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Wednesday, March 28, 2012

Cell Therapy Companies Post a Relatively Good Financing Month

 

In the midst of a tough environment for life science financing, cell therapy had a relatively good month.

According to the our sources, cell therapy companies raised around $100 million this month.   This was done primarily by 6 companies - 5 in the US and 1 in Europe.  If one adds US-based tissue engineering company, Organovo, into the mix it brings the total to just over $110 million.

Bellicum Pharma started off the month with a $20 million Series B round with current and new investors participating.  Funds will be used primarily to fund two phase II trials. >> read more

Aastrom (ASTM) did the largest deal (called a Series B) with $40 million PIPE.  Funds will be used primarily to fund its phase III trial in critical limb ischemia.  >> read more

Athersys (ATHX) announced a PIPE financing of $9 million presumed to be largely dedicated largely to its current pipeline of phase I and II trials.  << read more

Mid-month International Stem Cell (ISCO) arranged a $5 million dollar Series G PIPE in a financing provided by the healthcare investment firm owned by ISCO CEO and Board of Directors Co-Chairman, Andrew Semechkin.  ISCO has a long tradition of this kind of insider financing.  The funds it said will be used to provide "economic stability and resources" to "consolidate" their "leadership position" and "accelerate our therapeutics programs."  >> read more

The relatively unknown, Proteonomix, did what they are calling a Series E for $3.8M along with series A, B and C warrants.  Other than paying management salaries the company has not yet disclosed the intended use of these funds but presumably they will go largely to clinical trials.  Proteonomix has an interestingly convoluted story involving cell banking, cosmetics, and therapeutics with a subsidiary dedicated to each. Recently the company announced they were moving forward with a clinical trial of its product, UMK-121, at the University of Miami.  At the time of this post, however, we cannot find any reference to Proteonomix trial on ClinicalTrials.gov searching under UMK-121, StomaCel, Proteonomix, "end stage liver disease" or ESLD >> read more

The tissue printing company and media darling, Organovo, closed a $15.2 million private financing in conjunction with it's reverse merger.  >> read more

Absent something happening in the next couple days, European-based Promethera Biosciences, closed out the month with a $31.4 million financing comprised of EUR 17 million from new and current investors and a EUR 6.6 million loan from a local, regional agency. What was notable about this financing in my view was the size of the raise particularly in light of how early the company's products are in development but perhaps even more encouraging was the ilk of investor. Among the new investors were the venture arms of pharmaceutical companies Boerhinger Ingelheim and Shire Pharmaceuticals.  >> read more

If you are are of other deals in the sector this month, let us know and we'll update this accordingly.


Friday, March 9, 2012

Predicting the Success of the Late-Stage Cell-Based Cancer Immunotherapy Pipeline?

 

Adam Feuerstein (phama and biotech writer with TheStreet.com) has designed his own rule. 

For those who know or follow Adam, this will come as no surprise.  He is neither short of rules nor opinion and is never shy in his vivid expression of either.  But this rule is more than a simple expression of informed opinion. It was born of hard data analysis and has yet to be broken.  In Adam’s own words, this is how he and his colleague (Mark J. Ratain) came to the rule they coined the Feuerstein-Ratain Rule:

[We] analyzed the outcomes of 59 phase III clinical trials of cancer drugs going back 10 years, stratified by the market value of the companies four months prior to trial results being announced. What we found was a remarkable difference between the market values of companies that had positive and negative announcements.  (the list of companies/products used can be found here)
Specifically, the median market capitalization was approximately 80-fold greater for the companies with positive trials vs. companies with negative trials. There were no positive trials among the 21 micro-cap companies (companies with less than $300 million market capitalization) whereas 21 of 27 studies reported by the larger companies analyzed (greater than $1 billion capitalization) were positive.
The editorial, entitled “Oncology Micro-Cap Stocks: Caveat Emptor!”, can be found in Journal of the National Cancer Institute  (JNCI) at http://jnci.oxfordjournals.org/content/early/2011/09/26/jnci.djr375.full.

They identified drugs that were undergoing evaluation in phase III trials or for regulatory approval by the US FDA between January 2000 and January 2009.  They calculated the company value based on the market value of primary drug sponsor roughly three months prior to the release of the data.  They concluded that whether or not a company had pharma in place was not determinative of a drug’s success but rather that partnerships or acquisitions by Big Pharma can play a role in determining a drug’s success only in that these deals may increase the market value of the primary drug sponsor.  That value was the determinative factor.
This is Adam’s summary of the analysis they did that led to the “Feuerstein-Ratain Rule”.  Below are the important snippets from the analysis behind the rule:

The "Feuerstein-Ratain rule" is derived from an analysis of 59 phase III clinical trials of cancer drugs conducted over the past 10 years. We actually had no say whatsoever in the selection of cancer drugs used in the analysis. The list was put together by health economist Allan Detsky of Toronto's Mount Sinai Hospital and his co-authors as part of their paper published in the Journal of the National Cancer Institute suggesting that doctors entrusted with conducting late-stage cancer drug clinical trials are using advanced knowledge of the results of these pivotal studies to engage in illegal insider trading.
Ratain and I used the same list of 59 cancer drug clinical trials, re-analyzed by market value of the drug sponsors, to debunk Detsky's insider-trading theory. That's how the "Feuerstein-Ratain rule" came about, and we published our conclusions in the JNCI alongside Detsky's paper.
To restate our findings:  No positive trials among the 21 micro-cap companies (companies with less than $300 million market capitalization) whereas 21 of 27 studies reported by the larger companies analyzed (greater than $1 billion capitalization) were positive

There were 21 companies on the list with market values of $300 million or less, with a 0% success rate in phase III cancer drug clinical trials.
The list also contained 11 companies with market caps between $300 million and $1 billion. The clinical trial success rate for this mid-tier or second strata group was 18%. (Two positive clinical trials out of 11.)
Lastly, there were 21 of 27 studies reported by the larger companies analyzed (greater than $1 billion capitalization) that were positive, or a 78% success rate.
So what interesting for us in cell therapy?

It is interesting to note that the Feuerstein-Ratain Rule is limited to oncology drugs and all the companies behind them were public.  Adam has not – nor has anyone else to the best of my knowledge – looked at how the rule may or may not translate outside of oncology.

Of the cell therapy companies to have received market approval in US or EU in the past 10 years, one was public (DNDN) and one was still private (TIG) and went public shortly therafter in the same year. TiGenix was a private company and is not in oncology so the analysis arguably does not apply.  However, Dendreon’s Provenge is an oncology ‘drug’.  Dendreon had a market cap of about $430M in the 4 months before its ph III data was announced and as such would have fallen in the 18% likelihood of success category.  That sounds about right.

I thought it might be interesting to do our own look at what the Rule might say about the pipeline of late-stage cell-based oncology trials.  Following is a list of cell therapy companies currently in ph III or II/III for oncology:

2010 Onco CT Immunotherapies (late-stage)
* Trial not expected to complete until Q1 2014 so a lot could happen to the market cap in 2012/13.  It also could be argued that this is not an oncology treatment as per original data set but a treatment of the side  effects of the primary cancer treatment.

** Trial not expected to complete until Q1 2014 so a lot could happen to the market cap in 2012/13.

*** It could be argued that this is not an oncology treatment as per original data set but a treatment of the side effects of the primary cancer treatment.

+ It could be argued this is not a cell therapy though we would argue it is.  Others might argue that as a phase II/III trial with only 60 patients this may not be powered to be a pivotal oncology trial.

^ Trial currently in “suspension” so this date may be pushed out or trial terminated. It also could be argued that this is not an oncology treatment as per original data set but a treatment of the effects of the primary cancer treatment.  Others might argue that as a phase II/III trial with only 70 patients this may not be powered to be a pivotal oncology trial.

Conclusion:  At the moment it looks like both NovaRx and ERYtech will go to their phase III data completion (June and October 2012 respectively) as private companies.  To qualify under the rule, Cell Medica would have to go public within the year and/or Kiadis would have to go public within the next 25 months. 

The only companies with cell-based oncology products currently in late-stage trials to which the Rule would apply are Molmed’s HSV-TK and Newlink Genetics’ HyperAcute Pancreas.  

Assuming both MolMed and NewLink's trials progress as planned, we won’t know what they look like under the rule until around Sept 2013 at which time we can assess their market cap against the Rule.  At the moment, it’s looking pretty bleak for both of them according to the Rule though at least the NLNK price has been going in the right direction of late.  

Certainly one would expect trading volume to dramatically increase on both these as their trial completion dates near.  It remains to be seen how this will impact price but they would have to  dramatically increase in market cap (double or triple) to succeed as the Rule predicts. 

Naturally, this is just one way of looking at the world and, of course, this rule - as with all rules - is meant to be broken.