling and – in turn – halts or reduces replication of cancer cells.

With that out of the way, what did the results that Clovis released over the weekend show?

First let’s look at Rucaparib. In the treatment of platinum sensitive BRCA-mutant ovarian cancer patients, we saw an overall response rate of 82%, disease control at 94%, and a medium progression free survival of 9.4 months. We also saw a 10% complete response rate, as well as a manageable safety profile and the suggestion that the drug is well tolerated, with only mild adverse events including anemia, fatigue, and nausea. This is great news for Clovis, and Patrick J. Mahaffy, President and CEO of Clovis Oncology had this to say upon its release:

“With these data presented at ASCO, we believe rucaparib has clearly emerged as a unique and best-in-class PARP inhibitor”.

Now let’s look at Rociletinib. In this instance we saw a 60% overall response rate and the 90% of these control rate in very advanced patients with EGFR mutant non-small cell lung cancer. Medium progression free survival totaled 10.3 months in patients without history of metastases and 40% of those with a history of metastases. While these results are not quite as exciting as those demonstrated by the previously mentioned Rucaparib, this still indicate efficacy and could be enough to give us some bullish momentum in Clovis stock this week.

What is the potential market impact of these two drugs being approved for Clovis? According to the National Cancer Institute, nearly 230,000 Americans are diagnosed with lung cancer each year. About 80% of these diagnoses will be non-small cell lung cancers, and about 10% of these will be EGFR gene mutated. This means the US market is just short of 20,000 patients every year. In the US, average treatment costs for lung cancer come in around $60,000, meaning the industry is a $1 billion industry. Obviously, this number includes all treatment expenses, but it gives an idea of where the market fits in terms of size.

Looking at ovarian cancer, the total market for a varying cancer in the US, Europe and Japan combined is about $460 million at the moment. Analysts forecast that this will increase to US$1.4 billion by 2021. BRCA mutations occur in about 10% of total cases, which – at a rough estimate – will put the global markets around $140 million.

So, with all this said, what are takeaways? Well, markets will likely respond positively to this data, especially the Rucaparib results. An 82% response rate is impressive, and if the company can report similar trial completion results, we could see some serious upside as we head into phase 3 and beyond.

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Cellectis Up On Pfizer Rumors; A Good Time to Buy?

By
ME Staff
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CLLS

In June last year, biotech giant Pfizer (PFE) entered the CAR-T technology arena with an investment in the then private company Cellectis (CLLS). According to the terms of the deal, Pfizer got exclusive rights to Cellectis development products to be targeted at 15 Pfizer applications. Further, Cellectis had the right to choose 12 targets and have Pfizer contribute towards preclinical development, with $80 million paid upfront and a potential further $185 million milestone for every successful treatment developed. Two months ago, in March 2015, Cellectis went public, with a $228 million IPO. With the IPO priced at $41.50, the company started out strong, but lost some strength over the last six weeks or so to trade just ahead of $30 mid-May. However, over the last 10 days, Cellectis shares have gained more than 55% on the $30 lows, and are currently trading at just over $47 at last night’s close. The reason? Buyout rumors. According to a report released last night by the Financial Times, a number of companies are lining up to discuss a potential acquisition of Cellectis – with the current reported front runner none other than Pfizer itself. With this said, what are the potential terms of any acquisition, and what might it mean for Cellectis shareholders? Let’s take a look.

First, let’s do a quick recap of what Cellectis does and why it might be an attractive acquisition to an incumbent in the space. The company focuses on what is called engineered T cell CAR therapy, with CAR standing for chimeric antigen receptor. The science behind these treatments is pretty complicated, but it can be summed up as follows: Cellectis constructs CARs by piecing bits of different proteins together. They then introduce these to immune cells – generally T lymphocytes – and then the engineered T cells intoto the human body. The CARs that are now present on the T cells allow them to recognize a particular antigen that is present in cancer cells. Upon recognition, an immune response is triggered, and the T cells attack the cancer cells.

Ahead of its IPO, the company announced plans to initiate four phase 1 trials, one for each of its four lead and most promising CAR-T candidates. Even if the negotiations between Cellectis and its suitor are drawn out, therefore, we still have a number of potential catalyst events that could further expand the company’s market capitalization near-term. One of these is the upcoming presentation at the American Society of Clinical Oncology Annual Meeting between May 29 and June 2 in Chicago.

The presentation will include poster sessions on three incidences, UCART19, an Allogeneic “Off-the-Shelf” Adoptive T-Cell Immunotherapy Against CD19+ B-Cell Leukemias, Adoptive immunotherapy of acute myeloid leukemia with allogenic CAR T-cells targeting CD123 and a multidrug resistant engineered CAR T-cell for allogeneic combination immunotherapy targeted at leukemia. The market is very hot for CAR-T at the moment, and so the introduction of these treatments to Cellectis’ pipeline could drive some short term upside momentum in the company’s stock.

Looking specifically at the potential acquisition, what might be the terms? Again according to FT, and sources close to the company, Pfizer has already approached Cellectis to pitch a deal that values the company at as much as €1.5 billion ($1.64 billion). However, given the current run up in Cellectis’ market capitalization, we may get word of an inflated offer in the coming weeks. If this happens, expect another run up in share value before anything is closed.

What are the risks in taking a position at this stage? Well, Cellectis shares – as mentioned – are up 56% on yearly lows, with the increase driven pretty much entirely by speculation of a buyout. If the buyout does not materialize, or we hear rumors that it may be delayed, then we could see much of this added value given back to the markets medium-term. In short, this could be a rewarding play if things turn out as expected, but as a general rule, relying on expectations in pharma is very risky.

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Accelerated Assessment Primes Amicus for a Billion Dollar Market

By
ME Staff
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Amicus

On May 26, 2015, the European Medicines Agency (EMA) announced that its “Committee for Medicinal Products for Human Use” had granted accelerated assessment to Migalastat – a small molecule treatment targeted at patients suffering from Fabry disease, currently being developed by Amicus ($FOLD). The company has been one of biotech’s top performing stocks over the last year and a half, and the latest announcement looks to have compounded the bullish momentum that has carried the stock more than 250% since May last year. The latest announcement could present us with an opportunity to buy into further gains, but before we do, let’s have a look at what the company does, what it’s treatments involve, and what the implications are of accelerated assessment status.

In order to understand how the treatment works, it’s first important to understand what Fabry disease is and what it does to the body. The disease is a lysosomal storage disease. A lysosome is the part of the cell that contains something called hydraulic take enzymes – which are enzymes that break down things that are no longer needed in the body such as dead cells or external debris. One of the primary enzymes associated with lysosomes is α-galactosidase A (α-Gal A). In patients with Fabry disease, the α-Gal A is not delivered and stored in sufficient quantities to the lysosomes, and so unwanted debris is not removed efficiently. This can lead to chronic pain, kidney failure, heart disease and strokes.

So where does Migalastat come in? Migalastat – according to the company website – is designed to “bind and stabilize the endogenous α-Gal A that is made in the patient’s own cells, thereby increasing its trafficking to lysosomes”. This essentially means that the treatment serves as a kind of delivery vehicle, collecting up α-Gal A that the body has produced but is not rendering effectively, and taking it to lysosomes where it can be made put to use.

And what is the benefit of accelerated assessment status? The process was introduced in Europe in 2005, and is designed to speed up the regulatory procedure to enable patients access to new medicines quicker. It basically means that – instead of the usual 210 days required for the marketing authorization assessment (MAA) phase of the approval process, the EMA will conduct its MAA in a maximum of 150 days.

And what might this mean for the company? Well, it means we could see a quick(er) turnaround of the final step in the approval process and – in turn – an approval that comes sooner than initially expected. A number of treatments have qualified for accelerated assessment in the past – one of the prime examples being soliris for the treatment of hemolytic uremic syndrome – and, while it is by no means a sure sign that the treatment will receive approval, it can often serve as an insight into the EMA’s perception of a particular treatment.

John F. Crowley, Chairman and Chief Executive Officer of Amicus had this to say about the accelerate assessment granting:

“The designation of Accelerated Assessment in the European Union (EU) demonstrates that the EMA understands the current unmet medical need in Fabry disease as a major public health interest, and with this designation may accelerate the approval and our launch timelines to make migalastat available for patients very rapidly.”

So what is the upside potential for Amicus if the drug is approved? While Amicus has not yet revealed a price point for the treatment, we can use the cost of a current treatment alternative to estimate how big the market potential is for Migalastat. There are an estimated 5000 individuals suffering from Fabry disease across Europe, and analysts expect this to increase at a compound annual growth rate of 18% over the next four years. This means that by 2020 there will be approximately 10,000 sufferers in Europe. Current treatments offered by Shire ($SHPG) and Genzyme cost on average $200,000, making the market potential in Europe $1 billion currently and – by 2020 – $2 billion.

Conclusion: Amicus is a company will be watching very closely over the coming quarters. Biotech is notoriously unpredictable, but all the cards look lined up and pointing towards a Migalastat approval in Europe, and – if this is achieved – there could be some serious upside potential on Amicus’ current $1.1 billion market capitalization. One to watch.

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A Look at What Drove the Genocea Market Frenzy

By
ME Staff
-
valeant

On may 20, 2015, Genocea Biosciences, Inc. (GNCA) announced the results of its phase 2 trial for genital herpes immunotherapy treatment GEN-003. Widely perceived as positive, the data translated to some heavy volume buying of Genocea stock, and temporarily boosted the market capitalization of the company. Now the dust has settled and Genocea stock has dipped a bit, what are our feelings about the results and their implications as far as Genocea is concerned? Let’s take a look.

First, let’s take a quick look at the drug that the results represent, what it is and how it works. GEN-003 is an immunotherapy treatment, meaning it is designed to elicit a response from a patient’s own immune system and a subsequent attack on the cells that cause damage. While not a cure, the drug is targeted at effective treatment of genital herpes, and has already demonstrated statistically significant reductions in clinical signs of genital herpes and viral shedding in previous trials. The actual process through which the drug works is quite complicated, but to simplify, it presents pieces of the herpes virus to T cells and B cells in the body. This presentation causes the human immune system to respond, and triggers an attack on the HSV-2 cells that cause outbreaks and viral shedding (viral shedding is the release of something called virus progeny that follows the replication of a virus cell and its rate is an indication of the virility of a virus – the lower the better).

The latter of these – viral shedding – is considered one of the key metrics by Genocea in determining efficacy of GEN-003. So, with this in mind, what did the results show? During a 28 day observation period starting from completion of dosing, we saw a 55% decline in the viral shedding rate when GEN-003 was introduced with Matrix-M2 as an adjuvant (an adjuvant simply means something that is combined with viral treatments in order to aid the antigen in its task of eliciting an immune system response). The company reported that – across all doses aside from the lowest dose combination – the trial demonstrated statistically significant viral shedding rate reduction against the baseline and versus the placebo.

Chip Clark, president and CEO of Genocea had this to say alongside the announcement:

“We are extremely pleased with these positive top-line results which have successfully allowed us to identify the optimal dose to advance into further trials…  The results strengthen the product profile from our Phase 1/2a trial, which we have shown in market research to be highly clinically meaningful and commercially attractive, providing further evidence of the strong value proposition of GEN-003 for patients, physicians and payers.”

So what’s next? Well, before we can consider any sort of approval potential, Genocea must first find a commercial partner to help get GEN-003 into – and through – phase 3 trials. We saw efficacy demonstrated in the recent trials, but it is not uncommon for efficacy to be demonstrated on a small scale yet not scale up in the final trial phase. It’s news and information surrounding the phase 3 trial that we will now look to in order to form a medium-term bias. If we do see any announcements over the coming couple of weeks regarding a further trial, it could quickly translate to an upside revaluation in Genocea stock.

What is the potential market for a herpes treatment such as GEN-003? In a report published in 2010, analysts estimated the global herpes market at $4.2 billion, and suggested we will likely see a compound annual growth rate of 10.1% to reach $9.1 billion by 2018. This is for both herpes simplex and herpes zoster, while Genocea’s GEN-003 only targets the former, so the actual market potential for GEN-003 is approximately 60% of those numbers mentioned.

So, is now good time to buy in? In its latest financials, Genocea reported a $12.1 million loss for Q1 2015, and in doing so, missed expectations by about seven cents per share across an average of  six analyst forecasts. With little to no revenues ($121,000 last quarter) it’s important for a biotech company at this stage of its development to attract funding. Before we can recommend the stock, we would like to see some outside capital commitment. Having said this, we are still about $12 short of the 52 week high, and – if we see some positive results related to the company’s other candidate, GEN-004, a vaccine for pneumococcal infections that is currently undergoing phase 2 trials – we might see some upside as speculative investors enter on the announcements.

Conclusion: we will be on the lookout for some outside financing before taking a long position, but more risk tolerant investors might be in for a speculative punt on expectations of further positive news.

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