Thursday, February 17, 2011

BSD Medical's MicroThermX System Used to Treat Lung Cancer

BSD Medical reported earlier this week that its MicroThermX microwave ablation system was used to treat a patient with lung cancer at the Comprehensive Cancer Center at Rhode Island Hospital.  It is too early to know know the effects of the treatment, but so far only good things have been reported.  The attending oncologist Damian E. Dupuy said that the MicroThermX is the best generator he has used.  Hopefully this gets other oncologists interested to use the microwave ablation system to treat their patients in addition to surgery, chemotherapy, and radiation.  The MicroThermX system has less adverse effects than chemotherapy and radiation, which will win it patient preference.  Also, the system uses antennas to deliver the microwaves to designated ablation areas.  These antennas are one time use, so the company will continue to have a source of revenue.  The system can also be used to treat various forms of cancers.   

BSDM also got a boost in stock price after 21th Century Oncology Center purchased a hyperthermia therapy system.  The BSD 500 Hyperthermia System has received a pre-market approval from the FDA, a requirement for class III medical devices.  21th Century Oncology operates nearly 100 cancer treatment centers in the USA, provides advanced therapy and radiation therapy options for its patients, and recruits physicians from the most prestigious training centers.  BSD Medical has a growing network of clinical centers that will be involved with continuous clinical studies of their system.     

The soft tissue ablation market is growing and there is a high revenue potential.  Some estimates predict a worldwide market worth $2-3 billion.  With the current ineffectiveness of cancer therapy, clinicians will need to adopt newer ways to treat cancer.  BSD Medical is perhaps the most advanced in developing microwave ablation and hyperthermia systems and will continue to be the leader in the coming years.  Investors should become excited about the latest developments for BSD Medical and expect more good things to come.     

Friday, February 11, 2011

Is There Anything Left for Mannkind?

Mannkind Corporation (Nasdaq: MNKD) has taken quite a beating recently.  The big blows came from the FDA when issuing a Complete Response Letter for Afrezza, a inhalable insulin delivery technology that was seen as very promising.  The CRL will require Mannkind to conduct further clinical trials, which require cash.  Mannkind is reported to have less than a year's worth of cash on hand.  In the past, CEO Alfred E. Mann has used his own personal money to help advance Afrezza.  In a conference call, Man  stated that the company will be laying off employees and has not said that he will be infusing more cash into the company to conduct more clinical trials.  Many think that Mann has given up, but perhaps he looking at other options to conduct these trials.  It is believed that most pharmaceutical companies will shy away from inhalable insulin after the failure of Exubera.  Afrezza has numerous advantages over Exubera and is a better product overall.

For investors, it is worth exploring what Mannkind has to offer if Afrezza should fail.  Investors can buy Mannkind stock at a discounted price right now.  At the time of writing, MNKD was down 20% with unusually high volume. It is important for Mannkind to find other sources of funds, whether from the outside or through selling rights to its intellectual property.  

Besides Afrezza, Mannkind is working on an active immunotherapy platform that may be applicable to various forms of cancer.  The idea is interesting and unique from current forms of therapies.  However, Mannkind is still in the early stages, just completing or initiating Phase I studies.  It will be also worth knowing if Mannkind will be able to finance further clinical trials for its oncology program.

Mannkind also has patent rights to the inhaler technology called the "Dreamboat."  Perhaps to raise more funds, the utilization of this technology can be sold to other pharmaceutical and biotech companies studying therapies for respiratory disorders.  The Dreamboat technology can possibly be used with their oncology immunotherapy program.  Since the oncology program is utilizing plasmid DNA and peptides, the inhaler can be used to deliver these to the lung for the treatment of lung cancer.

Mannkind has also developed the Technosphere technology used in Afrezza and another anti-diabetic drug candidate, a GLP-1 analog.  With little cash, Mannkind will find it difficult to continue development of the GLP-1 analog.  The Technosphere technology may find other applications.

Mannkind may need to find a partner to help finance further clinical trials for Afrezza.  A big pharma is the best option, but as mentioned earlier, there is reluctance to venture into the field of inhalable insulin.  There is a risk involved, but the reward is worth it.

Investors should not avoid Mannkind like the plague.  There is still things to like about Mannkind and the company is not doomed for failure.  There is money to be made depending on what direction Mannkind decides to pursue.   

Wednesday, February 9, 2011

Will Teva's Push to Expand Help Grow Your Portfolio?

Teva Pharmaceutical Industries Limited (TEVA) is well known as a generic drug maker.  However, a closer look reveals that Teva is pushing to become labeled as a "Big Pharma" company.
There are several things investors have to love about Teva:
  1. Teva is following a similar strategy as Big Pharma by acquiring companies in areas in which it may not be a major player.  An example is the acquisition of Ratiopharm GmbH and taking a bigger stake in Rexahn Pharmaceuticals. 
  2. Teva is conducting clinical trials for drugs such as QNAZE, a treatment for perenial allergic rhinitis.  Teva also has Copaxone, a FDA approved drug for the treatment of multiple sclerosis.  Copaxone has revenue of $938 million last quarter, a 26% increase over the previous quarter.  The patent for Copaxone expires in 2014, but Teva believes that it will take longer than that for a generic to reach the market.  A combination of generic and drug discovery operations is advantageous for pharmaceutical companies.
  3. The patent cliff of 2011 and 2012 will make the coming years, the years of the generic manufacturers.  Teva is the biggest generic manufacturer and with its expertize Teva will capitalize on future opportunities.
  4. Teva shares have dropped over the past days because profit missed estimates.  The primary reason is the deal to acquire Ratiopharm.  There was also a 5% decline in generic drug sales in the US.  Investors may be able to buy stocks at a slightly cheaper price this week.
  5. Teva pays a dividend and the next one which will be paid at the end of the month will of $9.218, up 14% from the previous quarter.
  6. A wide variety of drugs are manufactured, marketed, or sold by Teva.  This will ensure a revenue stream for many years to come.    
Teva Pharmaceuticals is positioning itself to be in a strong position in the coming years.  Investors should add Teva to their portfolios for diversification and the possibility that Teva may see greater grow than other popular pharmaceuticals stocks such as $JNJ, $PFE, and $MRK.

Monday, February 7, 2011

Will Pharmaceutical Companies Be Willing to Pursue a New Indication for Statins?

There has been a plethora of recent lab results showing involvement of cholesterol in cancer progression and resistance.  Researchers have demonstrated delivery of statins, cholesterol lowering medications, are effective in treating a variety of cancers either alone or in combination with chemotherapeutic agents.  With several statins losing patent protection in the coming years, it will be interesting to see if companies are willing to pursue a new indication that can possibly extend patent life.

A recently published study by Peixun Zhou  et al. demonstrated that leukemic stem cells had increased uptake of synthetic low density lipoproteins.  By treating cancer stem cells with statins, it would reduce endogenous lipid synthesis and potentially prevent recurrence since stem cells are dormant and are later activated to multiply.  

There is also evidence suggesting that cholesterol and low density lipoprotein receptors (LDL-R) are involved in multi-drug resistance by interacting with p-glycoprotein (P-gp), which is a energy driven protein that expels exogenous substances of various chemical structures from the cell [JCR]. 

Atorvastatin (Lipitor) is marketed by Pfizer (PFE) and generated $12.4 billion in revenues in 2008 making it the top selling medication.  The US patent is set to expire this summer, but PFE has reached a pay-to-delay agreement with Ranbaxy Laboratories to delay the generic launch in the US until the fall. 

Rosuvastatin (Crestor) is marketed by AstraZeneca (AZN) and the patent expires in 2016.

Simvastatin was marketed by Merck (MRK) under the brand name, Zocor.  The patent has expired and is widely available as a generic manufactured by Ranbaxy Laboratories, Teva Pharmaceuticals Industries (TEVA), and Dr. Reddy's Laboratories.  A study led by Professor Riganti of University of Turin in Italy, targeted liposomal doxorubicin (Doxil) to LDL-R. [JCR]  By treating the cancer cells with simvastatin, the team was able to decrease endogenous cholesterol production.  To compensate for low amounts of cholesterol, the cancer cells increased expression of LDL-R on cell membrane to bring exogenous cholesterol into the cell.  The increased expression allowed the team to exploit LDL-R as targets to deliver doxorubicin to cancer cells and overcome resistance due to p-glycoprotein efflux pump. 

Pravastatin (Pravachol) has been available as a generic from TEVA. A liposomal formulation of pravastatin was shown to decrease expression of pro-inflammatory and pro-angiogenesis proteins in tumor cells and theraby inhibit growth [Journal of Controlled Release].  The free drug did not have these effects.  The liposomal formulation is considered to be a new drug and a NDA can be submitted with more pre-clinical and clinical trials.  The difficulty will be to find a clinical trial sponsor. 

If a pharmaceutical company decides to pursue a new indication for a statin, they would have to submit pre-clinical results in animals to the FDA in order to begin testing in humans.  After completing the 3 clinical trial phases, the company would submit application for approval.  The company may get Orphan Drug Status and be required to continue monitoring the efficacy as the drug is used in clinical settings.  The testing period can last up to 8 years and requires a lot of capital.  This is the biggest deterrent against a company pursuing such a goal.  If approved, the company can obtain market exclusivity for a new indication.  The period can be extended if the company can obtain a patent on the new indication.  To make a profit and deter physicians from prescribing generic versions, the drug will need to be a new strength or new formulation.  The current data has been derived from in vitro experiments using liposomal formulations and statins that are available as generics.

Because of patent expirations, AstraZeneca is the only big pharmaceutical company with any incentive to pursue a new indication for statin.  However, this is highly unlikely.  The available data is in the preliminary stages and investors cannot get excited to capitalize.  Further research will indicate how statins are to be utilize in treating cancer; either as free drugs or as liposomal formulations making them new drugs.    

Saturday, February 5, 2011

Are M&A's a Signal to Buy Stock in a Biotech Company?

We all knew this would be coming as we approached the patent cliffs of 2011 and 2012.  Big pharmaceutical and biotechnology companies would start buying smaller companies to access their drug and biologic candidates.  Recently, we have seen Johnson & Johnson buy Crucell, and Pfizer buy Seattle Genetics.  Then there is Sanofi-Aventis trying to buy Genzyme and Pfizer reaching a deal to buy Theraclone.  

It is interesting to notice that all these acquisitions concern antibody technology.  Antibodies have become the fad in biotech drugs making some believe that they are the silver bullets for cure of various ailments.  Antibodies are proteins manufactured and secreted by the plasma cells (a type of white blood cell derived from B cells) in response to an antigen (typically an exogenous substance).  Each antibody has specificity for only one antigen.  The purpose of antibody-antigen binding is to destroy the antigen either directly or by recruiting other white blood cells to do the dirty work.  Therefore, antibody therapy aims to either have the antibody kill the tumor or stimulate the patient's immune system to kill the tumor. 

We also know that antibody therapies are expensive and can rake in huge revenues for companies especially if the antibody is for relatively common disease states such as cancers.  Another advantage of pursuing antibody technology is to make generic versions difficult and expensive to design and manufacture.  Small molecules are the most common forms of drugs, and they are much simpler to copy than biologics.  As a result, the patent life is in essence extended and less expensive generics or biosimilars do not reach to the market as quickly.

According to a recent Wall Street Journal article, several biological drugs with $60 billion in annual sales will be off-patent by 2015.  Spectrum Pharmaceuticals ($SPPI), Sandoz, and Teva Pharmaceuticals ($TEVA) have all begun designing and testing generic versions of Roche's Rituxan, which is a very complex antibody.  Due to the nature in which biologics are made, generic versions are not carbon copies of the brand drug.  Biologics are designed and manufactured using live cells and not following a chemical recipe that is used to make small molecule drugs. 

This slight difference in chemical structure and possibly function raises issues on how the FDA will review applications for biosimilars.  It would be expected that there will be a need for a modified Abbreviated New Drug Application (ANDA). 

Currently, it may be worth the risk to invest in small biotechs working on biologics and with a possibility of being acquired by bigger companies.  This of course requires a lot of research into the financials and scientific publications of the companies and the ability to evaluate if there will be interest in acquiring the technology.  Investing in small start-ups can be lucrative for investors willing to take the risk.

Longer term investments may be better in those companies that are acquiring these start-ups and technologies.  Larger companies such as $JNJ. $MRK, and $PFE are cutting their R&D costs, decreasing their payrolls and trying to be in better financial position as many of the executives will soon be retiring and want to be compensated nicely.  Investors should decide whether the companies are overpaying for drug candidates and technology.  It takes around $800 million to bring a drug to market.  A company is saving costs if they acquire a drug and complete clinical trials for less than that amount.  An article by EJ Emanuel et al. published in the Journal of Clinical Oncology calculated that the average cost of a phase III trial was around $6,000 per subject enrolled.  It is difficult to predict the correct price for acquiring a drug.  The seller will stress the potential of the candidate, which can be much higher that the $800 million average of bringing a drug to market.  It is good news for investors that larger companies typically buy the smaller biotech firms and thus not only acquiring the main drug target, but other drug candidates and technologies being developed.  These larger companies typically pay dividends and are safer investments (beta < 1).  An investor can diversify by simply buying some shares in smaller, riskier companies, and also buying shares in larger companies.