Amylin gets European approval for weekly diabetes drug
   The San Diego Union Tribune - by Keith Darcé Originally published June 21, 2011

INCYTE coverage by Gene Marcial of the MSN Money’s Top Stocks

BioSante (BPAX) released Phase III data from their two LibiGel trials and made our job of describing the data very simple. In a word, the data were horrible. For example, in the BLOOM-2 study the placebo actually performed better than the drug! Oysters had a better chance of success.

Subjects in BLOOM-2 who were treated with LibiGel showed an increase of 1.0 day with a satisfying sexual event compared to baseline, while those receiving placebo gel showed an increase of 1.28 days with a satisfying sexual event compared to baseline.  Subjects in the first trial, BLOOM-1, who were treated with LibiGel showed an increase of 1.47 days with a satisfying sexual event compared to baseline, while those receiving placebo gel showed an increase of 1.26 days with a satisfying sexual event compared to baseline (p=0.463). No, we didn’t misplace the decimal there – the statistics suggest that any treatment effect is just as likely due to placebo effect as to drug effect. Wow – these data are vastly worse than even we expected! 

This is a huge disappointment for BPAX and we expect the stock to get hammered tomorrow when it resumes trading.  The stock should open below $1.00 and could easily break $0.50 considering this is some of the worst clinical data you will ever see.  The company will end the year with $56 million in cash and has traded near that level in after-hours trading. We recommend that you cover all shorts and puts today. We will cover our BPAX short using the closing price from tomorrow, Thursday, December 15.

From this week's Issue of MTSL:

Our top story this week is a recommendation of a short sale of BioSante Pharmaceuticals (BPAX) over $2.25 with a target price of $1.25.  The company has a treatment (LibiGel testosterone gel) in Phase III clinical trials which, if approved, would be the first-to-market therapy for hypoactive sexual desire disorder (HSDD).  The drug is a transdermal gel delivery of testosterone intended to increase female libido. There’s a catch, though – there are reasons why there are no approved therapies for HSDD or other female libido drugs are on the market.  The first reason is safety. A year ago German drug maker Boehringer Ingelheim announced it was scrapping plans to develop its female libido drug because of safety concerns.  Proctor & Gamble ran into similar regulatory concerns last decade over its testosterone patch.  The second reason is the lack of clear and definable clinical endpoints for HSDD. If there’s one key lesson we’ve learned about clinical trials, it’s ask one question and answer it clearly. The LibiGel Phase III trials have multiple endpoints, making it harder to get a statistically significant result. 

On October 4, 2011, BPAX announced the completion of its two pivotal LibiGel Phase III efficacy trials. Trial data are being collected from the 141 investigative sites in the U.S. and Canada that participated in the trials and the company is, for now, blinded to the results. BPAX expects to announce top-line LibiGel efficacy results from both trials before the end of the year. We do not have to wait long to see if we are right about this short sale as results could come within days. 

The LibiGel clinical development program also includes the ongoing LibiGel Phase III cardiovascular event and breast cancer safety study, which completed enrollment of 3,656 subjects in June 2011. On October 11, BPAX announced that an independent DSMB completed its seventh unblinded safety review and recommended that the study continue according to the FDA agreed protocol. The primary analysis of safety data is targeted for the third quarter of 2012. The LibiGel New Drug Application (NDA) submission will include data from the two efficacy trials as well as the safety study, and is targeted for the fourth quarter of 2012.  Given the history of safety problems using testosterone to treat female libido, the FDA required this safety trial.

BPAX has a current market cap of $280 million.  The company has only $50 million in cash and is burning $12 million a quarter which amounts to less than a year of cash.  The stock could easily be cut in half if LibiGel fails in Phase III, with some of the remaining value attributed to the TEVA hypogonadism indication.  BPAX also is developing a portfolio of cancer vaccines and other programs. These programs are not, however, what you would call inspiring. Moreover, as we know in biotech the lead clinical program is the only thing that really matters for the valuation.

BPAX CEO Steven Simes has said the market for LibiGel may be at least $2 billion – the estimate for erectile dysfunction drugs.  We find this comment to be boastful at best as even the most bullish BPAX analysts have peak sales just over $500 million. Identifying the market for this drug is hard enough; successfully converting that potential market into actual sales is another problem altogether. 

The SPA agreement for the pivotal Phase III covers safety and efficacy of LibiGel in the treatment of FSD. The Phase III safety and efficacy trials are double-blind, placebo-controlled trials each of which will enrolled approximately 500 surgically menopausal women for six-months of treatment.

The primary endpoints in the LibiGel clinical trials are:

• An increase in the number of satisfying sexual events.        
• Change in mean sexual desire.     

The secondary endpoint is:

• Decrease in sexual distress associated with low desire.        

We don’t think you’ll need any convincing that these are soft endpoints, and BPAX will have difficulty attaining statistical significance. One of the most important keys to successful Phase III trials is narrowly defined endpoints that basically seek to answer one question.  One variable is enough to trip many clinical trials and adding multiple variables is a way to trouble in the form of poor results.  These trials will use patient surveys to obtain much of the data.  Patient surveys are notorious for providing mixed results because, again, you are asking multiple questions.

Most importantly, we expect a large placebo effect in these trials. Frankly put, thousands of years of history regarding aphrodisiacs prove the importance of patients’ state of mind and expectations when it comes to compounds advertised as improving one’s sex life. We are recommending a short sale of BPAX above $2.25 with a target price of $1.25.

MTSL Archives now Available Online

We celebrated our 700th Issue, but you get the presents. In the interest of deepening investors' knowledge and illuminating the history of the Biotech Industry, BioInvest.com has made 15 yearsa of the Medical Technology Stock Letter freely available online. The oldest newsletter devoted to the sector, MTSL has been continuously published for almost 30 years and continues to lead the industry in insight and analysis.

Mergers, acquisitions and outright failures are very common in biotech, and usually once a company is gone, any information about that company quickly slips down the memory hole. Now, with past issues of the MTSL dating back to 1996 available freely online, access to a wealth of historical information is at your fingertips. The most recent issues of the Letter continue to be available to subscribers only, so come to the Newsletter page to learn more about joining the ranks of successful biotech investors who have profited from MTSL.

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MTSL Editor John McCamant contributed the following to the Oncology Business Review.  Read the original post here.

A View From The Markets: Incyte, Novartis, and Ruxolitinib

Incyte (INCY) and their partner Novartis have reported that ruxolitinib (INC424), has met its primary endpoint of significantly reducing spleen size in patients with myelofibrosis (MF), when compared to best available therapy in a second Phase 3 trial. The European study, called COMFORT-II, showed that treatment with ruxolitinib provided a statistically significant reduction in spleen size in patients with primary MF, post-polycythemia vera myelofibrosis (PPV-MF), or post-essential thrombocythemia myelofibrosis (PET-MF), when compared with best available therapy. The company reported that the safety profile for ruxolitinib was consistent with previous studies. Regarding concerns about the potential for anemia, we will have to see the full details before we can put the issue to rest. Complete study data was not revealed in the company’s press release which will allow INCY to submit the data for presentation at an upcoming medical meeting. We expect the data to be presented in Chicago at this year’s ASCO. It should be well received since there are no current treatments approved specifically for MF.

An NDA filing for ruxolitinib consisting of COMFORT-II and COMFORT-I will be submitted to the FDA in the second quarter, with a European filing shortly following the FDA filing. The drug candidate has received orphan drug status in both the U.S. and in Europe which means that it will be reviewed in six months, rather than the normal 12 months for regular NDAs, positioning ruxolitinib for two regulatory approvals by year-end. The news flow for the drug candidate in 2011 will be outstanding:

• Submit NDAs in both U.S. and Europe in Q2.
• Present COMFORT-I and COMFORT-II data at ASCO in June.
• FDA advisory committee meeting.
• Receive FDA/European approvals in late Q3/early Q4.
• Launch ruxolitinib in the U.S., possibly before the end of the year.

We raised our buy limit on INCY in late January from $12 to $15 based on a short piece (written by supporters of a rival drug from YM Biosciences, which has potential, but clearly is behind ruxolitinib) that claimed ruxolitinib caused anemia and only reduced symptoms. They claimed these problems would lead to an inevitable delay by the FDA. We believe that the addition of positive Phase 3 results from COMFORT-II to COMFORT-I will be sufficient to earn ruxolitinib regulatory approval. Finally, the full data set that we expect to be presented at ASCO should put to rest lingering safety concerns. 2011 is shaping up to be a transformative year for INCY as they bring their first drug to market. The bottom line is that stock is less risky now than when we raised our buy limit in January. Since that time the stock price has drifted lower, and we urge subscribers to take advantage. INCY is a buy under $15.

Amylin and Alkermes’ stock prices were both down this week after releasing top-line results from DURATION-6, a head-to-head study designed to compare weekly Bydureon to Novo Nordisk’s once-daily Victoza.  The disappointing results showed that patients receiving Bydureon experienced a reduction in A1C of 1.3% from baseline, compared to a reduction of 1.5% for Victoza, and did not meet the pre-specified primary endpoint of non-inferiority to Victoza.  This was a risky trial that would have been a huge marketing tool, but now it will be used against Bydureon.  Given that Bydureon is not yet on the market and will have to play catch up, the risk was probably worth taking.  If Bydureon had been shown to be superior, everyone would hale the companies’ boldness and foresight instead of saying that they’d made a mistake. While the top-line efficacy endpoint was not as good as Victoza, the data was still good and the peripherals actually tilt towards Bydureon. 

AMLN’s stock was down over 25% and ALKS stock was down over 10% on good data that wasn’t quite as good as their competitor’s.  We believe that the 25% sell-off is an over-reaction as Bydureon is much closer to approval and the path is much clearer than it was last year when the FDA requested more information on Bydureon. In previous trials Bydureon’s A1C was better than Victoza and A1C is not the only criteria for an effective diabetes drug. Bydureon has consistently provided better weight loss than Victoza and has shown about half the side-effects.  Most importantly, Bydureon is a once-weekly injection vs. a daily injection for Victoza, (one needle stick vs. seven needle sticks a week), which is very important to patients. While doctor’s certainly understand the importance of biomarkers like A1C, a patient’s comfort and compliance are also considered, and we think that this data will not discourage doctors from trying Bydureon.

We believe that this week’s decline has more than discounted the disappointment from DURATION 6 which did show Bydureon to highly effective, just not quite as good as Victoza.  We are also much closer to the re-filing of Bydureon with the FDA then we were in October.  We also have added clarity as the NDA will be re-filed by year end.  Therefore, we are raising our buy limit on ALKS from $12 to $13 to take advantage of today’s opportunity.  ALKS has done a tremendous job creating value in their pipeline, and Bydureon still represents significant revenue growth for both ALKS and AMLN.  While we are disappointed in the news, we believe that both stocks have been over-sold and urge subscribers to either add or establish positions in AMLN and ALKS.

While attending the annual JP Morgan Chase Healthcare Conference in San Francisco, we ran into Inside Wall Street's Gene Marcial. You can read his rundown of the event in his rundown of the annual event here: 

Inside Wall Street: Every January, It's a Four-Day Health Care Fest in San Francisco

Once again, the Medical Technology Stock Letter participated in the AOL Daily Finance Top Picks for 2011 this year. The Top Picks include a selection of of interesting stocks for the coming year as chosen by leading investment newsletters. MTSL Editor John McCamant chose Aastrom Biosciences (ASTM), saying, "We are recommending Aastrom Biosciences as our top stock recommendation for 2011 because we believe that they are the clear leader in the regenerative stem cell space."

Read the rest of our ASTM recommendation here.

You can also check out the entire list here.

Alternatively, you can download the whole report in .pdf format from www.thestockadvisors.com.

Investment Scan

Two weeks ago, under pressure from the General Accounting Office, the FDA announced strict rules outlining its new rights to seize any imported goods manufactured overseas.  The GAO reported earlier this month that the FDA has failed to implement a series of recommendations made in 2008, including the fact that the FDA’s database of manufacturing facilities riddled with errors.  The agency is much more likely to inspect new facilities for drugs that haven’t reached the market than it is to expect critical facilities supplying millions of doses...

Three Types of Manufacturing
Pharmaceutical manufacturing can be broken into three broad categories: small molecules, biological products and custom manufacturing.  Small molecule candidates are easy to make and screen in large numbers. Biological products include all of the various proteins, enzymes, antibodies and other macromolecules that are manufactured through the use of cell cultures Custom manufacturing includes any type of drug production that does not fall into the other two categories.  In today’s evolving world these categories do not define the company since large pharmaceutical companies engage in complex biological manufacturing and many biotech companies pursue small molecule drugs...

Sangamo Leads the Way

In this and upcoming Issues we will be looking deeply into the manufacturing developments that are transforming biotechnology and will shape our recommended companies’ futures.  Sangamo Biosciences (SGMO) is getting into the action on multiple fronts, using their zinc-finger technology as a treatment and to discover new treatments, to improve manufacturing for anyone using CHO cell cultures, employing E. coli manufacturing, and even custom manufacturing.  The zinc finger nuclease (ZFN) technology is truly a uniquely powerful tool in the biotechnologist’s arsenal.  It allows for the modification of genes in almost any cell type and has enabled the creation of transgenic research animals in previously unavailable species...

This is an excerpt of the latest issue of Medical Technology Stock Letter.The full content of this article is only available to registered subscribers.  Please SUBSCRIBE to access the complete newsletter.

 Want to read more?  Log in to our subscriber area or subscribe to the Medical Technology Stock Letter.

For the eighth year in a row, MTSL made its way to the BIO Investor Conference in San Francisco this week to check up on companies and chat with opinion leaders and CEOs.  While we were there, we also got a chance to learn about some interesting emerging technologies and unfamiliar companies.  After digesting all the information and checking deeper into these companies, we will bring you a new recommendation.  In the interim, we want to shine the flashlight onto some of the candidates – companies that are worthy of a second look.

OncoGeneX (OGXI) CEO Scott Cormack gave a thoughtful presentation and did a good job of balancing the need to tell his company’s story with a thoughtful recognition of the everyday struggles of people living with cancer.  OGXI’s lead clinical candidate OGX-011 is being tested in two Phase III studies for treating prostate cancer, including for opioid-resistant cancer-related pain.  In addition, a Phase III in NSCLC is scheduled to start next year.   OGX-011 is partnered with marketing powerhouse Teva Pharmaceuticals and OGXI also has an ongoing collaboration with ISIS that has given the company access to ISIS’ antisense technology.  In addition to OGX-011, which is also being tested in non-small cell lung cancer patients, OGXI collaborates with ISIS on OGX-427 (prostate cancer and solid tumors) and OGX-225 (solid tumors).  A lack of significant news to drive the stock in the immediate future has contributed to the current buying opportunity.  We added shares of OGXI in this Issue and we believe they are now the most undervalued cancer company in Phase III development.

ZIOPHARM Oncology (ZIOP) is a biopharmaceutical company that is seeking to develop and commercialize a diverse portfolio of chemotherapy drug development candidates for smaller oncology indications.  The lead compound, palifosfamide, delivers the cancer-fighting component of ifosfamide and is expected to overcome the resistance seen with ifosfamide and cyclophosphamide, two of the most commonly used alkylating drugs used to treat certain cancers. Palifosfamide does not have the toxic metabolites of ifosfamide that cause the debilitating side effects of encephalopathy and severe bladder inflammation – problems that have severely limited its use.   ZIOP has recently started a randomized double-blind Phase III trial in front line soft tissue sarcoma patients.  This trial comes on the heels of strong controlled Phase II results presented at this year’s ASCO.  Ifosfamide previously showed efficacy in small cell lung cancer (SCLC), but the trial was stopped due to adverse events.  This result, combined with palifosfamide’s improved safety profile, leads the company to believe that the drug may have utility in SCLC, and a Phase I trial towards that end is slated to begin shortly.  We are intrigued by ZIOP and its late stage cancer drug candidate.  The company is well funded with $73 million in cash, which should allow it to fund operations into the Q3 2012.

NOVAVAX (NVAX) is a vaccines company focusing on seasonal and emergent influenza.  Most flu vaccines are still manufactured using chicken eggs.  The drawbacks of this process are time related – it is a labor-intensive process to properly culture the eggs and it can take up to a year to manufacture a vaccine after initial identification of the virus.  NVAX uses their novel virus-like particle (VLP) technology as an alternative method to create the vaccines.  The particles contain just enough genetic information to trigger a robust immune response, without any genetic instructions for viral replication.  So, no chance of getting the flu from your flu shot.  The company can generate large quantities of vaccine in just 12 weeks after receiving the genetic information of the target virus.  There is a good chance that NVAX may soon receive a nice infusion of non-dilutive financing in the form a federal grant.

Idenix Pharmaceuticals (IDIX) is taking a multi-faceted approach to battling viruses, especially hepatitis C (HCV).  HCV continues to be one of the largest areas of unmet need in global health.  IDIX recognizes that many patients with HCV quickly develop multiple-drug resistance and have integrated this fact into their drug-development paradigm.  The future of HCV treatment will consist of a cocktail of drugs that attacks the virus from multiple angles at once.  IDIX believes that the foundation of a treatment should consist of protease inhibitors combined with nucleoside/nucleotide inhibitors, two therapies with complementary modes of action and resistance profiles.  These two will be augmented with non-nucleosides and NS5A inhibitors.  IDIX has recently hit a snag in their HCV development plans as Phase II trials for two lead compounds, IDX184 (nucleotide inhibitor) and IDX320 (protease inhibitor) have been put on a “verbal” clinical hold by the FDA due to potentially liver toxicity.  The problems do not appear to be fatal for the programs and the company is currently gathering data that they will give to the FDA.  IDIX also has an approved drug, Tyzeka/Sebivo for HBV, and an HIV treatment in Phase II testing.  A private company, Presidio Pharmaceuticals, also presented interesting data in the HCV space; the company is developing a small molecule NS5A inhibitor and has multiple programs in the pre-clinical phase.

During his presentation and in a post-presentation discussion with IDIX CEO Jean-Pierre Sommadossi, he pointed out that Abbott had recently failed to deliver satisfactory efficacy in a two drug combination study.  This supports the company’s believe that HCV may eventually need to be treated with four drugs, not with three as is currently assumed.  If this does prove to be the case, it is obviously a positive for IDIX as they have multiple drugs in development to treat HCV. 

ADVENTRX Pharmaceuticals (ANX) is a drug delivery company that aims to use emulsion technology improve the performance of existing injectable drugs.  Highly lipophilic drugs are difficult to administer and due to their low water-solubility surfactants are often used, which can limit dosing.  Since they won’t dissolve, ANX’s emulsion technology allows the drugs to be stably suspended in tiny droplets within water.  The main effect of the technology is to reduce injection-site reactions, however the lack of surfactants also makes the drugs easier to administer.  The company has two products in late stage testing, formulations of the cancer drugs Navelbine (vinorelbine) and Taxotere (docetaxel), and a straightforward path to regulatory approval.  There is no need for large efficacy trials, only small clinical trials to demonstrate bioequivalence.  The most interesting thing about ADVENTRX is that despite a chance that the company will soon be marketing a drug, their stock is trading close to cash.

In addition to being the major contributor to BIO’s Hematology Therapeutic Workshop, Dr. Joseph Buggy from Pharmacyclics (PCYC) convinced those in attendance at his presentation that he is passionate about his work.  The company has a strong understanding of the role of B-cells (immune cells) in various diseases and the best way to deal with their rogue activity.  Dr. Buggy made a convincing argument that altering B-cell expression is a safe way to go after a disease because other systems are not affected.  As evidence, he pointed out that some people are born without the ability to make B-cells, but otherwise the body is healthy.  PCI-32765 is currently in Phase I testing in multiple cancers of the blood and PCI-45292 is being tested in a pre-clinical setting for diseases like rheumatoid arthritis and lupus, both of which involve rogue B-cells.  Both of these drug candidates are inhibitors of Bruton’s tyrosine kinase (Btk).  Btk inhibition deactivates downstream B-cell antigen receptor (BCR) signaling and eventually prevents B-cell maturation.

Of course many private company were at the conference and while they aren’t investment opportunities for us, they are doing interesting work.  We think Hepregen might revolutionize the detection of liver-toxicity in early-stage drug candidates and Sirius Genomics has a very innovative business model.  The diagnostic company develops tests to determine which patients will respond to certain drugs, increasing sales of the drugs.  But instead of profiting from the tests they sell them at cost after signing a revenue-sharing agreement with the drug’s manufacturer.  Sanovas Surgical Technologies is developing a device for the removal of lung tumors without the need for cauterization (the current standard), shortens hospital stays, and gives oncologists the ability to deliver drugs directly to the tumor site during surgery. 

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This is an excerpt of the Medical Technology Stock Letter.The full content of this article is only available to registered subscribers.  Please SUBSCRIBE to access the complete newsletter.