Visibility for the disease is on the rise following the recent deaths of Apple, Inc. (AAPL) co-founder Steve Jobs and Ralph Steinman, a cell biologist who died several days before being named one of three winners for the 2011 Nobel Prize in Medicine.  While awareness is increasing, there is an urgent need for more effective treatments and diagnostics to detect the disease earlier due to the fact that the number of new pancreatic cancer cases is projected to increase by 55% from 2010 to 2030[3].

Difficult Disease

The disease remains one of the most difficult to treat due to its extreme resistance to treatment and few early symptoms.  At the time of initial diagnosis, 50% of patients have distant metastases to the liver or peritoneal surface, and more than 80% of the remaining patients have locally advanced tumors [confined to the pancreas but unresectable][4]. The majority of pancreatic tumors [95%] are adenocarcinomas that mainly develop from exocrine cells in the tissues of the pancreas[5]. The tumors are characterized by an aggressive behavior with a fast progression rate that makes them highly metastatic. In contrast, neuroendocrine tumors of pancreatic origin [pancreatic NET, also known as islet cell tumors] are not as common [<2%] and are considered less deadly[6].

Illustrating the difference between the two, Hollywood actor Patrick Swayze was diagnosed with stage IV pancreatic exocrine cancer that had already spread to the liver in March 2008 and lost his battle with the disease in September 2009 at the age of 57.  Apple’s Steve Jobs underwent surgery for pancreatic NET in 2004 and didn’t succumb to the disease until October 2011 at the age of 56.

Treatment for Organ Confined Disease

In terms of treatment, surgical removal of the tumor represents the best option for pancreatic cancer patients without invasion into surrounding organs or distant metastasis.  Unfortunately, only 15–20% of all patients are candidates for potentially curative surgery[7].  Depending on the tumor localization, pancreaticoduodenectomy [Whipple procedure], distal, or total pancreatectomy can be performed.  However, even with an optimal curative surgery, metastases often occur.  Median survival time without evidence of recurrent disease is 21.2 months after surgical resection[8].

Treatment for Locally Advanced/Metastatic Disease

For locally advanced or metastatic disease, an effective single agent for pancreatic cancer remains elusive and treatment is still palliative rather than curative.  Since its approval in 1997, Eli Lilly’s (LLY) Gemzar® [gemcitabine] is the only single agent that improves symptoms and overall survival [OS] in patients with locally advanced or metastatic pancreatic exocrine cancer.  However, gemcitabine is associated with a modest median OS of 5.7 months and one-year probability of survival rate of 18%[9]. No confirmed objective tumor responses were observed in the pivotal study.

Beyond Single Agent Gemcitabine

At least 35 Phase II trials of gemcitabine-containing regimens and 11 randomized Phase III trials have been performed to improve the efficacy of gemcitabine alone, but the progress to date has been incremental at best[10].  In these 46 trials, overall response rates ranged from 5% to 58% in the Phase II studies and 4.4% to 38.5% in the Phase III studies.  Median OS ranged from 4 months to 13.1 months in the Phase II studies and 5.4 months to 9 months in the Phase III studies.  Inclusion of heterogeneous patient populations in many of these studies may have confounded the results, as the median survival time for patients with metastatic disease and locally advanced disease is 3–6 and 9-13 months, respectively[11].  The only successful combination approved by the FDA in 2005 is gemcitabine plus Roche/Astellas Pharma’s Tarceva® [erlotinib], which modestly increased the median OS to 6.4 months and one-year survival to 23%.

Hope on the Horizon

Despite the long list of past failures, drug developers continue to explore new options for treating pancreatic cancer and more than a dozen new treatments are currently being evaluated in clinical trials [see Table 1].  One product was recently approved and several programs have demonstrated encouraging results with data from pivotal trials due in the next 6-12 months.  While a comprehensive review of investigational pancreatic cancer therapies is beyond the scope of this article, we briefly highlight some of the more high profile pancreatic treatments below:

Amgen, Inc. (AMGN)

Amgen is developing ganitumab (also known as AMG 479), an investigational fully human monoclonal antibody that targets type 1 insulin-like growth factor receptor [IGF-1R], which plays an important role in the regulation of cell growth and survival.  At the 2010 American Society of Clinical Oncology [ASCO] Annual Meeting, Amgen announced results from a Phase 2 study demonstrating that the addition of AMG 479 to gemcitabine resulted in an OS rate at six months of 56.6% versus 50.1% with gemcitabine alone[12]. Median OS was 7.3 months versus 6.2 months in the gemcitabine arm.  Amgen initiated a Phase III trial with AMG 479 for metastatic pancreatic cancer in the second quarter of 2011 with data expected in late 2013 or 2014 [ClinicalTrials.gov identifier NCT01231347].  This trial focuses on metastatic disease and therefore should represent a homogeneous patient population where the median OS is expected to be 3–6 months in the control arm.

Celgene Corporation (CELG)

Historically known more for its franchise in treating blood cancers, Celgene moved into the realm of solid tumors through its 2010 acquisition of Abraxis BioScience, Inc. for $2.9 billion.  As a result, Celgene is now developing Abraxane® [paclitaxel protein-bound particles for injectable suspension] for the treatment of metastatic pancreatic cancer.  Abraxane is currently approved for the treatment of breast cancer after failure of combination chemotherapy for metastatic disease or relapse within 6 months of adjuvant chemotherapy[13].

In October 2011, positive Phase I/II study results with Abraxane in combination with gemcitabine in 67 patients with advanced pancreatic cancer were published in the Journal of Clinical Oncology[14].  In the Phase II component of the study, the overall response rate was 48% [21/44 patients], median OS was 12.2 months, and the one-year survival rate for patients was 48%.  This compares favorably with the median OS of 5.7 months and one-year probability of survival rate of 18% with single-agent gemcitabine.

The combination of Abraxane and gemcitabine is now the treatment arm of an ongoing, international, randomized Phase III clinical trial for patients with metastatic pancreatic cancer [ClinicalTrials.gov identifier NCT00844649].  Importantly, this study specifically excludes patients with only locally advanced disease and therefore represents a homogeneous patient population where the median OS is expected to be 3–6 months in the control arm.

Clovis Oncology, Inc. (private)

In November 2009, Clovis licensed rights from Clavis Pharma for CO-101 in the U.S., E.U., and select other countries.  CO-101 is an investigational, lipid-conjugated derivative of gemcitabine, currently in a pivotal Phase II randomized, open-label, multicenter study comparing CO-101 with gemcitabine as first-line therapy in patients with metastatic pancreatic adenocarcinoma [ClinicalTrials.gov identifier NCT01124786].  CO-101 is designed to improve upon the efficacy of gemcitabine by enabling the drug to enter cancer cells without requiring membrane expression of transporter proteins.  As a hydrophilic molecule, the entry of gemcitabine into tumor cells is dependent upon the expression of specific membrane transporter proteins, particularly human equilibrative nucleoside transporter 1 [hENT1].  Data from the pivotal Phase II trial are expected in the first half of 2012 and the inclusion criteria for only Stage IV patients [metastatic] represents a homogeneous population to study in this trial.

In April 2010, Clovis Oncology, Inc. and Ventana Medical Systems, Inc. entered into a collaboration for the development of a hENT1 immunohistochemistry [IHC] assay, which will be used in Clovis’ CO-101 clinical trials to identify patients with low level tumor expression of hENT1 protein.  Approximately 50% of pancreatic cancer patients have been shown to have low tumor expression of hENT1 and low levels of tumor hENT1 expression have been shown to correlate with poor survival outcomes after gemcitabine therapy[15].  These observations support the hypothesis that limited tumor uptake of gemcitabine in hENT1-low patients is responsible for a poor treatment effect in many patients and is an excellent example of a biomarker-driven clinical strategy.

Novartis AG (NVS)

In May 2011, the FDA approved Afinitor® (everolimus) by Novartis AG (NVS) for the treatment of progressive pancreatic NET in patients with unresectable, locally advanced or metastatic disease. Afinitor is an allosteric inhibitor of mammalian target of rapamycin [mTOR], a serine-threonine kinase, downstream of the PI3K/AKT pathway that is dysregulated in several human cancers.  Approval of Afinitor represents the first new therapy for pancreatic NET in the US in nearly 30 years[16].  The approval was based on Phase III data from the RADIANT-3 [RAD001 In Advanced Neuroendocrine Tumors] trial, showing treatment with Afinitor plus best supportive care more than doubled median progression-free survival [PFS], or time without tumor growth, from 4.6 to 11.0 months and reduced the risk of cancer progression by 65% when compared with placebo in patients with advanced pancreatic NET.

Threshold Pharmaceuticals, Inc. (THLD)

At the 2011 ASCO Gastro Intestinal Cancers Symposium, Threshold Pharmaceuticals presented results with its hypoxia-activated prodrug, TH-302, in combination with gemcitabine in 47 patients with previously untreated, locally advanced, unresectable or metastatic pancreatic adenocarcinoma[17].  Of the 43 evaluable patients, one patient [2%] demonstrated a complete response as measured by RECIST [Response Evaluation Criteria In Solid Tumors] and 8 patients [19%] had a partial response.  In the gemcitabine plus TH-302 treatment arms, median OS was 8.5 months.  While this compares favorably with the median OS of 5.7 months with single-agent gemcitabine, recall that in 35 Phase II trials of gemcitabine-containing regimens in heterogeneous patient populations the median OS ranged from 4 months to 13.1 months.

In June 2011, Threshold Pharmaceuticals completed enrollment of patients with first-line, locally advanced, unresectable or metastatic pancreatic adenocarcinoma.  The company expanded the study’s enrollment target from the original 165 patients to at least 200 patients.  As mentioned earlier, inclusion of a heterogeneous patient population may confound the study results [expected before the end of 2011], as the median OS for patients with metastatic disease and locally advanced disease is different.

Conclusion

As we approach Pancreatic Cancer Awareness Month in November, visibility for the disease is on the rise following recent high-profile deaths.  Despite numerous late-stage failures, more than a dozen products are currently in clinical trials with key data expected in the next 6-12 months.  Going forward, early detection using biomarkers, more effective treatments, and novel drug targets could provide new hope for the treatment of this deadly disease.

NOTE: For more information, please visit the Pancreatic Cancer Action Network [http://www.pancan.org], a national organization creating hope in a comprehensive way through research, patient support, community outreach and advocacy for a cure.

Table 1. Baker’s Dozen in Active Clinical Development for Pancreatic Cancer

References

The tale seems fitting to illustrate the evolution of drugs that target the phosphatidylinositol 3-kinase [PI3K] pathway [see Table 2 for a listing of compounds in clinical development].  Despite ample evidence that pan-PI3K inhibitors and dual PI3K/mTOR inhibitors might offer a therapeutic advantage, tailors continue to weave new compounds targeting individual components of the pathway with presumably superior properties.  But does the “mTOR” really have new clothes?

Pathway Layout

The PI3K pathway regulates cell growth, survival, proliferation, migration, and the process of angiogenesis and is frequently deregulated in cancer, which makes it one of the most attractive targets for anticancer therapy.  Big pharma’s interest in the target is evidenced in part by Sanofi-aventis’ (SNY) licensing of two early-stage PI3K inhibitor programs [XL147 and XL765] from Exelixis, Inc. (EXEL) in May 2009 that could result in development, regulatory and commercial milestone payments to the company that total over $1 billion in the aggregate [including $140 million in cash upfront], as well as royalties on sales of any products commercialized under the license.

In general, the pathway comprises the following three components starting near the cell membrane and continuing towards the nuclear machinery at the heart of cellular processes:

1.     PI3K

-       Held in check by the phosphatase PTEN, PI3K can be activated by upstream tyrosine kinase receptors

-       Four class I isoforms of PI3K [α, β, γ, δ, or alpha, beta, gamma, delta]

2.     Akt

-       Gets recruited to the proper location in the cell needed for activity [cell membrane] and is changed into the required active conformational state by phosphorylation of T308 by the action of PI3K

3.     mTOR

-       Promotes increased protein synthesis in part driven by activated Akt

-       Forms complexes called mTORC1 and mTORC2, of which mTORC2 directly increases Akt by phosphorylation on S473

Dysfunction of PI3K, Akt, and/or mTOR is associated with cancer and while cellular signaling becomes more complex on almost a daily basis, much has been discovered about the best way to effectively block the pathway in cancer cells.  Accordingly, the purpose of this article is to highlight some of the latest advances in our understanding of the PI3K pathway along with the leading companies working in this market segment.

Good, Better, and Best

Pfizer, Inc.’s (PFE) Torisel® [temsirolimus] and Novartis AG’s (NVS) Afinitor® [everolimus], both for the treatment of renal cell carcinoma, were among the first PI3K pathway inhibitors [via inhibition of mTORC1] to reach the market – Torisel in May 2007 and Afinitor in March 2009.  While inhibition of mTORC1 through rapamycin or the rapalogs [“Good”] demonstrated sufficient clinical activity for U.S. Food and Drug Administration [FDA] approval, there is clear evidence that blocking only mTORC1 activity paradoxically leads to activation of the PI3K pathway through redundant or alternative signaling mechanisms.  For example, mTORC2 can activate Akt by phosphorylation on the S473 position.  This led to the design of mTOR complex catalytic site inhibitors [“Better”] that block the activity of both mTORC1 and mTORC2.  While effective in shutting down mTOR activity, this approach still provides for partial activation of Akt on T308 by PI3K.  Therefore, simultaneous inhibition of both PI3K and mTOR kinase activity with a dual PI3K/mTOR inhibitor [“Best”] would be expected to more effectively shut down PI3K-Akt-mTOR signaling and such an agent could remain effective in situations where the activity of mTOR inhibition has been circumvented.

Isoform Selectivity: Is Less Really More?

In addition to the benefits of dual PI3K/mTOR inhibition as described in the prior section, there is also compelling biological rationale for inhibiting all four of the class one PI3K isoforms [α, β, γ, δ, or alpha, beta, gamma, delta] rather than inhibiting only a subset.  The most compelling support for pan-PI3K inhibition is the recent disclosure that the activity of any class 1A PI3K isoform [alpha, beta, or delta] can sustain cell proliferation and survival [ref 1].  Additionally, both in vitro and in vivo studies indicated that for PTEN-negative tumors inhibition of the beta isoform is needed [ref 2].  Moreover, evolving analyses of cancer tissues provides additional rationale for inhibiting the various isoforms as for example the recent finding that the gamma isoform has tumor-specific overexpression in pancreatic cancer [ref 3].

The role of PI3K in a wide range of normal biologic processes raised potential toxicity concerns about pan-PI3K inhibitors and dual PI3K/mTOR inhibitors, which led to the development of isoform-selective inhibitors.  However, clinical data presented at the 2010 American Society of Clinical Oncology [ASCO] annual meeting demonstrated relatively consistent toxicity profiles among pan-PI3K, dual PI3K/mTOR, and isoform-selective PI3K inhibitors, with no discernable safety advantage among the class [see Table 1 below].  The most common side effects reported with these inhibitors included diarrhea, nausea, vomiting, and fatigue [ref 8].  Liver damage, as evidenced by elevated aspartate aminotransferase [AST] and alanine aminotransferase [ALT] levels, were reported only with orally administered pan-PI3K, dual PI3K/mTOR, and PI3K delta isoform-specific inhibitors and were dose limiting in some cases.  Interestingly, insulin resistance [hyperinsulinaemia or hyperglycaemia] was originally predicted to be one of the most likely toxicities resulting from on-target effects of PI3K inhibitors, but has not been widely observed in clinical trials to date.

Table 1. Adverse Event Profiles as Reported at 2010 ASCO Annual Meeting

+ = Adverse event listed among the top five most frequent Grade 1 or 2 in the trial

++ = Dose limiting toxicities

* = For GDC-0941, results are from GDC4254g study; for PX-866, AST/ALT toxicity is only in the continuous daily dosing arm

n/r = Grade 1 and 2 data has not been reported

Helping explain the lack of variation between pan-PI3K, dual PI3K/mTOR, and isoform-selective PI3K inhibitor toxicity profiles is the translation of data from in vitro potency to in vivo settings.  For example, while Calistoga Pharmaceuticals’ (private) CAL-101 product candidate demonstrates relative selectivity for the PI3K delta isoform using traditional two-dimensional [2D] monolayers of cancer cells, the significant blood levels seen clinically suggest that all isoforms may be inhibited at least part of the time.  In addition, in a PTEN-null PC3 xenograft model Roche Holding AG’s (RHHBY.PK) PI3K inhibitor GDC-0941 at 75mg/kg daily [ref 4] showed similar inhibition of about 80% of tumor growth as Semafore Pharmaceuticals’ (private) dual PI3K/mTOR inhibitor SF1126 at 20mg/kg three times per week [ref 5] even though SF1126 is reported to be at least 10-times less potent on all PI3K isoforms.  Two recent publications help further support the dramatic differences between 2D and 3D cell cultures and perhaps shed some light on how potency translates, or fails to translate, into in vivo models [refs 6,7].

Future Directions

Prodrugs

One of the most widely studied PI3K inhibitors, LY294002 possesses a unique mechanism of drug action through dual inhibition of all Class 1 PI3K isoforms and mTOR, inhibition of additional cancer kinases such as PIM1, DNA-PK, and PLK1, and the molecule’s ability to induce apoptosis and oxidative stress through other mechanisms.  However, the strong hydrophobicity of LY294002 drastically limits its use in natural form.  In addition, there is the aforementioned concern for toxicity through the non-specific, indiscriminate inhibition of the PI3K pathway in normal cells.  Therefore, Semafore Pharmaceuticals sought to improve the use of LY294002 by enhancing its solubility, selectivity and in vivo delivery by preparing a functional prodrug that selectively accumulates in tumor areas to maximize efficacy and minimize toxicity.  The resulting new chemical entity, SF1126, has been tested in more than 50 patients in Phase 1 trials.

Disease Settings and Biomarkers

In general, the standard paradigm for early drug development is to test compounds in a broad range of cancers to identify those in which the compounds work, which then forms the basis for future clinical development and regulatory strategy.  Such has been the case with development of PI3K inhibitors.

Across the nine mixed solid tumor Phase 1 studies reported at ASCO 2010, 114 out of 469 patients [24%] showed stable disease, prolonged in some cases, as the best response [ref 8].  Only 5 partial responses out of 469 patients [1%] of unknown duration were reported from the group in total.  Of these 3 were in breast cancer patients, one was in non-small cell lung carcinoma [NSCLC], and one was in a patient with lung cancer/Cowden disease.   On this basis, there is no clear direction for development of PI3K inhibitors in the solid tumor setting.

In contrast, significant responses in hematological cancers have been reported with PI3K inhibitors.  For example, Calistoga Pharmaceuticals’ delta selective PI3K inhibitor CAL-101 demonstrated overall response rates of 57%, 67%, and 30% in indolent non-Hodgkin’s lymphoma [NHL], mantle cell lymphoma [MCL], and chronic lymphocytic leukemia [CLL], respectively.  However, in acute myeloid leukemia [AML], multiple myeloma [MM] and diffuse large B-cell lymphoma [DLBCL] there were no responses and no stable disease.  Accordingly, several pan-PI3K inhibitors and dual PI3K-mTOR inhibitors are advancing clinical development in the responsive B-cell malignancies both alone and in combination with potentially synergistic agents.  Updated clinical data from various PI3K inhibitor programs is expected at the upcoming American Society of Hematology [ASH] annual meeting held December 4-7, 2010, in Orlando, FL.

Instead of testing compounds in mixed patient populations, another strategy is to use the most compelling preclinical data to guide genotype-directed trials.   For example, preclinical work suggests that cancers with PIK3CA mutations might be most sensitive [ref 9] and cancers with KRAS mutations might be difficult to treat with single agent PI3K inhibitors [refs 10,11].

Dual Pathway Inhibition – Better than Best?

Beyond the aforementioned PI3K pathway redundancies highlighting the potential benefits of dual PI3K/mTOR inhibition, recent data demonstrate crosstalk between the mitogen-activated protein kinase [MAPK] pathway and PI3K pathway.  This can serve as a back-up pathway to survival, particularly in the case of mutations in the MAPK pathway such as KRAS mutations [ref 10].

This discovery has led to the unusual step of evaluating clinical combinations of unapproved PI3K and MAPK inhibitors.  For example, Novartis’ PI3K inhibitor BKM120 is being combined with GlaxoSmithKline plc’s (GSK) MEK inhibitor GSK1120212 in a Phase 1 study focused on tumors with RAS/RAF mutations and triple negative breast cancer [ref 12].  In addition, Merck & Company, Inc.’s (MRK) allosteric Akt inhibitor MK-2206 is being combined with AstraZeneca plc’s (AZN) MEK inhibitor AZD6244 [ref 13] and Roche Holding AG has a trial combining their PI3K inhibitor GDC-0941 and MEK inhibitor GDC-09773 [ref 14].

Developing one investigational drug is challenging enough, but developing two investigational compounds simultaneously can be daunting.   Complexities can arise from trying to match different administration schedules and differing pharmacokinetics [PK], distribution, and metabolism profiles between the combined agents.  A single molecule that simultaneously inhibits both PI3K and MAPK would therefore be preferable and the following three companies are currently pursuing this single-molecule, dual pathway inhibition strategy with their respective preclinical product candidates:

1.     AEterna Zentaris, Inc. (AEZS): preclinical molecule [AEZ132] that inhibits PI3K and Erk

2.     Progenics Pharmaceuticals, Inc. (PGNX): preclinical molecule [PGNX-01/02] that inhibits mTOR/PI3K and MNK [downstream of Erk]

3.     Semafore Pharmaceuticals: preclinical molecule [SF2626] that inhibits PI3K and MEK

Conclusion

Our understanding of the PI3K pathway has advanced significantly since the FDA approved the first mTORC1 inhibitors for the treatment of renal cell carcinoma in 2007/2009.  Promising results have been demonstrated in the area of hematological malignancies with next-generation PI3K inhibitors and new insights into the pathway biology has led to the development of new molecules and combination approaches that will allow us to realize the ultimate potential of this pathway as a therapeutic target for a variety of diseases.

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Table 2: Select PI3K Pathway Inhibitors in Clinical Development

REFERENCES:

1. Lazaros C. Foukasa, Inma M. Berenjenoa, Alexander Grayb, Asim Khwajac, and Bart Vanhaesebroeck  “Activity of any class IA PI3K isoform can sustain cell proliferation and survival”, Proceedings of the National Academy of Sciences, June 22, 2010; vol. 107, No. 25, 111381-11386.
2. Kyle A. Edgar, Jeffrey J. Wallin, Megan Berry, Leslie B. Lee, Wei Wei Prior, Deepak Sampath, Lori S. Friedman, and Marcia Belvin, “Isoform-Specific Phosphoinositide 3-Kinase Inhibitors Exert Distinct Effects in Solid Tumors”, Cancer Research, February 1, 2010; vol.70, No. 3, 1164-1171.
3. Charlotte E. Edling, Federico Selvaggi, Richard Buus, Tania Maffucci, Pierluigi Di Sebastiano, Helmut Friess, Paolo Innocenti, Hemant M. Kocher, and Marco Falasca, “Key Role of Phosphoinositide 3-Kinase Class IB in Pancreatic Cancer”, Clinical Cancer Research, published OnlineFirst on September 28, 2010 as 10.1158/1078-0432.CCR-10-1210.
4. See Figure 5 of Reference 2.
5. Joseph R. Garlich, Pradip De, Nandini Dey, Jing Dong Su, Xiaodong Peng, Antoinette Miller, Ravoori Murali, Yiling Lu, Gordon B. Mills, Vikas Kundra, H-K. Shu, Qiong Peng, and Donald L. Durden, “A Vascular Targeted Pan Phosphoinositide 3-Kinase Inhibitor Prodrug, SF1126, with Antitumor and Antiangiogenic Activity”, Cancer Research, January 1, 2008; vol. 68, No. 1, 206-215.
6. Ville Harma, Johannes Virtanen, Rami Makela, Antti Happonen, John-Patrick Mpindi, Matias Knuuttila, Pekka Kohonen, Jyrki Lotjonen, Olli Kallioniemi, Matthaias Nees, “A Comprehensive Panel of Three-Dimensional Models for Studies of Prostate Cancer Growth, Invasion and Drug Responses”, PLoS ONE May 2010, vol. 5, e10431
7. Maria Laura Polo, Maria Victoria Arnoni, Marina Riggio, Victoria Wargon, Claudia Lanari, Virginia Novaro, “Responsiveness to PI3K and MEK Inhibitors in Breast Cancer.  Use of a 3D Culture System to study Pathways Related to Hormone Independence in Mice”, PLoS ONE May 2010, vol. 5, e10786.
8. Joseph Garlich, Candace Shelton, Wenqing Qi, Xiaobing Liu, Laurence Cooke, Daruka Mahadevan,”Update on the Novel Prodrug Dual nTOR-PI3K Inhibitor SF1126″, Poster presented at: Next-Gen Kinase Inhibitors Oncology and Beyond, June 21-23, Cambridge, MA.  Poster available at: http://www.semaforepharma.com/publications.html.
9. Shingo Dan, Mutsumi Okamura, Mariko Seki, Kanami Yamazaki, Hironobu Sugita, Michiyo Okui, Yumiko Mukai, Hiroyuki Nishimura, Reimi Asaka, Kimie Nomura, Yuichi Ishikawa, and Takao Yamon, “Correlating Phosphatidylinositol 3-Kinase Inhibitor Efficacy with Signaling Pathway Status: In silico and Biological Evlauations”, Cancer Research, June 15, 2010; vol. 70, No. 12, 4982-4993.
10. Martin L. Sosa, Stefanie Fischera, Roland Ullrich, Martin Peifer, Johannes M. Heuckmann, Mirjam Koker, Stefanie Heynck, Isabel Stuckrath, Jonathan Weiss, Florian Fischer, Kathrin Michel, Aviva Goel, Lucia Regales, Katerina A. Politi, Samanthi Perera, Matthaus Getlik, Lukas C. Heukamp, Sascha Ansen, Thomas Zander, Rameen Beroukhim, Hamid Kashkar, Kevan M. Shokat, William R. Sellers, Daniel Rauh, Christine Orr, Klaus P. Hoeflich, Lori Friedman, Kwok-Kin Wong, William Pao, and Roman K. Thomasa, “Identifying genotype-dependent efficacy of single and combined PI3K- and MAPK-pathway inhibition in cancer” Proceedings of the National Academy of Sciences, October 27,2009; Vol.106, No. 43, 18351-18356.
11. Nathan T. Ihle, Robert Lemos, Jr., Peter Wipf, Adly Yacoub, Clint Mitchell, Doris Siwak, Gordon B. Mills, Paul Dent, D. Lynn Kirkpatrick, and Garth Powis, “Mutations in the Phosphatidylinositol-3-Kinase Pathway Predict for Antitumor Activity of the Inhibitor PX-866 whereas Oncogenic Ras is a Dominant Predictor for Resistance, Cancer Research, January 1, 2009; Vol. 69, No. 1, 142-150.
12. Source:  www.clinicaltrials .gov website. Clinical Trials.gov identifier number NCT01155453, started April 2010.
13. Source:  www.clinicaltrials .gov website. Clinical Trials.gov identifier number NCT01021748, started November 2009.
14. Source:  www.clinicaltrials .gov website. Clinical Trials.gov identifier number NCT00996892, started November 2009.

According to the American Cancer Society, pancreatic cancer is a devastating disease with the worst mortality rate and an overall 5-year survival rate lower than 5%.  Although accounting for only 3% of all cancers, this disease is the fourth leading cause of death and represents 6% of all cancer related deaths in the United States.

The disease remains one of the most difficult to treat due to late initial diagnosis and extreme resistance to treatment.  For example, about 50% of patients have locally advanced disease at the time of diagnosis, indicating that the cancer has grown beyond the confines of the pancreas to invade surrounding vital structures, and in 40% of patients the tumor has spread to distant sites, such as the liver and lungs [metastatic stage].  Case in point: Patrick Swayze was diagnosed with stage IV pancreatic cancer that had already spread to the liver in March 2008 and lost his battle with the disease in September 2009 at the age of 57.

The majority of pancreatic tumors [95%] are adenocarcinomas that mainly develop from exocrine cells in the tissues of the pancreas.  They are characterized by an aggressive behavior with a fast progression rate that makes them highly metastatic.  Neuroendocrine tumors [NET] of the pancreas [islet cell tumors] are much less common [1-2%] than exocrine pancreatic tumors and are considered less deadly.  For example, Steve Jobs, co-founder and chief executive of Apple Inc. (AAPL), was diagnosed with this rare, slow-growing pancreatic tumor in 2004.

In terms of treatment, surgical removal of the tumor represents the best option for pancreatic cancer patients without invasion into surrounding organs or distant metastasis.  Unfortunately, only 15–20% of all patients are candidates for potentially curative surgery.  Depending on the tumor localization, pancreaticoduodenectomy, distal or total pancreatectomy can be performed.  However, even with an optimal curative surgery, metastases often occur.  Median survival time without evidence of recurrent disease is 21.2 months after resection.

For locally advanced or metastatic disease, treatment is still palliative rather than curative, and chemotherapy remains the only option.  Since its approval in 1997, Eli Lilly’s (LLY) Gemzar® [gemcitabine] is the current standard first-line treatment in the U.S.  It has been shown to improve the median time to disease progression and overall survival [OS].

Just like lupus, sepsis, and several others, pancreatic cancer has been referenced as one of those challenging diseases where good drugs [and companies…] go to die.  Since 2005, nine late-stage clinical trials have been performed to improve the efficacy of gemcitabine with little success in terms of improving survival outcomes [see Table 1].  Such failures resulted in at least two companies filing for bankruptcy [both Aphton Corp and Therion Biologics in 2006].  In fact, the only combination approved by the U.S. Food and Drug Administration [FDA] is gemcitabine plus Astellas Pharma’s Tarceva® [erlotinib], which increased the median OS from 6.0 to 6.4 months.

Table 1. Prominent Late-stage Pancreatic Product Failures

Despite past failures, drug developers continue to explore new options for treating pancreatic cancer and more than a dozen new molecular entities are currently being evaluated in clinical trials [see Table 2].  Several programs have recently demonstrated impressive results in Phase 2 studies and are now enrolling patients in pivotal trials.  While a comprehensive review of investigational pancreatic cancer therapies is beyond the scope of this article, we briefly review some of the more promising pancreatic treatments currently in clinical development:

Celgene Corporation (CELG)

Historically known more for its franchise in treating blood cancers, Celgene moved into the realm of solid tumors through its recent acquisition of Abraxis BioScience, Inc.  As a result, Celgene is now developing Abraxane® [paclitaxel protein-bound particles for injectable suspension] for the treatment of pancreatic cancer.  Updated overall survival findings from a phase I/II study of Abraxane given in combination with gemcitabine demonstrated increased survival of the first-line treatment of patients with advanced pancreatic cancer.  In 44 patients treated at the recommended dose of 125 mg/m² Abraxane plus gemcitabine [1000 mg/m²], the median OS time was 12.2 months, an impressive doubling of survival compared to historical control of gemcitabine administered alone.  The findings were discussed at the 101st Annual Meeting of the American Association for Cancer Research [AACR] in 2010. The combination of Abraxane and gemcitabine is now the treatment arm of a randomized Phase 3 clinical trial that is currently enrolling patients [ClinicalTrials.gov identifier NCT00844649].

Novartis AG (NVS)

In June 2010 at the12th World Congress on Gastrointestinal Cancer, Novartis reported that its RADIANT-3 Phase 3 study of Afinitor® (everolimus), plus best supportive care met its primary endpoint, showing that the drug more than doubled median progression-free survival [PFS], or time without tumor growth, from 4.6 to 11.0 months when compared with placebo in patients with advanced pancreatic NET.  More recently, Novartis presented data from a second Phase 3 study called RADIANT-2 at the 35th European Society for Medical Oncology [ESMO] Congress.  The study, which evaluated Afinitor® in combination with Sandostatin® LAR Depot (octreotide acetate for injectable suspension), demonstrated that everolimus plus octreotide LAR provided a clinically meaningful extension in the median time without tumor growth from 11.3 to 16.4 months when compared with placebo plus octreotide LAR.  However, the study did not meet its primary endpoint of PFS based on central radiologic review of the data (p=0.026 versus p=0.024 predefined).  According to the company, results from the two RADIANT trials will form the basis for regulatory filings later in 2010.

Amgen, Inc. (AMGN)

Amgen is developing AMG 479, an investigational fully human monoclonal antibody that targets type 1 insulin-like growth factor receptor [IGF-1R], which plays an important role in the regulation of cell growth and survival.  At the 2010 American Society of Clinical Oncology [ASCO] Annual Meeting, Amgen announced results from a Phase 2 study demonstrating that the addition of AMG 479 to gemcitabine resulted in an overall survival rate at six months of 57% versus 50% with gemcitabine alone and 39% versus 23% at 12 months. Median overall survival was 8.7 months versus 5.9 months in the gemcitabine arm.  AMG 479 is moving into a Phase 3 study for metastatic pancreatic cancer.

Threshold Pharmaceuticals, Inc. (THLD)

At the 2010 ASCO Annual Meeting, Threshold Pharmaceuticals presented results with its hypoxia-activated prodrug, TH-302, in combination with gemcitabine in thirty-four patients with advanced or metastatic pancreatic cancer that had at least one evaluable post-treatment tumor assessment.  One patient [3%] demonstrated a complete response as measured by RECIST [Response Evaluation Criteria In Solid Tumors] and 8 patients [24%] had a partial response.  Of the 34 assessed patients, 28 had elevated carbohydrate antigen CA19-9 levels at baseline and 17 of 28 [61%] had a CA19-9 reduction of greater than 50%.  This is important, as a greater than 20% decrease in levels of this tumor-associated antigen has been shown to correlate with improved overall survival. The biomarker CA19-9 has been shown to be highly specific and sensitive for pancreatic cancer and approximately three-quarters of all pancreatic cancer patients have elevated baseline serum CA19-9 level at baseline.

Neogenix Oncology, Inc. (private)

Neogenix Oncology is develping ensituximab, a novel, chimeric monoclonal antibody intended for the treatment of advanced pancreatic and colorectal cancer. Pre-clinical studies have demonstrated that NPC-1C specifically targets pancreatic and colorectal cancer sparing healthy tissue.  In 2010, the company initiated a multi-center Phase 1 trial in patients with late stage pancreatic or colorectal cancer being conducted at Johns Hopkins University Hospital, Duke University Medical Center, and North Shore University Hospital.  Neogenix is also exploring the diagnostic and prognostic utility of ensituximab using a new serum ELISA test in a prospective study.  Preliminary results demonstrate that the biomarker test can differentiate between blood serum of healthy donors and that of patients with colorectal or pancreatic cancer.  In addition, the results of the biomarker test indicate superior sensitivity as compared to commercially available CEA and CA19-9 assays.

Table 2. Select Pancreatic Products in Active Clinical Development*

* Based on ClinicalTrials.gov

Conclusion

In contrast to the prominent late-stage failures over the past five years, several drugs have recently shown promise for the treatment of pancreatic cancer.  Going forward, early detection using biomarkers, more effective treatments, and novel drug targets could provide new hope for the treatment of this deadly disease.

Standard frontline therapy for AML patients under the age of 60 consists of cytarabine  [AraC] combined with an anthracycline [such as daunorubicin or idarubicin] in what is commonly referred to as the 7+3 regimen.  While 45% of elderly patients with AML [70+ years old] achieved a complete response [CR] using this regimen, there was no improvement in overall survival and more than a third of patients died within the first eight weeks of treatment according to a recent study published in the journal Blood[i].  This is consistent with the CR rates of 40%–60% with conventional chemotherapy and disease-free survival of less than 20% at three years referenced in the literature[ii].

Since more than half of AML cases occur in patients over 60 years old, there is a need to develop better frontline therapies in this setting.  With five agents being investigated as frontline therapy for elderly AML patients in late-stage trials, the purpose of this article is to compare and contrast these programs – several of which have near-term catalysts for investors.

Hypomethylating Agents

SuperGen, Inc. (SUPG), Eisai Co. Ltd. (ESALF), and Johnson & Johnson (JNJ)

On June 30, 2010, preliminary results from a Phase III trial of Dacogen® [decitabine] as a frontline treatment for elderly patients [65+ years old] with AML were released.  While Dacogen did not meet the primary endpoint of overall survival, a trend was reported to be evident.  However, the failure to demonstrate an improvement in overall survival was surprising given the favorable Phase II results and the fact that the comparator arm received low dose AraC instead of the aforementioned 7+3 regimen.  Low dose AraC predominantly works in patients with favorable cytogenetics, so it should have been relatively easy for Dacogen to demonstrate a survival benefit.

Shares of SuperGen, which climbed as high as $2.89 on expectations for positive trial results, reached a new 52-week low of $1.71 in July.  Supergen receives a 20-30% royalty on worldwide sales of Dacogen from its development and commercialization partners – Eisai in North America and Johnson & Johnson outside of North America.

While investors appear to be discounting approval of Dacogen as a frontline therapy for elderly AML, there may be reasons for optimism.  For example, both Eisai and Johnson & Johnson are continuing to analyze the data and planning to move forward with North America and European regulatory filings in 2011 based on the primary analysis and secondary endpoints.  In addition, the Phase III study was conducted under a special protocol assessment [SPA] with the U.S. Food and Drug Administration [FDA].

Celgene Corporation (CELG)

In view of Dacogen’s negative Phase III trial results, investors may be skeptical about Vidaza® [azacitidine], another hypomethylating agent currently approved for the treatment of myelodysplastic syndromes [MDS], a pre-cancerous condition that can often progress to AML.  According to ClinicalTrials.gov [Identifier NCT01074047], Celgene is currently enrolling patients in a Phase III, multicenter, randomized, open-label, study of Vidaza versus conventional care regimens for the frontline treatment of elderly patients [65+ years old] with AML.

In December 2008, the European Commission granted marketing authorization for Vidaza as a treatment for patients with higher-risk MDS, chronic myelomonocytic leukemia [CMML], and MDS that transforms into AML with a blast percentage of 20-30% in the peripheral blood or bone marrow.  While Vidaza demonstrated a clinically relevant increase in median survival of 9.4 months [24.4 vs. 15 months] in these settings[iii], it is unclear how the drug will work in AML de novo patients with a higher blast percentage [greater than 50%] that represent half of the elderly patient population.  In view of the fact that Dacogen is more myelosuppressive than Vidaza [see Table 1], and for this reason may be preferred over Vidaza for off-label use in AML, the recent failure of Dacogen only adds to this uncertainty.

Table 1. Percentage of Patients with Myelosuppression from Prescribing Information

Monoclonal Antibodies

Seattle Genetics, Inc. (SGEN)

Seattle Genetics is developing SGN-33 [lintuzumab], an unconjugated IgG1 antibody for the treatment of AML.  Lintuzumab has been shown to induce cell death by both complement and/or antibody-directed cellular cytotoxicity, or as a direct effect of the engagement of the CD33 receptor, which is expressed in most leukemic blast cells but also in normal hematopoietic cells.

In a Phase II study in relapsed/refractory AML patients, single agent lintuzumab demonstrated efficacy in patients with advanced AML; however, the positive effects were confined to patients with low disease burden [blast percentage 5% to 30%].  This suggested that additional development of this agent would be best achieved by combining lintuzumab with chemotherapy.  However, while the addition of lintuzumab to salvage induction chemotherapy was safe, it did not result in a statistically significant improvement in response rate or survival in patients with refractory/relapsed AML in a subsequent Phase III trial[iv].

Seattle Genetics is now conducting a 210 patient Phase IIb study in frontline treatment of elderly patients [60+ years old] with AML with results expected in the August to October 2010 timeframe.  See ClinicalTrials.gov [Identifier NCT00528333] for more information.

While lintuzumab relies on a different mechanism of action, investor’s are understandably skeptical about the success of another anti-CD33 monoclonal antibody in AML.  In June 2010, Pfizer, Inc. (PFE) agreed to withdraw Mylotarg® [gemtuzumab ozogamicin] from the U.S. market, effective October 15.  Mylotarg is an IgG4 monoclonal antibody to CD33 linked to a cytotoxic agent from the class of calicheamicins.  Developed by Wyeth, the drug was fast-tracked to treat patients ages 60 and older with recurrent AML who were not candidates for other chemotherapy.  The FDA approved Mylotarg in May 2000 based upon a surrogate endpoint due to the fact it treated relapsed disease with no other viable therapy.

Four years later, a confirmatory trial was begun to confirm the results of the 142 patients who participated in the three previous clinical trials.  The 2004 trial showed that adding Mylotarg to existing chemotherapy for the treatment of AML provided no benefit and even showed a higher death rate.

Nucleoside Analogs

Genzyme Corporation (GENZ)

In September 2009, the FDA’s Oncologic Drugs Advisory Committee [ODAC] voted 9 to 3 that a randomized, controlled trial is needed to support the proposed label expansion for Clolar® (clofarabine) as a frontline treatment for elderly [60+ years old] patients with AML.  Consistent with the decisions for both Johnson & Johnson’s Zarnestra® [tipifarnib] and Vion Pharmaceuticals’ Onrigin® [laromustine], the committee determined that single-arm clinical study results were not sufficient for approval.

Despite the setback, Genzyme stated in a press release that the company remains committed to the clinical development of clofarabine in this patient population and that the drug is being investigated in clinical trials by most of the leading AML experts and major cooperative leukemia investigation groups in the United States and Europe.

Beyond the frontline setting, Genzyme is also conducting a randomized Phase III trial comparing clofarabine in combination with AraC to AraC alone in relapsed and refractory adult AML patients 55 years old or older [ClinicalTrials.gov Identifier NCT00317642]. Results are expected in 2011.

Note: At the time of writing, Sanofi-Aventis (SNY) has offered to acquire Genzyme for $69 per share.

Cyclacel Pharmaceuticals, Inc. (CYCC)

Cyclacel is developing sapacitabine for the treatment of AML, MDS and non-small cell lung cancer [NSCLC].  Sapacitabine is unique among the frontline, elderly AML landscape as it represents the only oral agent in late-stage clinical development and the only product candidate to demonstrate a survival benefit in a randomized study.

In December 2009, Cyclacel reported interim results from an ongoing Phase II study involving 60 patients aged 70 or older with either untreated AML [80%] or AML in first relapse [20%] randomized across three dosing schedules of sapacitabine [ClinicalTrials.gov Identifier NCT00590187].  The three-day dosing schedule in Arm C was selected for further clinical development in elderly patients with de novo AML based on a 1-year survival rate of 30% and an overall response rate of 35%.

In the first quarter of 2010, Cyclacel submitted a SPA request for a randomized, registration-directed, Phase III study of sapacitabine in elderly patients with AML and, pending the response, expects to initiate a pivotal Phase III study in 2010.

Summary

While many companies are developing therapies for AML [see Table 2], there is a need to focus on better frontline therapies for elderly patients given the lack of efficacy and significant toxicity associated with the current 7+3 treatment regimen.  Investors will be watching the following catalysts to help handicap which of the five product candidates [decitabine, azacitidine, clofarabine, sapacitabine, or lintuzumab] will win the race and become the first agent approved by the FDA in this setting:

• Phase IIb results for lintuzumab expected in the August to October 2010 timeframe
• FDA response to SPA request for Phase III study of sapacitabine; initiation of pivotal Phase III study in 2010
• Supplemental new drug application [sNDA] for decitabine by March 31, 2011 and subsequent response from FDA
• Results from frontline clofarabine clinical trials by AML experts and major cooperative leukemia investigation groups in the United States and Europe; relapsed/refractory AML Phase III results in 2011
• Phase III results for azacitidine expected around 2013

NEW – Click here to view this article in PDF format.

Table 2. Late-stage Therapeutic Landscape for AML

References

[i] Kantarjian H, Ravandi F, O’Brien S, Cortes J, Faderl S, Garcia-Manero G, Jabbour E, Wierda W, Kadia T, Pierce S, Shan J, Keating M, Freireich EJ.  Intensive chemotherapy does not benefit most older patients (age 70 years or older) with acute myeloid leukemia. Blood. 2010 Jul 28. [Epub ahead of print]

[ii] Amadori S, Suciu S, Willemze R, Mandelli F, Selleslag D, Stauder R, Ho A, Denzlinger C, Leone G, Fabris P, Muus P, Vignetti M, Hagemeijer A, Beeldens F, Anak O, De Witte T; EORTC leukemia group; GIMEMA leukemia group.  Sequential administration of gemtuzumab ozogamicin and conventional chemotherapy as first line therapy in elderly patients with acute myeloid leukemia: a phase II study (AML-15) of the EORTC and GIMEMA leukemia groups.  Haematologica. 2004 Aug;89(8):950-6.

[iii] Edlin R, Connock M, Tubeuf S, Round J, Fry-Smith A, Hyde C, Greenheld W.  Azacitidine for the treatment of myelodysplastic syndrome, chronic myelomonocytic leukaemia and acute myeloid leukaemia. Health Technol Assess. 2010 May;14 Suppl 1:69-74.

[iv] Eric J. Feldman, Joseph Brandwein, Richard Stone, Matt Kalaycio, Joseph Moore, Julie O’Connor, Nancy Wedel, Gail J. Roboz, Carole Miller, Raj Chopra, Joseph C. Jurcic, Randy Brown, W. Christopher Ehmann, Philip Schulman, Stanley R. Frankel, Daniel De Angelo, David Scheinberg.  Phase III Randomized Multicenter Study of a Humanized Anti-CD33 Monoclonal Antibody, Lintuzumab, in Combination With Chemotherapy, Versus Chemotherapy Alone in Patients With Refractory or First-Relapsed Acute Myeloid Leukemia. Journal of Clinical Oncology, Vol 23, No 18 (June 20), 2005: pp. 4110-4116.

With few exceptions, companies with monoclonal antibody platforms have significantly outperformed the NASDAQ Biotechnology Index® (NBI) since the end of 2008 [see Table 1].  Accordingly, the purpose of this article is to offer several key factors that help explain the above average returns for monoclonal antibody companies during this +18-month period – a trend that we believe is likely to continue.

Table 1: Select public companies with monoclonal antibody platforms

Higher rate of success

In order to determine the appropriate current value for a biotechnology company, an investor would normally consider projected future cash flows resulting from product sales, probability of success, and a discount rate to reflect the risks that the company faces.

With regard to probability of success, one of the greatest considerations for a biotechnology company is the fact that new drug candidates must receive approval from the Food and Drug Administration [FDA] before they can be marketed in the United States.  Receiving FDA approval is dependent, in part, on the drug candidate successfully passing a series of clinical trials that are generally conducted in three sequential phases.

Successfully transitioning from the early stages that establish safety [Phase I] to later phases where efficacy is demonstrated [Phase III] will improve the approval success rate [e.g., the odds that the drug will ultimately reach the market].  Interestingly, researchers from the Tufts Center for the Study of Drug Development at Tufts University recently analyzed the average approval success rates for investigational drugs first tested in humans from 1993 to 2004 [Ref 3] and found substantial differences between large molecules [32% success rate] and small molecules [13% success rate].  Monoclonal antibodies represented the largest group [47%] of the large molecules evaluated in the study.

In view of the fact that nearly one-third of large molecule product candidates entering the clinic ultimately receive FDA approval and that they are nearly 2.5-times more likely to ultimately receive approval than small molecule compounds, companies that are developing monoclonal antibodies should be awarded higher valuations due to the higher probability of success.

Reduced concerns from biosimilars

The Patient Protection and Affordable Care Act [PPACA], which was signed into law on March 23, 2010, included a provision amending the Public Health Service Act [PHSA] to permit approval of biosimilar biological products through an abbreviated biological license application [ABLA] submitted to the FDA.  Under the law, originators have a 12-year exclusivity period before a biosimilar is approved.

While many questions remain about the specifics of the ABLA process until the FDA releases its guidance, the PPACA does state that to support approval of a biosimilar, the sponsor must show that the product is “biosimilar to the reference product” based upon data derived from analytical, animal, and clinical studies.  As a result, it is unlikely that monoclonal antibody products will represent the first class of biosimilars on the market due to the fact that they have very specific binding properties and are typically larger and more complicated than other biologic drugs.

Regardless, according to a recent article by Ludwig Burger for Reuters, analysts expect price discounts of only 20 to 30 percent in markets affected by biosimilar competition, which compares with an average markdown of 90 percent for generic versions of small molecule drugs. This is likely due to the fact that development, production and marketing of a biosimilar costs more than making a generic copy of conventional chemical drugs.

Lastly, for those individuals that believe manufacturing biologic drugs is easy, a review of Genzyme Corporation’s (GENZ) recent challenges offers a different perspective.  See “Genzyme’s Manufacturing Disruption Highlights Investment Opportunities in Lysosomal Storage Disorders.”

Manufacturing processes have improved

In contrast to small molecule therapeutics that can be synthesized for $1 per gram and simple proteins like insulin that can be efficiently produced in bacterial hosts, monoclonal antibodies are normally produced in mammalian cells at a cost of $300-$5,000 per gram [Ref 4].

Fortunately, in parallel with the clinical and commercial success of monoclonal antibodies there have been major advances in cell line development, bioreactor construction and operation, purification strategies and analytics. For example, cell culture productivity has improved more than 100-fold in the last 15-years.  With these advances, global protein output using mammalian cell culture increased from under 500 kilograms in 2000 to 3,600 kilograms in 2005 and manufacturing costs have been reduced.

In addition to the aforementioned advances, new sources of inexpensive antibody production are being explored.  For example, antibodies have been expressed successfully in genetically modified plants and have been shown to retain their native functional forms.

Evolution from acute to chronic treatment

In the early 1980’s, most monoclonal antibodies were derived from mouse genes with major limitations such as inducing human anti-mouse antibody [HAMA] responses in patients, lack of effector functions and short plasma half-life [Ref 5].  Later that decade, genetic engineering techniques made chimeric and humanized versions available for study.  Until this point in time, most therapeutic monoclonal antibodies had been studied as acute treatments for cancer or immunological diseases [Ref 6].

By the late 1990’s, methods to produce human monoclonal antibodies were developed, including phage display and transgenic mice.  With the availability of human antibodies with reduced immunogenicity and increased efficacy, the biotechnology industry began studying monoclonal antibodies for the chronic treatment of non-life threatening diseases, which opened new market opportunities.

In this regard, KaloBios Pharmaceuticals, Inc. (private) is applying its proprietary Humaneering™ technology platform to produce antibodies that are close to human germ-line in sequence while retaining the specificity and improving the affinity of the reference antibody.  KaloBios is developing an anti-GM-CSF human monoclonal [KB003] for the treatment of patients with autoimmune and chronic inflammatory conditions, such as rheumatoid arthritis and asthma.  Sales of two marketed monoclonal antibodies indicated for the treatment of rheumatoid arthritis, Humira® [adalimumab] and Remicade® [infliximab], are projected to reach $15.8 billion in combined sales by 2016 according to Evaluate Pharma [Ref 2].

In January 2010, KaloBios partnered with Sanofi Pasteur, the vaccines division of sanofi-aventis Group (SNY), to develop the company’s Humaneered™ antibody fragment KB001 for the prevention and treatment of Pseudomonas aeruginosa (Pa) infections. KaloBios received an upfront payment of $35 million and is eligible for development, regulatory and commercial milestones totaling $255 million in addition to royalties on eventual product sales.

In addition, MacroGenics, Inc. (private) entered into a global strategic alliance with Eli Lilly & Co. (LLY) in October 2007 valued at approximately $500 million for teplizumab, a humanized anti-CD3 monoclonal antibody currently being studied in a global pivotal Phase II/III clinical trial for individuals with recent-onset type 1 diabetes.

Licensing, merger, and acquisition dynamics

The higher average approval success rates with large molecules compared with small molecules appears to be partially reflected in the economics of some recent licensing and M&A transactions.

For example, in June 2010 OncoMed Pharmaceuticals, Inc. (private) partnered with Bayer Schering Pharma AG (BAYRY.PK) to discover, develop and commercialize novel anti-cancer stem cell therapies including multiple antibody, protein therapeutics and small molecules targeting the Wnt signaling pathway.  For each drug candidate successfully developed through Phase III clinical trials and regulatory approval, OncoMed’s payments from Bayer could total up to $387.5 million for each biotherapeutic drug compared with $112 million for small molecule drugs.  Accordingly, potential payments for large molecules are 3.5 times greater than for the small molecules.

As another example, Eli Lilly & Co. (LLY) acquired ImClone Systems, Inc. for $6.5 billion [5x sales of $1.3 billion], while Astellas Pharma, Inc. paid $4 billion for OSI Pharmaceuticals, Inc. [3.3x sales of $1.2 billion].  Both ImClone and OSI received royalties on product sales from corporate partners.

ImClone’s marketed product Erbitux® [cetuximab] is a monoclonal antibody that inhibits the epidermal growth factor receptor [EGFR] and is indicated for the treatment of certain types of colorectal cancer and as a single agent or in combination with radiation therapy for head and neck cancer.  OSI’s comparable product Tarceva® [erlotinib] is a small molecule antagonist of EGFR and is indicated for the treatment of non-small cell lung cancer and pancreatic cancer.  While this is not an apples-to-apples comparison, it does help support the fact that premiums are being paid for monoclonal antibodies versus small molecules.

Investors are also likely placing M&A premiums on monoclonal antibody companies due to robust activity during the past five years [see Table 2].  In fact, there has been at least one deal announced each year during this period.

Table 2: Select M&A among monoclonal antibody companies

Access to capital

Despite a challenging financing climate, many public monoclonal antibody developers referenced in Table 1 have been able to raise capital through public offerings.  For example, ImmunoGen, Inc. (IMGN) raised $77.6 million at $8.00 per share in May 2010, Micromet, Inc. (MITI) raised $80.5 million at $7.00 per share in March 2010, and Seattle Genetics, Inc. (SGEN) raised $136 million at $10.75 per share in August 2009.  This demonstrates strong investor appetite for monoclonal antibody companies, which could bode well for future initial public offerings [IPOs] given the paucity of public options in the sector due to M&A activity over the past few years.

Summary

Biotechnology companies developing monoclonal antibodies have been outperforming the broader sector for the past 18-months, a trend that is likely to continue based on higher average approval success rates, reduced concerns from biosimilars, improvements in manufacturing and resulting impact on margins, broadening utility beyond treating cancer and inflammation, robust partnering and M&A activity, and access to capital.

References

1. Roche Annual Report 2009 (www.roche.com/gb09e.pdf)
2. Evaluate Pharma World Preview 2016 Report
3. DiMasi, JA. Et al. Clin Pharmacol Ther. 2010 Mar;87(3):272-7. Epub 2010 Feb 3.
4. Chen, C. Trends in Bio/Pharmaceutical Industry. 2009 5(3).
5. Chan, A. Et al. Nat Rev Immun. 2010 May;10.
6. Reichert JM. Curr Pharm Biotechnol. 2008 Dec;9(6):423-30.

With Opening Day less than a month away, it seems only fitting to reference one of the most quoted personalities of our time to describe our analysis of the biotechnology sector in 2010.  In this article, we review our favorable outlook for the industry, draw comparisons with the prior year, and introduce the results of our recent “Life Sciences Industry Outlook” survey that targeted industry executives, investors, analysts, and members of the media.

Bullish Outlook

Our favorable outlook for the biotechnology industry in 2010, which builds upon many of the same catalysts we proposed for 2009, is based on the following key drivers:

• Sector’s defensive characteristics and impact on future economic growth
• Highest number of annual new product approvals since 2004
• Record number of products in clinical trials and annual industry R&D investment
• Improving access to capital
• Brisk pace of industry consolidation and licensing transactions
• Many small and mid-capitalization companies remain undervalued

In fact, several of these themes were reinforced by the results of our industry survey.

Defensive Sector and Economic Driver

During periods of economic uncertainty, the biotechnology sector is often portrayed as defensive given that disease is relentless in both good economic times and bad.  Despite recent medical advances, there remains a need for quality, innovative products to diagnose and treat a broad variety of diseases such as cancer, central nervous system disorders, cardiovascular diseases, diabetes and infectious diseases.

Beyond its defensive characteristics, the sector plays a critical role in the United States [US] economy.  Innovative new medicines developed by life science companies provide better patient outcomes, improved quality of care, increased life expectancy, and lead to economic gains.

While the strengths and weaknesses of the US healthcare system remain the subject of great debate, we believe new medicines should be viewed as investments in the future, not only in patient health – but also in economic recovery and growth.  For example, as indicated in our October 2009 article “Innovative New Medicines are Key to Economic Growth,” a permanent one percent reduction in mortality from cancer alone has a present value to current and future generations of Americans of nearly $500 billion and a cure would be worth about $50 trillion.

New Drug Approvals

In a repeat of last year, the total number of approvals for new molecular entities and biologic license applications by the US Food and Drug Administration’s [FDA] Center for Drug Evaluation and Research [CDER] in 2009 was the highest since 2004.  Of course, cynics will rightfully call attention to the modest year-over-year increase [25 in 2009 versus 24 in 2008] and that recent performance is still more than 50% below the high of 56 new approvals in 1996.

However, we believe that viewing the number of FDA approvals in the context of new risk evaluation and mitigation strategies [REMS] that were introduced in 2008 and internal resource constraints that have plagued the agency provides optimism going forward.  While legislation passed in 2008 gave the FDA more money and resources, hiring and training hundreds of new employees takes time.  With that process well underway, combined with increased familiarity of the REMS program, we believe the drug approval process should improve going forward.

In terms of therapeutic areas, oncology represented one out of five [20%] approvals by CDER in 2009 according to a recent publication [Nature Reviews Drug Discovery 9, 89-92, February 2010].  Not surprisingly, oncology was our highest ranked survey response with regard to attracting investment and/or business development activity in 2010.  See Table 1 below.

Table 1. In terms of raising capital and/or business development activity, which key therapeutic area do you expect to attract the most interest/visibility during 2010?

* Numbers may not add up to 100% due to rounding

Record Pipeline and Investment

According to the latest report by the Pharmaceutical Research and Manufacturers of America [PhRMA], there are a record number of biotechnology drugs currently in development.  In the US alone, there are 633 biotechnology medicines being developed, including 254 medicines for cancer, 162 for infectious diseases, 59 for autoimmune diseases, 34 for HIV/AIDS and related conditions, 25 for cardiovascular disease, and 19 for diabetes and related conditions.

Annual research and development expenditures by PhRMA member companies also reached a record $50.3 billion in 2008, more than tripling the $15.2 billion level of investment in 1995.

Access to Capital

In 2010, companies at all stages of development will try to attract investors and the competition will be fierce.  However, in terms of access to capital for life sciences companies, our survey indicated that more than 46% of respondents expect favorable conditions in 2010, with modest improvement over 2009.  Another 46% of respondents indicated that they expect access to capital to be about the same as 2009.  Only 4% of respondents expected access to capital to improve markedly with initial public offerings [IPO] possible.

In 2009, venture capital investment in biotechnology declined by 19%, both in dollars and deals, from the prior year according to the MoneyTree™ Report by PriceWaterhouseCoopers and the National Venture Capital Association, based on data from Thomson Reuters.  However, biotechnology was the single largest investment sector for 2009 with $3.5 billion going into 406 deals.

In terms of initial public offerings [IPOs], only three biotechnology companies successfully tested the public markets in 2009.  In 2010, two IPO’s have already been completed, albeit both below the expected offering price, and several others are in queue, including Prometheus Laboratories, Aveo Pharmaceuticals, Trius Therapeutics, Aldagen, Alimera Science, and Tengion.  See Table 2 for recent biotechnology IPO performance.

Table 2. Recent Biotechnology IPO Performance

In terms of public financings, several companies have already completed offerings in 2010, including Amicus Therapeutics, Inc. (FOLD), BioSante Pharmaceuticals, Inc. (BPAX), Cell Therapeutics, Inc. (CTIC), Chelsea Therapeutics International, Inc. (CHTP), Cleveland Biolabs, Inc. (CBLI), Cyclacel Pharmaceuticals, Inc. (CYCC), Derma Sciences, Inc. (DSCI), EntreMed, Inc. (ENMD), InterMune, Inc. (ITMN), Palatin Technologies, Inc. (PTN),and XOMA Ltd. (XOMA).

Improving access to capital could lead to an acceleration of merger and acquisition activity and licensing deals, as large pharmaceutical companies begin to lose their leverage and company valuations start increasing.

Consolidation

More than 82% of survey responders expected merger and acquisition activity to accelerate in 2010 compared with 2009.  In view of two recent deals, the paucity of merger and acquisition activity and decline in both the quantity and value of licensing & partnering transactions announced during the JP Morgan Healthcare Conference in 2010 appears to have been the pause that refreshes [see “Biotech Deal Activity Declines…The Pause that Refreshes?”].

For example, on February 23, 2010, Cephalon, Inc. (CEPH) exercised its option to acquire Ception Therapeutics, Inc. for $250 million in view of positive Phase 2 data from a clinical study in adults with eosinophilic asthma.  In January 2009, Cephalon paid Ception $100 million upfront for the option.

On March 1, 2010, Astellas Pharma, Inc. offered to acquire all outstanding shares of common stock of OSI Pharmaceuticals, Inc. (OSIP) for $52.00 per share in cash, or an aggregate of approximately $3.5 billion on a fully diluted basis.  The offer represented more than a 40% premium on the closing price of OSI Pharmaceuticals’ common stock of $37.02 per share on February 26, 2010, and shares have subsequently traded above $57 on expectations for a higher bid.

In view of the fact that US pharmaceutical companies stand to lose billions of revenue due to patent expirations from 2010 to 2012, we expect merger and acquisition activity to remain brisk.

Small Versus Large

As highlighted in our “Biotech’s 2009 Stealth Small Cap Rally” article, small capitalization biotechnology companies were among the best performers of 2009.  The relative underperformance of many large capitalization biotechnology companies in 2009 masked the fact that many smaller, innovative companies performed well, with 20 of the 125 companies comprising the NASDAQ Biotech Index producing triple-digit returns during the period.  Vanda Pharmaceuticals (VNDA), Human Genome Sciences (HGIS), and Targacept, Inc. (TRGT) led the way, with stock prices up 2,150%, 1,342%, and 487%, respectively.

Similar to 2009, we expect that small and mid-capitalization companies with positive clinical or regulatory catalysts will continue to outperform their larger industry peers in 2010.

Beware the Ides of March

In our February 2009 article “Chink in the Biotechnology Armor,” we cited the spate of high profile clinical setbacks and regulatory delays during the month as the reason for the sector’s precipitous decline.  The NASDAQ Biotech Index, which traded as high as 772 during the first week of February, traded as low as 605 by the first week of March – losing more than 21% of its value during the 30-day period.

In February and March 2010, there have also been a significant number of clinical and regulatory setbacks.  Consider the following:

• AMAG Pharmaceuticals, Inc. (AMAG) – Purported safety concerns regarding Feraheme® [ferumoxytol], the company’s marketed product for the treatment of iron deficiency anemia in adult patients with chronic kidney disease, kicked off a 27% decline in shares of AMAG Pharmaceuticals, Inc.  The stock, which traded as high as $45.61 on February 3, 2010, subsequently traded as low as $33.29 despite assurances from the company that the rate of serious hypersensitivity reactions related to Feraheme are consistent with the product’s label.
• Cell Therapeutics, Inc. (CTIC) – On February 8, 2010, the FDA released its briefing documents for the company’s lymphoma drug, pixantrone, in advance of an Oncologic Drugs Advisory Committee [ODAC] meeting originally scheduled for February 10, 2010.  Shares of Cell Therapeutics, Inc., which closed at $1.06 the prior week, traded as low as $0.53 that day.  Among other issues, the FDA raised concerns about pixantrone’s efficacy in view of the fact that the randomized study was stopped at less than 50% of its planned patient target because of poor accrual.  The ODAC meeting was subsequently rescheduled for March 22, 2010.
• Isis Pharmaceuticals, Inc. (ISIS) – On February 10, 2010, the company and its partner, Genzyme Corporation (GENZ), announced results from a Phase 3 study of mipomersen in patients with heterozygous familial hypercholesterolemia [heFH].  While the trial met its primary endpoint with a highly statistically significant 28 percent reduction in LDL-cholesterol after 26 weeks of treatment, the results raised safety concerns and apparently fell short of Wall Street’s expectations.  Shares of Isis Pharmaceuticals, which closed above $11 the day before the results were released, traded as low as $8.85 the next day.
• XenoPort, Inc. (XNPT) – On February 17, 2010, XenoPort, Inc. and its partner GlaxoSmithKline plc (GSK) received a Complete Response letter from the FDA, delaying approval for Horizant™ [gabapentin enacarbil] Extended-Release Tablets, an investigational non-dopaminergic treatment for moderate-to-severe primary Restless Legs Syndrome.   Shares of XenoPort, Inc., which closed at $19.60 the day before the news, hit an all-time low of $6.39 the next day.
• Novelos Therapeutics, Inc. (NVLT.OB) – On February 24, 2010, the company announced that the primary endpoint of improvement in overall survival was not met in a pivotal Phase 3 trial for advanced non-small cell lung cancer [NSCLC] with its lead product, NOV-002, in combination with first-line chemotherapy.  Shares of Novelos Therapeutics, Inc., which closed at $1.65 the day before the results were released, traded as low as $0.28 the next day.
• Adventrix Pharmaceuticals, Inc. (ANX) – On March 1, 2010, the company announced that it received a refuse to file letter from the FDA regarding its New Drug Application for ANX-530 [vinorelbine injectable emulsion].  In the letter, the FDA indicated that the data included in the initial submission from the intended commercial manufacturing site was insufficient to support a commercially-viable expiration dating period.  Shares of Adventrix Pharmaceuticals, Inc. which closed at $0.29 the prior week, traded as low as $0.16 that day.
• Medivation, Inc. (MDVN) – On March 3, 2010, the company and its partner, Pfizer, Inc. (PFE), announced that the investigational drug dimebon [latrepirdine] unexpectedly failed in a Phase 3 trial in patients with Alzheimer’s disease.  Shares of Medivation, Inc., which closed above $40 the day before the results were released, traded as low as $12.55 the next day.

Helping to offset the negative impact of these setbacks, the NASDAQ Biotech Index is market value-weighted, taking into account the total market capitalization of the companies it tracks and not just their share prices.  Accordingly, companies with the largest market capitalizations, or the greatest values, will have the highest impact on the index.  Further, several companies experiencing clinical or regulatory setbacks were not included in the NASDAQ Biotech Index.

In addition, recent merger and acquisition activity may also help mask the effects of the aforementioned clinical and regulatory setbacks.  For example, the NASDAQ Biotech Index closed up 2.7% the day that Astellas Pharma, Inc. offered to acquire OSI Pharmaceuticals, Inc.

Upcoming Catalysts

When it comes to raising visibility and capital, 40% of survey respondents cited general risk aversion in the financial markets as the single greatest challenge facing most life sciences companies in 2010.   Another 28.8% of respondents cited the average market capitalization of life sciences companies being too small and/or lack of liquidity as the single greatest challenge.

In view of the aforementioned clinical and regulatory setbacks, investors will be closely monitoring the following events, as there is no discounting the negative impact of continued clinical and regulatory setbacks on biotechnology investor’s appetite for risk:

• MannKind Corporation (MKND) – In January 2010, the company announced that the FDA would be unable to complete its review of Afrezza™ before the mid-January Prescription Drug User Fee Act [PDUFA] date in order to complete an inspection of a manufacturing-related facility belonging to one of the company’s suppliers.  Alfrezza is a novel, ultra rapid acting mealtime insulin therapy under review for use in adult patients with type 1 and type 2 diabetes mellitus for the treatment of hyperglycemia.  The company has not been given a new PDUFA date by the FDA.
• InterMune, Inc. (ITMN) – A Pulmonary-Allergy Drugs Advisory Committee [PADAC] meeting is scheduled for March 9, 2010, to review the NDA for pirfenidone, the company’s investigational drug candidate for the treatment of patients with idiopathic pulmonary fibrosis [IPF] to reduce decline in lung function.
• Amylin Pharmaceuticals, Inc. (AMLN), Eli Lilly and Company (LLY), and Alkermes, Inc. (ALKS) – Following a weather delay, the FDA has set a new PDUFA action date of March 12, 2010, for its review of the NDA for exenatide once weekly.  Exenatide is being developed in collaboration with Eli Lilly and based on technology from Alkermes, Inc.
•  Cell Therapeutics, Inc. – The rescheduled ODAC meeting for pixantrone takes place on March 22, 2010.
• Delcath Systems, Inc. (DCTH) – On February 4, 2010, the company announced that sufficient events have been reached to allow data analysis to begin on its Phase 3 trial for a novel drug delivery platform to deliver ultra-high doses of anti-cancer drugs to the liver while preventing these high doses of drug from entering the patient’s bloodstream.  The 92 patient, randomized, multi-center, Phase 3 trial used the drug melphalan to treat patients with metastatic melanoma in the liver.  Assuming a successful trial endpoint, the company expects to file a new drug application [NDA] with the FDA in April 2010.
• Dendreon Corporation (DNDN) – A Biologics License Application for Provenge® [sipuleucel-T] for the treatment of men with metastatic, androgen-independent prostate cancer, has been assigned a PDUFA date of May 1, 2010.

Conclusion

While the capital markets remain turbulent, many of the biotechnology industry’s fundamentals, such as the number of products in clinical trials, new product approvals, profitable biotech companies and industry mergers & acquisitions remain favorable.   Combine these positive attributes with yet to be seen benefits from decoding the human genome, an improvement or stabilization in the capital markets, greater resources for the FDA and a novel blending of technology, chemistry and biology and many of the necessary ingredients for The Biotechnology Revolution remain intact.  Or, as Yogi Berra simply said, “You can observe a lot by watching.”