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Physicians' Financial News for September 2007

Published on: 
Oncology & Biotech News, September 2007, Volume 1, Issue 7

Physicians' Financial News focuses on newsworthy and/or notable companies in the oncology/biotech sector. In this issue: 1) Amgen: Amgen Oncology Under Review 2) Myriad Genetics, Inc.: Launches Test to Predict Toxicity to 5-FU 3) GPC Biotech AG: Pulls NDA for Prostate Cancer Drug, and more

%u25BA Amgen Oncology Under Review

Amgen’s foundation as the leading biotech company by sales is made up of five multibillion- dollar drugs. This is largely an oncology base, as three of these products are related to the treatment of cancer symptoms. Amgen only stepped into the cancer therapy market, however, in 2006 with Vectibix for metastatic colorectal cancer (mCRC). While Vectibix hasn’t faired as well as predicted, the company is now betting on another anticancer candidate currently in Phase III.

The blockbuster drugs are Epogen for anemia in kidney dialysis patients, Aranesp for anemia in the renal and oncology settings, Neupogen /Neulasta for treating chemotherapy-induced neutropenia and Enbrel for inflammatory conditions.

These products netted sales of almost $3.44 billion, over 95% of Amgen’s total sales for the second quarter of 2007. The cancer drugs themselves racked in $1.99 billion. Yet, while the company gained 3% in overall worldwide sales, it’s best seller, Aranesp, lost 10% quarter over quarter, bringing in $949 million.

In light of these circumstances, Amgen is planning to slash 12-14% of its staffas well as $1.9 billion in capital expenditures. The restructuring will yield savings between $1 billion and 1.3 billion in 2008. The company will endure charges between $600 million and $700 million in 2007 and 2008.

Even though Amgen seems to be executing cost saving methods, the company is ramping up its lobbying efforts by an unspecified amount. Last year, Amgen spent $10.22 million on capitol hill and has already shelled out $9.08 million in the first half of this year. As it is, the 2006 expenditure was close to 80% more than its 2005 contribution of $5.72 million. Amgen now ranks second only to Pfizer in terms of lobbying efforts.

Oncology & Biotech News

Label and reimbursement changes were the main drivers of Aranesp’s sales decline for this quarter as well as Amgen’s increased lobbying budget. Both Epogen and Aranesp have garnered special interest from the FDA because of safety issues. Additionally, the Centers for Medicare and Medicaid Services want to stop paying for certain uses of Aranesp and suggest limited use of Aranesp (See the June issue of for more details).

Combined worldwide sales of Neulasta and Neupogen rose 4% to $1.041 billion in the second quarter of 2007 versus the prior year’s second quarter. Vectibix, however, approved in the U.S. as a third-line treatment for patients with EGFr-expressing mCRC, was not able to gather steam. Launched in September 2006, the product had sales of $39 million for the fourth quarter of 2006. While sales did go up the next quarter to $51 million, they dropped offin the current quarter to $45 million.

Blockbuster potential of Vectibix has not been fully realized. Toxicity results reported in March from a label-extending study pushed the possibility of the drug as a first-line treatment further away (See OBN May for more details).

Adding to its woes, Vectibix has not yet been able to break into the European market. On May 25, Amgen received notice from the EMEA that the European Committee for Medicinal Products for Human Use (CHMP) rendered a negative opinion.

The company’s cancer pipeline consists of three different Phase III compounds as well as four Phase II and five Phase I candidates. It’s lead drug is Denosumab, and data from the 252-patient study in breast cancer patients undergoing hormone ablation therapy showed that all primary and secondary endpoints were successfully met, Amgen reports.

Amgen’s shares were priced at $49.59 as of August 22, down about 35% from its 52-week high of $76.5 in late October. The company hasn’t traded this low since October 2004. Analysts are vary Amgen is putting too much faith on the shaky grounds of its anemia franchise and believe that their lobbying efforts are likely to not change much.

Amgen is probably set to hold it’s number one position even through tumultuous times. It’s profit and value, however, could decrease, somewhat mirroring the ways of pharmaceutical companies, as patents expire, competition steps up and regulations tighten the proverbial noose. Hopefully, unlike its pharmaceutical counterparts, the company will come out of its R&D recesses.

Amgen Oncology Pipeline

Drug

Cancer type

Phase I

5 compounds

Various types of cancer

Phase II

AMG 102

Various types of cancer

AMG 531

Chemotherapy-induced thrombocytopenia in non-small cell lung cancer and lymphoma

AMG 531

Myelodysplastic syndromes

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Palifermin

Oral mucositis associated with radiation therapy and chemotherapy for solid tumors

Motesanib diphosphate *

First-line breast cancer

Motesanib diphosphate*

First-line non-small cell lung cancer

Motesanib diphosphate*

Thyroid cancer

Panitumumab

Head and neck cancer

Phase III

AMG 531

Immune thrombocytopenic purpura (an autoimmune bleeding disorder)

Denosumab

Bone loss induced by hormone ablation therapy for breast cancer or prostate cancer

Denosumab

Prevention of cancer-related bone damage

Denosumab

Prevention of bone metastases

Panitumumab

First- and second-line colorectal cancer

Approvals

Aranesp (darbepoetin alfa)

Chemotherapy-induced anemia

Kepivance (palifermin)

Severe oral mucositis in patients with hematologic cancers undergoing bone marrow transplant

Neulasta (pegfilgrastim)

Chemotherapy-induced neutropenia

NEUPOGEN (Filgrastim)

Neutropenia (multiple indications)

Vectibix (panitumumab)

Metastatic colorectal cancer with disease progression on or following standard chemotherapy

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Myriad Launches Test to Predict Toxicity to 5-FU

Myriad Genetics, Inc. introduced TheraGuide 5-FU to help predict which cancer patients are likely to suffer toxic reactions to the drug 5-fluorouracil (5-FU) or the oral form of the drug.

TheraGuide 5-FU screens for certain variations in two genes, DPYD and TYMS, which are associated with up to a 60% risk of toxicity to 5-FU chemotherapy. “Between these two genes, the inherited risk is thoroughly covered,” according to Bill Hockett, Executive VP, Communication. Even though there are certain other contributors to chemotherapy toxicity risk, they are minor, Hockett added.

“TheraGuide 5-FU will be sold to doctors as a laboratory test service provided here at Myriad,” Mr. Hockett stated, and will cost $1,100. The test requires 7 ml of blood and detects all mutations in the DPYD gene by DNA sequencing and the tandem or triplet repeats in the TYMS gene promoter region, he explained. The findings are returned within seven days of receipt at Myriad. DPYD is also referred to as DPD, and TYMS, or thymidylate synthase, known as TS. “There is extensive literature on DPD demonstrating that lack of or reduction of DPD enzyme results in 5-FU and Xeloda, the oral form, toxicity. The TS gene data is newer,” Mr. Hockett informed.

Deleterious mutations in the DPYD gene are linked to up to a seven-fold increased risk of toxicity, according to studies cited on the company’s website. The DPYD gene makes the enzyme that is primarily responsible for metabolizing or breaking down 5-FU and clearing it from the body. If the DPYD enzyme activity is compromised, 5-FU will be cleared more slowly from the system.

The TYMS gene has variations in certain regions, which alter the enzyme that 5-FU/ capecitabine targets to disrupt DNA synthesis. Low levels of enzyme (2R/2R) are associated with up to a 2.5-fold risk.

TheraGuide 5-FU is Myriad’s fifth molecular diagnostic product. “We plan to introduce another test later this year,” Hockett said, but was unable to reveal further details. The company’s previous products cover assessment of risk for breast and ovarian cancer, prediction of hereditary colorectal polyps and cancer as well as endometrial cancer, melanoma, and pancreatic cancer.

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GPC Biotech Pulls NDA for Prostate Cancer Drug

A negative vote from an FDA advisory panel triggered GPC Biotech AG to withdraw satraplatin’s NDA, filed for accelerated approval as a hormone-refractory prostate cancer treatment.

The Oncologic Drugs Advisory Committee (ODAC) unanimously (12-0) recommended the FDA to wait for the final survival analysis of the SPARC trial. If approved, satraplatin could be the first oral platinum-based drug. Bernd R. Seizinger, MD, PhD, Chief Executive Officer, is confident that GPC Biotech has a solid financial position to get to its goal. As of June 30, cash, cash equivalents, marketable securities and short-term investments totaled €93.1 million. The company plans on keeping its 35 plus U.S. sales force in place for now but will consider the possibility of a partner, he added.

Overall Survival (OS) data should be available within six months and it will then probably take 12 months for full approval, Dr. Seizinger said during a conference call on July 25. This estimate is based on an extrapolation of death rates. Over 650 death events out of the 700 target had occurred and for the last couple of months, the rate has been five per month, he explained.

The reported point of contention at the ODAC discussion was the progression-free survival (PFS) endpoint. According to Mirko Scherer, PhD, Senior Vice President & Chief Financial Officer, the primary endpoint was changed from time-to-tumor progression to PFS because of a guidance document published by the FDA in 2005. Terms were discussed at the SPA process, and present pain index (PPI) was included as the pain score under their advice.

GPC Biotech believed at the time of the ODAC review that the issue of highest importance centered on the PFS measure, Dr. Scherer explained. Thus, they did not include data on OS at 12-month follow up that showed a positive trend. “All parties agreed that the accelerated approval process is one that does not take into consideration OS, and so we decided with the very limited time that we had that we would not show this exploratory analysis of our interim OS results.”

ODAC, however, found the pain progression endpoint, part of the PFS endpoint, insufficient, Dr. Scherer said. Additionally, their suggestion was to wait for OS data.

Referring to the PFS data, Dr. Seizinger noted, “The FDA has approved other drugs where the standard was not met.”

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Cell Therapeutics Pads Pipeline through $20-Million Acquisition of Systems Medicine

Cell Therapeutics, Inc. (CTI) is taking over Systems Medicine, Inc. (SMi), in a stock-for- stock merger worth $20 million. CTI thus gains a potentially first-in-class cancer drug, Brostallicin, currently in multiple Phase II trials.

Brostallicin fills CTI’s pipeline, which consists of pixantrone for non-Hodgkin’s lymphoma and Xyotax against non—small-cell lung cancer in late-stage development and Phase I CT-2106 for colorectal and ovarian cancer. The companies predict launch dates in early and late 2009 for pixantrone and Xyotax, respectively, and 2010 for Brostallicin.

CTI also will be able to leverage SMi’s affiliation with TGen as well Italian licensor of Brostallicin, Nerviano Medical Sciences (NMS). NMS is complimentary to CTI’s own preclinical development facility in Bresso, Italy. For SMi, the purchase price was attractive as it would be similar to a Series A financing, said Tim Williamson, CBO and Founder of SMi, during the company’s conference call. SMi’s acquisition also is better than a codevelopment deal, which was initially being considered, he added.

SMi stockholders could receive an additional $15 million in cash or CTI shares. They will get $5 million upon FDA special protocol agreement to a single pivotal trial for Brostallicin and $10 million upon regulatory approval.

Brostallicin is a DNA minor groove binding agent. This is unlike other cancer treatments that bind to DNA within the minor groove. Although there are no marketed DNA minor groove binding medications, PharmaMar’s Yondelis for the treatment of sarcomas received a positive opinion from the EMEA in July.

“Brostallicin has notable advantages over this drug from a toxicity and convenience perspective,” commented Jack W. Singer, MD, Chief Medical Officer at CTI. The therapy has a shorter infusion time and is not associated with major liver toxicity as is seen with Yondelis, Dr. Singer explained.

Brostallicin is currently being evaluated in Phase II trials as a treatment for relapsed/refractory softtissue sarcoma and breast, colon, and head and neck cancer. SMi initially plans to move into a Phase III study in the sarcoma setting.

Brostallicin is a good example of SMi’s context-of- vulnerability approach to drug development, finding what causes cancer cells to be sensitive to a drug or combination of drugs.

Preclinical data reportedly show that activity can be enhanced by selecting patients with mismatch repair deficiency (subset of colon cancer), GSH/GST, or high levels of glutasyon/ glutasyon transferate (platinumresistant ovarian cancer), or T12:16, that have a 12:16 translocation, which includes subgroups of sarcoma.

“The whole intent of informing clinical studies with mechanistic information and genomic information is to get to faster, less expensive trials with better performing agents,” remarked Jeffrey Jacob, CEO, President and Fouder of SMi.

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FDA Approves First Gene-Based Test to Detect the Spread of Breast Cancer

Veridex received FDA approval for the first intraoperative, gene-based test that detects the spread of breast cancer into the lymph nodes. The GeneSearch™ Breast Lymph Node (BLN) Assay can detect the spread of cancer into the lymph nodes more accurately than existing methods, the company reports.

Ken Berlin, General Manager, noted, “There is a need for a more accurate test to detect metastasized breast cancer in a woman’s lymphatic tissue — and that’s where the GeneSearch BLN Assay comes in. We now have the opportunity to detect some metastases that could be missed by other tests.”

The assay detects metastases greater than 0.2 mm in sentinel lymph node tissue removed from breast cancer patients. Veridex reports that in clinical trials with more than 300 patients in the U.S., the GeneSearch assay outperformed common intraoperative procedures. It correctly identified 95.6% of patients who had metastases in their lymph nodes.

The BLN test can more accurately guide decisions during surgery, in real-time, thereby reducing the number of unnecessary second surgeries, pointed out Peter Blumencranz, MD, Principal Investigator of GeneSearch trials. Dr. Blumencranz is also Medical Director, Breast Health Services, Morton Plant Mease Healthcare in Clearwater, Florida. The gene-based technology reportedly analyzes 50% of the sentinel node, versus 5% of tissue typically examined under a microscope. Additionally, results from GeneSearch can be produced in 35 to 40 minutes during a surgical procedure, versus two to three days with tissue pathology.

Patients can now undergo a sentinel lymph node biopsy (SLNB) to decide whether they should continue with an axillary lymph node dissection (ALND). The SLNB involves removing only the sentinel axillary lymph node, which is most likely to contain cancer cells if the disease has begun to spread, Veridex explains. If there is no evidence of cancer, it is highly unlikely that the disease has metastasized to other nodes, they add.

Veridex says that it will initiate two post-approval studies on the assay. The first will provide further evidence of the turnaround time of the test when used intra-operatively. An additional study will involve more than 1,000 patients to validate the accuracy of the test.

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Ariad Could Earn $727 Million in Deal with Merck Related to Its Novel mTOR Inhibitor

Merck inked a deal potentially worth up to $727 million to jointly develop and commercialize Ariad Pharmaceuticals’ novel anticancer candidate. This mTOR inhibitor, called deforolimus, is expected to enter Phase III development for the treatment of metastatic sarcomas in September.

“In collaboration with Merck, we have embarked on a markedly expanded global development program for deforolimus in which substantial clinical trials and biomarker studies will be conducted concurrently in multiple cancers,” said Richard W. Pascoe, Senior Vice President and Chief Commercial Officer.

Ariad will earn an upfront fee of $75 million and milestone payments worth $452 million. This includes $13.5 million for the initiation of the Phase III trial in sarcomas and $114.5 million for the initiation of other Phase II and Phase III studies. Additionally, Merck will pay up to $200 million based on achievement of sales thresholds.

“Ariad and Merck share the development costs globally, but any development that is unique to markets outside the U.S. will be borne by Merck exclusively,” Mr. Pascoe continued. Merck will provide at least $200 million toward global development. After Ariad has paid $150 million in development costs, Merck may contribute up to $200 million more on interest-bearing repayable terms. The companies also agreed to an evprofit split in the U.S. and tiered double-digit royalties to ARIAD outside this region. Pascoe predicted that the combination of the upfront and milestone payments will fund Ariad’s portion of the remaining development costs.

During Ariad’s webcast, Edward M. Fitzgerald, Senior Vice President, Finance and Corporate Operations, Chief Financial Officer and Treasurer, said, “We expect positive cash flow from operating activities in 2007 in the range of $30 million to $35 million. Based on those projections we estimate that our cash and marketable securities by December 31 will be $72 million to $76 million.” Wyeth and Novartis also have mTOR blockers in their oncology pipelines. In fact, Wyeth’s Torisel was the first mTOR inhibitor approved by the FDA as a treatment for advanced renal cell carcinoma.

“Although all three compounds are based on rapamycin,” Mr. Pascoe explained, “they are significantly different chemical entities that behave differently in the body.” Deforolimus has very predictable pharmacokinetics with little variation, has a more focused side-effect profile and can be combined with other antitumor agents, which has not proved possible with other mTOR inhibitors, Mr. Pascoe added.

Mr. Pascoe expects U.S. and ex-U.S. peak revenue potential for Deforolimus in sarcomas alone to be about $300 million.


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