|3 Compelling Oncology Biotechs from Rodman & Renshaw 2013|
|By Brian Wilson-Lead Contributor|
|Thursday, 12 September 2013 06:55|
While we weren’t able to see everything, we did walk away from Rodman with some very interesting content from the cancer development world that may be of interest to biotech-oriented investors.
1.) Champions Oncology (CSBR)
Champions Oncology is unlike many other oncology companies of its size in that it is essentially a hybrid service/diagnostics company. Champions specializes in using xenografts to predict the course of cancer progression, which allows the company to study individual cancer patients in great detail. For those unfamiliar with the terminology, note that xenografting is a process by which a batch of cells or living tissue is transferred between one organism to another (of a different species).
The process starts with a biopsy of a patient’s tumor, which is sent to Champions Oncology labs as soon as possible. A xenograft is then performed to insert the malignant tissue into immune-deficient mice. The cancer takes to the mouse and grows in 90% of cases, and is studied over a three to six month period.
This process allows Champions to test the efficacy of existing cancer drugs on the patient’s malignancy without actually harming the patient. This is especially valuable in the customization patients’ chemotherapeutic regimens, since it can determine which agents would be most successful in treating each patient.
Example of Personalized TumorGraft™ results, showing how one treatment was more effective than the others tested. (This case was published in Molecular Cancer Therapeutics, Villarroel et al.)
With the data mined from these personal xenografts, Champions has also been able to develop a database of patient outcomes and a physical library of malignant cells. This has extraordinary value for cancer research and development, although it is very difficult to determine valuation at this point.
For fiscal year 2013, Champions generated $2.4 M from its personalized oncology solutions, which include xenografts for the profiling of malignant tissue. $5.9 M in revenue was realized from translational oncology solutions, which included $.88 M in collaboration revenues from Cephalon (a subsidiary of Teva). Overall, the company realized $8.3 M in revenues for FY 2013. This statistic was 16% higher than it was in FY 2012.
We can also say is that the personalization of cancer care has been a big trend in the medical community, and that it is growing rapidly. We’ve realized that well-informed oncologists make better decisions for their patients. For additional reading on the xenografting story, see this New York Times article which also discusses Champions Oncology (link). Interested investors should also look forward to an upcoming earnings call (link), which will update the company’s financial figures and its status.
2.) Sorrento Therapeutics (SRNE)
Here is a visual of this company’s pipeline:
Sorrento recently completed its merger with the private company IgDraSol, which secures the drug Cynviloq™ for the company’s oncology pipeline. This drug is a modified version of a chemotherapeutic agent known as paclitaxel (“Taxol”), which inhibits mitosis (replication) in cancer cells. Another formulation of Taxol, known as Abraxane, is a very successful product that was acquired by Celgene in 2010.
Despite changes made to the formulation, the FDA determined that Cynviloq could be approved for in breast, lung, and pancreatic cancer indications through a specially designed approval pathway known as 505(b)(2). This pathway allows Sorrento to submit the drug for approval using clinical trial data that has been gathered for Taxol and Abraxane. Sorrento is expecting to initiate a final bioequivalence trial needed for Cyviloq registration before the end of 2013.
Valuation of the asset is tricky, although others have pointed to Celgene’s expensive buyout of Abraxis in 2010. From a previous note:
“The commercial potential for Cynviloq is derived from the previous – and ongoing – success of its cousin Abraxane, which was originally developed by Abraxis BioScience as an improvement to the original Taxol. Abraxis was acquired by Celgene (NASDAQ: CELG) in June 2010 for $3.5 B, but primarily for the Abraxane asset.
This same asset generated $427 M in total 2012 sales. Most of this was derived from breast cancer, although growth is occurring in gastric cancer and non-small cell lung cancer. These are expected to balloon to over $1 B as the drug is approved for new cancer indications in the coming years – specifically malignant melanoma, bladder cancer, and ovarian cancer.”
The company also recently secured a partnership with a private company Biomiga, which gave Sorrento the worldwide commercial rights to a therapeutic drug monitoring device for paclitaxel products. This device improves the monitoring of paclitaxel regimens, and offers Sorrento a potentially valuable asset for the paclitaxel market.
The pipeline also includes G-MAB®, which consists of a library of human antibodies and a platform for their identification and isolation into 20+ monoclonal antibodies. Perhaps the most exciting target here is PD-L1/PD-1, which has seen major attention from big pharma in recent years due to the apparent link between PD-L1 and immune system suppression.
From a previous note:
“It’s worth noting that billionaire biotech investor Dr. Phillip Frost took an interest in the company back in 2009 due to Sorrento’s antibody assets. This would include Sorrento’s G-MAB library, which is claimed by the company to be one of the largest human antibody libraries available for commercial use. His healthcare holdings company OPKO Health (NYSE: OPK) is currently the largest shareholder, with 2.4 M shares (nearly 18% of the company) on top of the 148,380 shares Dr. Frost owns personally.”
Perhaps Dr. Frost is looking to develop a PD-L1 inhibitor?
3.) CytRx Corporation (NASDAQ: CYTR)
This company focuses on improving drug delivery. Its lead program is for Aldoxorubicin (INNO-206) – an albumin-binding molecule that brings a DNA intercalating doxorubicin payload to tumor cells. The pipeline also contains delivery-enhanced versions of cisplatin and topotecan, although these programs are in the preclinical development.
The current focus is almost entirely on aldoxorubicin, which is being developed for five cancer indications. Doxorubicin is a very widely used and well-known chemotherapeutic agent, although it is limited by its toxicity and its highly inefficient delivery to malignant cells. Aldoxorubicin aims to rectify these issues with a “linker” molecule designed by CytRx to bind doxorubicin to albumin while in the bloodstream. This linker dissolves once aldoxorubicin enters tumor cells, which allows doxorubicin to shut down DNA replication.
Aldoxorubicin may be a particularly exciting drug for the treatment of Glioblastoma multiforme (GBM), which is a highly aggressive, deadly brain cancer that is extremely difficult to treat. Surgery and radiation therapies generally prolong survival, although the blood-brain barrier makes it very difficult for chemotherapeutic agents and other cancer drugs to reach the tumor cells.
In proof-of-concept studies using xenograft mouse models, it was shown that aldoxorubicin penetrates into GBM malignancies better than doxorubicin and significantly improves survival rates. CytRx is hoping to prove these results in a Phase IIb GBM trial that should be initiated before the end of the year. Success in this trial would be a huge deal for the company and its investors, and would lead to a breakthrough designation application by CytRx for GBM. While only 25 out of 57 applications were successful this year, drugs that receive this status enjoy an expedited and clear path to final FDA approval.
The most mature aldoxorubicin programs are targeting 1st and 2nd line treatment for patients with soft tissue sarcoma (STS). Investors are anticipating data from a 1st line STS patient trial before the end of the year, which aims to establish aldoxorubicin’s superiority over doxorubicin with progression-free survival (PFS) data from a pool of 105 patients. The first Phase III trial for the 2nd line indication is expected to commence in Q1 2014.
*Notes on Biotech Risk: Investors should realize that unprofitable biotechnology companies in the development stage experience particularly high volatility, are speculative, and do hold significant risk for loss of wealth. Investors believe that the company’s valuation will increase more over time than the rate at which the company will burn cash, which is why the high risks are taken.