Keryx: Another Beneficiary of the ASCO Effect

In my prior article, I highlighted the “ASCO-effect," which relates to the fact that biotechnology companies working in the field of cancer can experience double or triple-digit stock price increases from the end of April through the American Society of Clinical Oncology (ASCO) annual meeting. Beyond the names previously mentioned, investors also appear to be quite interested in oncology companies developing therapies that inhibit key targets along the PI3K-AKT-mTOR signaling pathway.

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 (RHHBY.PK)) 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.

Disclosure: No positions

Comments

[Ridge Hill ...:]

Aezs...its in phase 3 trial for centrolix ...the main driver and for BPH
signed deal with santofil for over 4 bucks a shares trades less than that

a real sleeper......perifsonie isnt even in the share price of aezs

my largest non gold investment

Jun 03 08:28 AM

[svygear:]

please see ACCP.Ob in the oncology space - latest press release is:

Access Pharmaceuticals (ACCP.OB) provides an update on ProLindac(TM) Phase 2 Ovarian Cancer Trial : ProLindac Showing High DACH Platinum Activity; Drug Well Tolerated With No Signs of Acute Neurotoxicity

pitch.pe/13850

Jun 03 11:06 AM

[D Smith:]

I had understood from colleagues that attended ASCO that the clinical data on several of the PI3K trials was far less than stellar, which leaves me scratching my head wondering what Sanofi knows that we don't. Does anyone have any thoughts?

Jun 04 01:37 PM

[Michael Becker:]

Excellent question. However, the antitumor activity demonstrated with most "single-agent" Phase 2 or 3 studies using signal transduction inhibitors (STI's) is low. For example, the objective response rate (ORR, determined by the percentage of patients achieving either a complete or partial response) demonstrated in an early Phase 2 trial of ImClone's Erbitux (cetuximab) was only 9% in a 57 patient colorectal cancer study, yet that product went on to become a blockbuster. Similarly, the ORR in a Phase 2 trial of Genentech's Avastin (bevacizumab) in metastatic renal-cell carcinoma was only 10% in a 39 patient study. Lastly, the ORR in a Phase 3 trial of Onyx Pharma's (ONXX) Nexavar (sorafenib) in advanced clear-cell renal carcinoma was only 10% in a 451 patient study. Few would argue with the subsequent commercial success of any of those products. STI's typically demonstrate more robust activity in combination studies using synergistic agents, which may partially explain the recent announcement by Merck (MRK) and AstraZeneca (AZN) to develop their respective STI's in combination.


On Jun 04 01:37 PM D Smith wrote:

> I had understood from colleagues that attended ASCO that the clinical
> data on several of the PI3K trials was far less than stellar, which
> leaves me scratching my head wondering what Sanofi knows that we
> don't. Does anyone have any thoughts?

Jun 06 08:17 AM

[somadude:]

If all this is true why is KERX falling like a lead balloon after the initial rise. I see no new news to cause a sel off? Someone know something I don't?

Jun 09 02:12 PM