Biotech continues to have a very good year, although the strong outperformance of companies in the "hot" specialty drug indications continues to skew sector performance to the upside.
Perhaps the best current examples are with companies that are targeting blood cancer indications. Many of these names saw increased valuations after the $10 BB acquisition of Onyx Pharmaceuticals (NASDAQ: ONXX) by Amgen (NASDAQ: AMGN) in August as the market attempted to price in the heightened M&A activity in the space.
We've seen similar attention given to companies targeting Amyloidosis, which is another potentially attractive area for drug developers. This is an indication that looks ripe for big pharma acquisition given the market potential and lack of competition.
Overview of Amyloidosis
Amyloidosis refers to a group of diseases that cause abnormal accumulation of proteins in the tissues of a patient. These protein masses, referred to as "amyloid deposits," grow over time. Amyloid deposits grow large enough to cause toxicity problems which can interfere with organ function after a while. Three proteins that are known to cause amyloidosis include: Amyloid Light-chain (AL), Amyloid A (AA) and Transthyretin (TTR).
Current treatments can include chemotherapeutic agents and steroidal anti-inflammatory agents, although these can only interfere with the creation of the protein deposits. Enormous unmet need remains in a true "cure" for the disease, or at least a therapy that is capable of attacking amyloid deposits once they are formed.
Only a handful of companies are targeting these forms of amyloidosis. We review three of the leading programs below -
1.) ALN-TTR02, ALN-TTRsc -- Alnylam (NASDAQ: ALNY)
ALNY has recently become one of the most expensive mid-stage biotech stocks at a market capitalization of $3.4 BB, although investors are very optimistic about the company's RNAi amyloidosis drugs. These include ALN-TTR02 and ALN-TTRsc.
The specific type of amyloidosis that is being targeted by Alnylam is TTR-mediated amyloidosis (also known as ATTR), which is caused by mutation of a protein called transthyretin. A mutation of the gene that codes for transthyretin causes changes in the protein structure, which changes the solubility of the protein and leads to buildups of transthyretin in unwanted places.
A Phase I top-line data release by Alnylam for its ALN-TTRsc development program in July had a very noticeable impact on the rate of Alnylam's ascension. This specific program is developing a subcutaneously administered RNAi therapeutic for TTR mediated amyloidosis, which can be targeted through inhibition of the transthyretin (TTR) gene.
In the Phase I trial, the company reported a statistically significant (p<0.01) knockdown of TTR concentration in the serum of over 80% of patients, implying that the RNA interference mechanism of action is still working as intended. Still, it should be said that Phase I data is not a reliable indicator of drug efficacy.
The program's intravenous TTR Amyloidosis product, ALN-TTR02, saw similar results in its own Phase I and II trials. The most recent Phase II data showed a sustained drop in transthyretin comparable to that of the subcutaneous data, which gives the company the green light to move into Phase III development.
The commercial potential of ALN-TTR02 and ALN-TTRsc is enormous - expected to be in the $1-2 B range. This may lead to an acquisition by Novartis given that the first late-stage trial goes well, which would make sense since the company already holds a large block of shares.
2.) TTR Rx - ISIS (NASDAQ: ISIS)
ISIS Pharma is utilizing its antisense platform technology to also target transthyretin amyloidosis, although the TTR program has been licensed to GlaxoSmithKline (NYSE: GSK). While this significantly limits potential revenues from the indication, it provides the company with future milestone revenues (if successful) and supports the notion that big pharma is very interested in the amyloidosis indication.
TTR Rx was given fast track designation last year following Phase I data that was presented with partner GSK. The drug achieved mean reductions of 44% and 81% in serum TTR levels in 200 and 400 mg cohorts, although the Phase I study was primarily designed to study safety at those dose levels.
GSK is expected to complete the Phase II/III TTR study in the first quarter of 2017, so investors should not be expecting anything soon. It should also be noted that most of ISIS' valuation is not comprised of its potential in amyloidosis at this point. The GSK partnership, and possibly some of the GSK acquisition potential, is priced into ISIS' $3.7 B valuation.
3.) NEOD001 - Prothena (NASDAQ: PRTA)
Prothena's flagship drug targets a different type of amyloidosis known as Amyloid Light-chain amyloidosis, which is only diagnosed in 2,000-3,000 patients per year in the US. NEOD001 works through a very different mechanism in that it does not work through manipulation of the transcription process of amyloid proteins. NEOD001 is a monoclonal antibody, and binds directly with the target proteins to cause their elimination.
Previous studies performed with Prothena's platform in mice show that antibodies interact with multiple types of amyloids (AL, AA), which allows for potential expansion of the indication.
NEOD001 is currently in a Phase I trial that is expected to end in 2016. The trial will also establish the dosing levels that will be used in future trials, and will also provide the first evidence of NEOD001 efficacy in humans. Specifically, the company will look for interaction between the monoclonal antibody and light-chain amyloids. The "lasting power" of the monoclonal antibodies in the body will also be examined, since this is crucial for determining the optimal dose.
Prothena's NEOD001 is less developed than GSK's TTR Rx and ALN-TTR02/ALN-TTRsc, although investors should note that the valuation is significantly lower (at $357 MM). Also important to realize is that NEOD001 targets a different indication with a different mechanism, while TTR Rx and ALN-TTR02/ALN-TTRsc both target production of Transthyretin at the genetic level.
Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it. I have no business relationship with any company whose stock is mentioned in this article. (More...)
No comments:
Post a Comment