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.
Monday, February 7, 2011
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.
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.
Subscribe to:
Posts (Atom)