With hundreds of billions at stake, it’s not surprising that there is often a tulipomania effect on companies that report significant scientific advances in the treatment of cancer.  Many investors recall the meteoric rise and subsequent plummet of EntreMed, Inc.’s (ENMD) stock following reports of the company’s breakthrough in disrupting the growth of blood vessels [angiogenesis] to kill cancer in mice back in 1998.

As spring is around the corner, it seemed an appropriate time to examine Wall Street’s latest tulip obsession, which relates to the potential of targeting cancer stem cells [CSCs] as a novel approach to eradicating the disease.  Stem cells are unique due to their ability to self-renew and/or mature into another type of cell with a more specialized function, such as a muscle cell, a red blood cell, or a brain cell[3].  Accordingly, stem cells hold great promise to potentially replace or repair damaged cells or tissues for a wide range of diseases.  Genetic mutations or other factors may give rise to CSCs that possess the same capacity for self-renewal and can mature into cancer cells that comprise the tumor.

For example, normal hematopoietic [blood-forming] stem cells have the potential for self-renewal, a property that enables life-long blood production.  These particular stem cells give rise to all of the types of red and white blood cells as well as some other types of cells[4].  Underscoring the importance of hematopoietic stem cells, red blood cells only have a lifespan of approximately 120 days and therefore must be completely replaced every four months[5].

Genetic mutations or other factors, however, may cause hematopoietic stem cells or their progeny to go awry.  In 1994, researchers identified a rare population of stem-like cells in the blood of patients with acute myeloid leukemia [AML][6].  These unique cells represented less than 1% of the total AML cell population found in the blood.  When transplanted into mice with impaired immune systems, these rare cells could recapitulate the entire cellular diversity of human AML in the animals.  This was the first time that researchers isolated CSCs.

Traditional cancer treatments, such as chemotherapy and radiation, have limited selectivity.  They exert their killing effect on rapidly dividing cells and do not discriminate between normal and cancerous targets.  In view of the fact that stem cells as a class tend to be relatively dormant[7], CSCs are unlikely to be destroyed by such therapeutic approaches.  In other words, the “seeds” of the tumor may remain intact – able to grow and spread.  Eradicating CSCs in addition to other cancerous cells may hold great promise for the treatment of cancer.

Enthusiasm for targeting CSC’s was recently bolstered by the March 1^st announcement that Dainippon Sumitomo Pharma Co., Ltd. would acquire privately-held Boston Biomedical, Inc. for up to $2.63 billion.  The deal included $200 million upfront, up to $540 million in development milestone payments, and up to $1.89 billion in sales milestone payments.  Boston Biomedical’s lead program for inhibiting CSCs in addition to other cancer cells, BBI608, is entering Phase 3 trials in patients with colorectal cancer.

In addition to Boston Biomedical and other programs currently in development by large pharmaceutical companies, the following is a partial list of emerging public companies with programs also targeting the destruction of CSCs for the treatment of cancer:

Geron Corporation (GERN)

After announcing that the company would discontinue development of its human embryonic stem cell programs, Geron is focusing on novel cancer programs, including lead program Imetelstat [GRN163L], a telomerase inhibitor that has been shown to effectively inhibit CSCs from a broad range of tumors.  Imetelstat is in Phase 2 trials for non-small cell lung cancer, metastatic breast cancer, essential thrombocythemia and multiple myeloma.

ImmunoCellular Therapeutics Ltd. (IMUC.OB)

ImmunoCellular is developing active immunotherapies that target not only regular tumor cells, but also CSCs.  The company’s most advanced product candidate, ICT-107, is a dendritic cell-based vaccine in Phase 2 development for the treatment of glioblastoma multiforme [GBM].  Underscoring interest in therapeutic approaches targeting CSCs, shares of ImmunoCellular are up more than 67% since the start of the year.

Verastem, Inc. (VSTM)

While unusual for a biotechnology company to pursue an initial public offering [IPO] without having a product candidate in human clinical trials, Verastem successfully priced its IPO at $10 in January 2012 and currently has a market capitalization greater than $236 million.  According to the prospectus, Verastem has identified a pipeline of small molecule compounds with the potential to target CSCs.  The company’s most advanced product candidates are VS-507, VS-4718 and VS-5095.  In late 2012, Verastem expect to file an investigational new drug application [IND] with the U.S. Food and Drug Administration [FDA] to initiate a Phase 1 clinical trial of VS-507.

Private companies also working in the area of CSCs include:

Eclipse Therapeutics, Inc.

Eclipse has developed a CSC discovery platform to identify antibody therapeutics that inhibit the growth of cancer stem cells.  Eclipse’s lead program is ET-101, a novel therapeutic antibody designed to target CSCs.  ET-101 is expected to advance towards human clinical trials by 2013.

Formula Pharmaceuticals

Formula’s lead product candidate, FPI-01, is an active immunotherapy in Phase 2 clinical development for the maintenance of first-remission in AML and other cancers that originated at Memorial-Sloan Kettering Cancer Center.  The vaccine targets Wilms Tumor 1 [WT1], an antigen ranked first in a list of 75 cancer vaccine target antigens by the National Cancer Institute [NCI] prioritization project.  Stem cell expression was among the criteria used to rank the antigens.

KaloBios Pharmaceuticals, Inc.

KaloBios has initiated a Phase 1 dose-escalating clinical trial for KB004, its first-in-class Humaneered™ monoclonal antibody, in EphA3-expressing hematologic malignancies, including chronic myelogenous leukemia, AML, acute lymphocytic leukemia, and myelodysplastic syndromes, who are refractory to, have failed, or have not received standard-of-care treatment. EphA3 is an onco-fetal protein that is expressed in a range of cancers, including hematologic malignancies and possibly on leukemic stem cells. Studies have shown that expression of EphA3, a receptor tyrosine kinase, is associated with B, T and myeloid neoplasms and certain solid tumors. EphA3 appears to be upregulated on tumor cells, including stem cells, tumor stromal cells, and tumor neovasculature. A biomarker assay is being developed to identify EphA3 expression.

OncoMed Pharmaceuticals

OncoMed’s lead CSC therapeutic, OMP-21M18, is a monoclonal antibody designed to block Delta-like ligand 4 [DLL4], an activator of Notch signaling, which is a pathway known to be important in CSCs and cancer.  OMP-21M18 has demonstrated single-agent activity in a Phase 1 study in heavily-pretreated solid tumor patients, and is currently advancing into combination studies with standard chemotherapy in advanced non-small cell lung and pancreatic cancers.

Stemica LLC

Stemica was founded in 2011 to focus on late-breaking cancer biology discoveries pinpointing cancer stem cells as the reason for not being able to currently cure cancer.  Stemica is currently developing novel molecules that inhibit these “cancer sleeper cells” in hopes of providing long-term survival for cancer patients.

Stemline Therapeutics

Lead programs SL-401, which targets IL-3R, and SL-701, which targets multiple defined epitopes, are in Phase 1 and Phase 2 development for the treatment of AML and glioma, respectively.  According to the company’s website, Stemline also possesses a landmark portfolio of intellectual property that includes the earliest filings in the CSC field covering CSC-directed therapeutics, diagnostics, and drug discovery.

In conclusion, targeting CSCs may hold great promise for the treatment of cancer following their initial discovery in 1994.  Enthusiasm for the approach has been bolstered by the recent $2.3 billion acquisition of Boston Biomedical, which may prove that targeting CSCs is more than a passing phase.  Using the breakthrough with anti-angiogenesis approaches to treat cancer as a model, however, it may be too early to determine which programs will ultimately succeed [e.g., Avastin®, bevacizumab] versus those that fail [e.g., endostatin and angiostatin].

References

By 2003, the U.S. Food and Drug Administration [FDA] had approved two radioactive labeled monoclonal antibodies for the treatment of patients with “relapsed” or “refractory”, low-grade or follicular B-cell NHL.  Refractory NHL is disease that never responded or has stopped responding to standard therapies.  Relapsed NHL is disease that has returned after successful initial treatment. 

Both products utilize monoclonal antibodies that target an antigen expressed by certain normal and malignant B-cell lymphocytes [CD20] combined with the killing power of radiation to eradicate tumor cells.  Zevalin® [ibritumomab tiuxetan] by Spectrum Pharmaceuticals, Inc. (SPPI) in the United States and Bayer Schering Pharma ex-United States employs yttrium-90 as its therapeutic payload, while Bexxar® [tositumomab] by GlaxoSmithKline (GSK) uses iodine-131. 

In April 2008, the European Commission extended the marketing authorization for Zevalin in Europe to include first line consolidation therapy for patients with NHL.  The decision by the European Commission to expand Zevalin’s indication was based on data from the pivotal Phase 3 First-Line Indolent Trial [FIT] demonstrating that the addition of Zevalin significantly prolonged the median progression-free survival time from 13.5 months [control arm] to 37 months [p<0.0001].  The data were presented for the first time at the 49th Annual Meeting of the American Society of Hematology [ASH] in December 2007. 

In November 2008, the FDA accepted and granted priority review status for Spectrum Pharmaceuticals’ supplemental Biologics License Application [sBLA] for expanded use of Zevalin as a first line consolidation therapy for patients with NHL.  A Prescription Drug User Fee Act [PDUFA] target date of July 2, 2009 has been established by the FDA for a decision regarding the Zevalin sBLA, although PDUFA dates appear to be a moving target with the agency nowadays. 

Assuming the sBLA is approved, which appears likely based on the European Commission decision, Spectrum Pharmaceuticals stated that Zevalin’s addressable patient population would increase by approximately 18,000.  At an approximate cost of $25,000 per treatment, the additional market for Zevalin would be worth $450 million.  Not bad. 

Unfortunately, despite the fact that both Zevalin and Bexxar have been demonstrated as safe and effective treatments for patients with relapsed or refractory NHL for years, it has been reported that fewer than 10% of patients who are candidates for the products ever receive them.  Recall the aforementioned statistic regarding NHL relative survival rates, indicating that a significant number of patients experience relapsed or refractory NHL.  According to Spectrum Pharmaceuticals, Zevalin’s annual sales in the United States were a mere $11.4 million in 2008. 

Therefore, while an expanded indication for Zevalin is nice, the fact that the product has yet to penetrate the market indication afforded approximately five years ago implies that there are other obstacles to the product’s success.  For example, while medical oncologists are the key prescribing audience for Zevalin and Bexxar, most aren’t licensed to administer radiopharmaceuticals – resulting in patient referrals to radiation oncologists and/or nuclear medicine physicians in the hospital setting.  This may provide an economic incentive to medical oncologists to exhaust all non-radioactive options, such as chemotherapy, before referring NHL patients to receive products that will not improve their bottom line.  Sad but true, this and other factors were discussed in my opinion editorial for Oncology Business Review [OBR] back in September 2007 titled “Radiopharmaceuticals Need a Jump-STaRT.” 

Spectrum Pharmaceuticals’ stock has been strong as of late – but perhaps more a result of Russell Investments adding Spectrum Pharmaceuticals to the Russell Global®, the Russell 3000® and the Russell 2000® Indexes.  For investors, significantly improved sales of Zevalin in future quarters will be much more important to Spectrum Pharmaceuticals than near-term approval of the sBLA.

# # #

About MD Becker Partners LLC

MD Becker Partners is a boutique management and strategy consulting firm focusing on both public and private companies in emerging growth industries, such as pharmaceuticals, biotechnology, medical devices, and cleantech. The firm’s mission is to bring experience-based insights gleaned from the three independent disciplines of investor relations, strategic advisory and operational improvement together and apply them to carefully conceived and expertly enacted strategies that help companies increase visibility, unlock value and access resources to grow their business. For more information, visit the website: http://www.mdbpartners.com/

Disclaimer: This article contains the author’s own opinions, and none of the information contained therein constitutes a recommendation that any particular security, portfolio of securities, transaction, or investment strategy is suitable for any specific person. To the extent any of the information contained in the article may be deemed to be investment advice, such information is impersonal and not tailored to the investment needs of any specific person.

Investor enthusiasm may be warranted, as this pathway is mutated or amplified more frequently than any other pathway in cancer. Activation of the PI3K-AKT-mTOR pathway is associated with cell survival, malignant transformation, tumor invasiveness, and resistance to chemotherapy, radiation therapy and other agents.

In terms of hierarchy, PI3K is at the top, AKT in the middle, and mTOR resides furthest downstream in the pathway. Generally speaking, activation of PI3K results in activation of AKT, which ultimately leads to activation of mTOR in a sequential manner.

Helping to validate the pathway, earlier this year Novartis (NVS) received Food and Drug Administration (FDA) approval for Afinitor® (everolimus), an oral inhibitor of mTOR, for patients with advanced renal cell carcinoma after failure of treatment with Pfizer Inc.’s (PFE) Sutent® (sunitinib) or Nexavar® (sorafenib) by Bayer HealthCare Pharmaceuticals, Inc. and Onyx Pharmaceuticals, Inc. (ONXX). Afinitor® is expected to generate several billion dollars in annual sales, as Phase 3 trials are underway to explore potential of the product in treating multiple additional cancers.

Unfortunately, it has previously been demonstrated (Cancer Res. 2008 Sep 15;68(18):7409-18) that inhibition of downstream targets such as mTOR can activate upstream targets such as AKT through various feedback mechanisms, which may eventually counteract the anticancer efficacy of mTOR inhibitors. In other words, although mTOR inhibition may initially treat the disease, it ultimately turns on a part of the pathway that leads to enhanced tumor survival.

Accordingly, the apex of the pathway (either PI3K or AKT) might be a more effective target and less susceptible to the effects of feedback loops associated with mTOR inhibition. This may explain why Sanofi-aventis (SNY) recently entered into a collaboration with Exelixis, Inc. (EXEL) that could be worth more than $1 billion for the discovery of inhibitors of PI3K for the treatment of cancer. Under the agreement, Exelixis receives an upfront payment of $140 million and guaranteed research funding totaling $21 million over three years.

The Sanofi-aventis/Exelixis collaboration appears consistent with other recent PI3K transactions. In April 2008, Roche acquired Piramed Limited, a privately-owned UK company focusing on therapeutics targeting PI3K, for approximately $175 million in cash. Back in November 2005, Piramed entered into a collaboration with Genentech, Inc. (now Roche) for the development of compounds targeting PI3K for the treatment of cancer. Under the terms of that agreement, Piramed received an undisclosed upfront payment and was eligible for milestone payments during development and on product approval up to a potential aggregate of approximately $230 million.

So it is not surprising that Keryx Biopharmaceuticals, Inc. (KERX) became yet another major beneficiary of the ASCO-effect when the company announced positive data from a Phase 2 combination study of its novel AKT inhibitor (KRX-0401, also known as perifosine) for the treatment of advanced metastatic colon cancer. Keryx also presented positive single agent Phase 2 data of perifosine in the treatment of advanced metastatic renal cell cancer – especially in patients that had previously failed treatment with mTOR inhibitors (either everolimus or temsirolimus). The company’s stock, which was trading around $0.25 at the end of April 2009, recently traded as high as $1.45 on the news. However, even with the recent increase, Keryx has a current market capitalization of just over $60 million.

The stock of AEterna Zentaris Inc. (AEZS) also rose on the news. AEterna licensed North America perifosine rights to Keryx, but kept the rest of the world rights and is seeking partnerships for Asia.

About MD Becker Partners LLC

MD Becker Partners is a boutique management and strategy consulting firm focusing on both public and private companies in emerging growth industries, such as pharmaceuticals, biotechnology, medical devices, and cleantech. The firm’s mission is to bring experience-based insights gleaned from the three independent disciplines of investor relations, strategic advisory and operational improvement together and apply them to carefully conceived and expertly enacted strategies that help companies increase visibility, unlock value and access resources to grow their business. For more information, visit the website: http://www.mdbpartners.com/

Disclaimer: This article contains the author’s own opinions, and none of the information contained therein constitutes a recommendation that any particular security, portfolio of securities, transaction, or investment strategy is suitable for any specific person. To the extent any of the information contained in the article may be deemed to be investment advice, such information is impersonal and not tailored to the investment needs of any specific person.

It is no wonder that ASCO is closely watched by biotechnology industry observers. According to the Pharmaceutical Research and Manufacturers of America (PhRMA), there are 633 medicines and vaccines developed through biotechnology in human clinical trials – the majority of them (254) for the treatment of cancer. Even more impressive, all of these products are either in human clinical trials or under review by the Food and Drug Administration (FDA).

The need for new cancer treatments and diagnostics is compelling. This year alone, the American Cancer Society estimates nearly 1.5 million new cases of cancer will be diagnosed with more than 562,000 Americans expected to die from the disease. Not only is cancer the second leading cause of death in the US (exceeded only by heart disease), the economic impact is massive. University of Chicago economists Kevin Murphy and Robert Topel reported that 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 that a cure would be worth about $50 trillion.

For biotechnology companies working in the field of cancer, double or triple-digit stock price increases from the end of April through the ASCO meeting (usually held in late May or early June) are not unprecedented. I first dubbed this the “ASCO-effect” in May 2000 while presenting a review of the top five performing stocks from companies issuing ASCO-related news from 1996 through 1999. Ironically, more than a decade has passed, but some of the same companies are once again benefiting from the ASCO-effect.

For example, Peregrine Pharmaceuticals, Inc. (PPHM), known as Techniclone Corporation at the time, saw its stock price nearly triple as a result of the ASCO-effect back in 1998. The stock, which was trading below $0.40 at the end of April 2009, recently traded as high as $1.13 on news that preliminary data from a Phase 2 clinical trial evaluating the company’s bavituximab in combination with docetaxel in advanced breast cancer patients would be the subject of an oral presentation at ASCO.

In addition, the stock of Poniard Pharmaceuticals (PARD), known as NeoRx Corporation at the time, nearly doubled as a result of the ASCO-effect in 1998. The stock, which was trading around $3.00 at the end of April 2009, recently traded as high as $5.19 on news that data from two Phase 2 clinical trials evaluating the company’s picoplatin in metastatic prostate and colorectal cancer would be presented at ASCO.

Since there are over 4,000 scientific abstracts being presented during ASCO 2009, it would be impossible to detail all of them in this setting. However, following recent positive Phase 3 results from Dendreon Corporation (DNDN) regarding its prostate cancer vaccine study; it is not surprising that investors appear to be gravitating towards companies working in the field of prostate cancer treatment. This enthusiasm only increased when Johnson & Johnson (JNJ) announced that it would acquire Cougar Biotechnology, Inc. (CGRB), a development stage company with an oral prostate cancer treatment being studied in two Phase 3 clinical trials, for approximately $1.0 billion.

With this in mind, OncoGenex Pharmaceuticals, Inc. (OGXI) appears to be one of the early beneficiaries of the ASCO-effect in 2009. The company’s stock, which was trading around $6.00 at the end of April 2009, recently traded as high as $22.00 on news that the company will be presenting final results of a Phase 2 trial of its prostate cancer treatment at ASCO. On Monday, investors will react to the data presented over the weekend.

At the start of the year I provided a positive outlook for the biotechnology industry in 2009, citing the sector’s defensive characteristics, favorable technical aspects, and improving fundamentals, such as the number of new product approvals, products in clinical trials and the brisk pace of industry consolidation and licensing transactions. With these fundamental and technical characteristics intact, it is possible that this year’s ASCO meeting could be the spark that reignites investor enthusiasm for the sector.

About MD Becker Partners LLC

MD Becker Partners is a boutique management and strategy consulting firm focusing on both public and private companies in emerging growth industries, such as pharmaceuticals, biotechnology, medical devices, and cleantech. The firm’s mission is to bring experience-based insights gleaned from the three independent disciplines of investor relations, strategic advisory and operational improvement together and apply them to carefully conceived and expertly enacted strategies that help companies increase visibility, unlock value and access resources to grow their business. For more information, visit the website: http://www.mdbpartners.com

Disclaimer: This article contains the author’s own opinions, and none of the information contained therein constitutes a recommendation that any particular security, portfolio of securities, transaction, or investment strategy is suitable for any specific person. To the extent any of the information contained in the article may be deemed to be investment advice, such information is impersonal and not tailored to the investment needs of any specific person.