Physicians' Financial News for July/August 2007

OBTNJuly/August 2007Volume 1Issue 6

Physicians' Financial News focuses on newsworthy and/or notable companies i the oncology/biotech sector. In this issue: 1) GlaxoSmithKline 2) Ventana Medical Systems Inc. and Roche Holding AG 3) Pfizer Inc. 4) Celgene Corporation 5) Coley Pharmaceutical Group, Inc.

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â–º GSK to Bring Five New Medicines to Market in the Next Three Years

GlaxoSmithKline (GSK) has announced plans to launch five drugs by 2010. “GSK has truly taken a balanced approach to the research we have done in oncology and the portfolio that we have built,” remarked Debasish Roychowdhury, MD, Vice President, Global Clinical Development for the Oncology Medicine Development Centre.

The drugs that will come to market, according to GSK, will include NCEs, biopharmaceuticals and vaccines for prevention of cancer like Cervarix, treatments as in Pazopanib for renal cell carcinoma and supportive care like Promacta in thrombocytopenia. Additionally, Rezonic is being evaluated for treating emesis and Ofatumumab in NHL/CLL.

On top of these five potential launches, GSK recently gained approval for Tykerb in the U.S. and Switzerland. The drug is indicated for advanced or metastatic breast cancer patients whose tumors overexpress HER2 and who have received prior therapy. This includes treatment with Genentech’s Herceptin.

“Tykerb is a dual kinase inhibitor and also binds to the EGFR,” Dr. Roychowdhury explained. “Herceptin is a monoclonal antibody and is only available in an IV formulation, while Tykerb is a small molecule that is administered orally. Additionally, data presented for Tykerb at ASCO 2007 suggest that Tykerb may cross a compromised blood-brain barrier.”

Next, GSK plans to file Promacta for approval to treat short-term ITP by the end of 2007 or early 2008. If sanctioned, it will be the first oral novel compound for thrombocytopenic patients. Phase III data on Promacta confirms increased platelet count and signifi- cantly lower incidence of bleeding in patients with ITP. GSK is investigating Promacta for the treatment of Hepatitis C-associated thrombocytopenia and chemotherapy-induced thrombocytopenia (CIT).

Also planned for the first half of 2008, is the filing of Rezonic for post-operative and chemotherapy-induced nausea and vomiting. Data show that the drug in combination with Zofran is superior to Zofran alone, GSK reported.

Pazopanib currently is in registration studies in renal cell carcinoma. Development programs for combination therapy and monotherapy in eight other cancer types are underway, including sarcoma and ovarian cancer.

Turning to the biologics in GSK’s oncology pipeline, Dr. Rowchowdhury said, “We are pursuing a robust clinical development program for Ofatumumab, a fully humanized, high-affinity monoclonal antibody that targets the CD20 molecule on the cell membrane of B cells and is in late stage development for the treatment of a number of serious conditions. We also have other biologics in early development and with the acquisition of Domantis, GSK now has an even stronger discovery and development program in biologics.” Ofatumumab is being evaluated in follicular NHL and CLL.

Soon advancing into Phase III trials is MAGEA3 ASCI (Antigen-Specific Cancer Immunotherapeutic), a novel vaccine to treat NSCLC. The registration trial, involving over 2,200 patients, will be the largest clinical trial ever conducted in this indication, according to GSK. To date, the company added, no active specific immunotherapies are approved by the FDA.

Tykerb is being evaluated in the first-line, adjuvant and neoadjuvant settings of breast cancer treatment, in the prevention and treatment of brain metastases, in hormone receptor positive patients and other EGFR and HER2 expressing tumors, including a Phase III trial in head and neck cancer. Over 1,200 patients have been enrolled in the Phase III TEACH (Tykerb Evaluation After CHemotherapy) adjuvant study, GSK reported.

GlaxoSmithKline Oncology Pipeline

Drug

Cancer Type

Phase I

4 Compounds

Various types of cancer

Phase II

pazopanib + Tykerb

breast cancer

pazopanib + Tykerb

other cancers

Promacta (eltrombopag)

chemotherapy induced thrombocytopenia, hepatitis C

Phase III

casopitant

chemotherapy induced & postoperative (US only) nausea & vomiting; overactive bladder, depression and anxiety

HuMax-CD20 (ofatumumab)

chronic lymphocytic leukemia & non-Hodgkin's lymphoma, rheumatoid arthritis

Hycamtin

ovarian cancer, first-line therapy

Hycamtin

small cell lung cancer, second-line therapy - oral formation

pazopanib

renal cell cancer

Promacta (eltrombopag)

long-term idiopathic thrombocytopenic purpura

Promacta (eltombopag)

short-term idioopathic thrombocytopenic purpura

Tykerb

breast cancer, adjuvant therapy

Tykerb

breast cancer, first-line therapy

Tykerb

head & neck squamous cell carcinomas

Tykerb

refractory breast cancer

Arranon/Atriance

acute lymphoblastic leukemia & lymphomas

Hycamtin

cervical cancer, second-line therapy

Recent Submissions and Approvals

â–º

Ventana Opposes Roche’s $3-Billion Buy-Out

On June 25, Roche Holding AG made an unsolicited offer to acquire Ventana Medical Systems Inc. for approximately $3 billion. About two weeks later, Ventana rejected the take-over attempt citing that the proposal was financially inadequate.

While Roche believes its offer is fair, Ventana was so displeased that Jack Schuler, Chairman at Ventana, and Christopher Gleeson, President and Chief Executive Officer, stated in their letter to Franz B. Humer, Chairman and CEO of Roche, “Because $75 per share is so far below a reasonable starting point for negotiations, we also decline to engage in discussions regarding a sale of Ventana.”

Mr. Humer asserted, however, “If you continue to decline to negotiate with us we will have no choice but to effect a transaction unilaterally.”

The hostile bid of $75 per share represented a 44% premium to Ventana’s share price on June 22. Ventana’s board of directors, however, unanimously found the price insufficient and contrary to the best interests of its stockholders. Ventana opened trading on June 26 at $77.36 and has since stayed above $75. The board thus recommended that stockholders not tender any of their shares to Roche.

“Roche’s offer does not come close to adequately compensating Ventana stockholders for the accelerating momentum of our business, the near-term potential from our innovative platforms, the numerous catalysts that are poised to drive long-term value, our game-changing next-generation technologies and the company’s growing menu of differentiated, high-value diagnostics that are expected to deliver on the promise of personalized medicine,” says Gleeson.

Roche’s interest in Ventana stems from the latter company’s leading position in tissue-based diagnostics. “The acquisition would give Roche entrance into this market and thus fill a hole in the company’s diagnostic medicine business,” Nina Devlin, a Roche media representative, remarked. Additionally, tissue-based tests are particularly important in anti-cancer drug development and will complement Roche’s focus on oncology, noted Severin Schwan, the Chief Executive Officer of Roche’s Diagnostics Division in a webcast to investors.

Schuler and Gleeson stated in their letter that Roche misrepresented Ventana by saying that the company declined several attempts to negotiate a transaction between the two companies. In fact, they pointed out, each proposal—first, for a controlling equity investment and then for a 100% acquisition— were considered and analyzed and Roche was informed that Ventana would get back to them after a board meeting.

Furthermore, Schuler and Gleeson continued, “The board has a serious concern that, to some significant extent, Roche’s interest in the company may be based upon confidential information shared with Roche or its affiliates for collaborative purposes.” Humer countered in his letter, saying, “Our judgment about Ventana’s value and potential has been based solely on publicly available information.”

If the deal goes through, Ventana will be the fourth diagnostic company Roche has purchased this year. In March, Roche bought 454 LifeSciences in a transaction worth $154.9 million to gain control of the company’s DNA-mapping technology. After a week, BioVeris was taken over for $600 million, expanding Roche’s immunochemistry business. In June, Roche made a

$272.5-million proposal for NimbleGen, entering the microarray market.

â–º

Pfizer Discusses Oncology Portfolio at ASCO

Pfizer, Inc. made its presence felt at ASCO with 52 abstracts on its oncology pipeline and portfolio, up from 26 last year. Presentations included longestablished Camptosar and Aromasin, recently launched Sutent, three compounds in the company’s mid- to late-stage and four early-stage candidates.

During the past five years, R&D oncology projects have increased four-fold, at Pfizer. The company reported that it now invests about 22% of its $7 billion budget in cancer research, one of eleven therapeutic areas of interest. There are 16 compounds in clinical development, including four in Phase II and four in Phase III.

“We have compounds in Phase III or nearing Phase III, which address more than 70% of deaths due to various cancer types,” noted Charles Baum, Vice President of Pfizer Global Research and Development.

Additionally, according to Craig Sullivan, Public Affairs, Pfizer, “We expect the following compounds to advance into Phase III trials in the next year: Sutent for non-small cell lung cancer, colorectal cancer, hepatocellular cancer; Axitinib for pancreatic cancer; and CP-751-871, for non-small cell lung cancer.”

Sutent was approved for the treatment of advanced RCC and imatinib-resistant GIST in March 2006, with global sales of $219 milllion. At ASCO, Pfizer presented 33 abstracts on the drug, including prolonged progression- free survival data from a Phase III study in first-line mRCC. Sutent currently is in late-stage development for breast cancer.

For 2007, Pfizer plans three more Phase III investigations for Sutent. Based on the reported positive results observed in the investigation of Sutent as a single-agent against HCC, Phase III studies in this indication are planned. On June 28, Pfizer initiated a late-stage trial to evaluate Sutent in combination with a standard chemotherapy regimen in patients with mCRC. The final Phase III trial is expected to be in first- and second-line metastatic NSCLC.

Like Sutent, Axitinib is the other anti-angiogenesis compound in Phase III development for thyroid neoplasm. ASCO presentations included Phase II data in advanced pancreatic, thyroid, RCC, NSCLC and metastatic breast cancer.

Pfizer plans to initiate Phase III evaluation of Axitinib in advanced pancreatic cancer. Preliminary Phase II data demonstrated that Axitinib combined with gemcitabine showed a trend toward prolonged overall survival in patients with advanced pancreatic cancer compared with gemcitabine alone. The breast cancer trial was also a combination study of Axitinib and docletaxel, but did not meet its primary endpoint of progression free survival. As a single agent in the other indications, Axitinib showed anti-cancer activity.

The last Phase III candidate to be discussed at ASCO was CP-675,206, the only biopharmaceutical at this stage of development. The company made four presentations evaluating CP-675,206 in metastatic melanoma and one in refractory CRC. “CP-675,206, a fully human monoclonal antibody, is an immunotherapeutic and our first potential medicine for melanoma. The compound frees the immune system’s cancer-fighting T cells to attack tumors,” said Sullivan.

Data from a Phase II biologic was also presented. “CP-751,871 is the first fully human monoclonal antibody with a high specificity for inhibiting the signaling of the insulin-like growth factor receptor (IGF-1R). Blocking such signals can result in cancer cell death,” Sullivan explained. Pfizer reported results of an advanced NSCLC trial evaluating the compound in the first-line setting. The candidate is also being investigated as a combination treatment for prostate and breast cancer, though Pfizer expects to advance studies in NSCLC to Phase III first.

Not discussed at ASCO and subsequently discontinued from development was PF- 3,512,676. The compound was in Phase III trials for the first-line treatment of metastatic NSCLC. On June 20, Pfizer halted all programs involving PF-3,512,676, including two Phase III and two Phase II trials. The drug was licensed from Coley Pharmaceutical Group in 2005 (see below).

Pfizer Oncology Pipeline

Drug

Cancer Type

Phase I

10 Compounds

Various types of cancer

Phase II

CP-675206

lung, genitourinary, gastrointestinal cancers

CP-751871

lung cancer

Sutent

lung, genitourinary, gastrointestinal cancers

PD-325901

lung cancer

SU-14813

breast cancer

axitinib

lung, gastrointestinal cancers

Phase III

axitinib

inhibitor thyroid neoplasm

CP-675206

melanoma

Sutent

breast cancer

PF-3512676

lung cancer

Sutent

renal cell carcinoma, gastrointestinal

Recent Submissions and Approvals

â–º

Revlimid Wins European Marketing Approval and Shows Benefit with Lose-Dose Chemo

Celgene Corporation’s lenalidomide (Revlimid) has been sanctioned in Europe as a multiple myeloma treatment. This approval represents the first regulatory approval for Celgene in Europe.

The drug, which has been available in the U.S. to treat this disease since June, 2006, received full marketing authorization by the European Commission for use in combination with dexamethasone in patients who have received at least one prior therapy. “We are working diligently with local regulatory authorities to determine next steps for pricing, reimbursement and distribution plans for all EU member states,” said Aart Brouwer, President of Celgene International.

Revlimid is an IMiDs compound, a group of novel immunomodulatory agents. The drugs are being evaluated in four additional Phase III trials.

The Marketing Authorization Application (MAA) for Revlimid was based on the safety and efficacy results of two trials evaluating the drug plus dexamethasone in multiple myeloma patients that have received at least one prior therapy.

At ASCO, the Eastern Cooperative Oncology Group (ECOG 4A03) presented full data on a Phase III study, interim results of which were initially reported in April. The evaluation showed the benefits of using Revlimid with low-dose dexamethasone (LDD), and patients in the trial were switched to receive LDD.

Patients under 65 had the greatest one year survival of 98% compared to 90% with Revlimidhigh dose dexamethasone (HDD). Patients over 65 had the greatest degree of benefit from Revlimid-LDD, with a 95% survival versus 83% for Revlimid-HDD. Additionally, there was more than a 10% improvement in survival in the combined group.

Revlimid was approved in the United States (in December, 2005) for patients with transfusion-dependent anemia due to low- or intermediate-1-risk myelodysplastic syndromes (MDS) associated with a deletion 5q cytogenetic abnormality with or without additional cytogenetic abnormalities. The MAA for this indication is currently under review by EMEA’s Committee for Medicinal Products for Human use.

Celgene reported Revlimid sales for the fullyear 2006 reached $320.6 million and for the first quarter of 2007 was $146 million. Brian Gill, Celgene spokesperson, declined to comment on expectations of Revlimid’s penetration into the European market.

â–º

Coley Gains Majority of 3M’s TLR Cancer Portfolio for $20M

Coley Pharmaceutical Group, Inc.’s value plunged about 59% in June in spite of making a highly complementary acquisition. The company spent $20 million for 3M Company’s therapeutic Toll-like receptor (TLR) cancer programs. However, nine days later, partner Pfizer axed development on a TLR9-targeted candidate licensed from Coley (see above story).

As of March 31, the company reported cash, cash equivalents and marketable securities totaled $97.8 million compared to $107.0 million at December 31, 2006. The deal with Pfizer, made in 2005, could have earned Coley $455 million in milestone payments, according to Pfizer financial documents from that year. Pfizer also reported that it expensed a payment of $50 million and purchased $10 million of Coley’s common stock up front.

While Coley may have lost its only clinical TLR9-targeted compound, it gained 3M’s program aimed at TLR7 and TLR8. The acquisition complements Coley’s own patent estate in TLR9-targeted drugs. The transaction includes clinical and preclinical targeted small molecules, an intellectual property estate of more than 200 issued and several hundred pending patents and an extensive library of approximately 10,000 small molecule compounds that stimulate these two receptors. Coley said that the acquired compounds may also be developed to treat other indications, such as asthma and allergic disorders, viral diseases and certain dermatological diseases.

“The acquisition of 3M’s small molecule TLR program is consistent with Coley’s business strategy to diversify our drug pipeline beyond TLR9-targeted compounds and to extend our leadership position in the development of next-generation TLR Therapeutics for the potential treatment of cancers and other large unmet medical needs,” said Robert L. Bratzler, Ph.D., President and Chief Executive Officer of Coley Pharmaceutical Group.

Coley anticipates initiating Phase I/II clinical trials in a cancer indication in 2008 with one of these TLR small molecules. The most advanced of the acquired portfolio is a candidate in Phase I/II monotherapy trials. It has demonstrated pharmacological activity and has been administered safely at clinically relevant doses to more than 100 subjects, according to Coley.

The $20-million cash payment will be made over three years. It includes an immediate payment of $5 million. Additionally, 3M could potentially receive milestone payments and royalties.

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