Upcoming Events: Phase 2 human growth hormone (hGH-CTP) results Q3 2011 (interim results could come sooner).
Prolor Biotech (PBTH.OB) – based in Nes-Ziona, Israel engages in the development and commercialization of bio-better proteins and peptides. Utilizing their proprietary CTP enhanced recombinant proteins, the company aims to leverage its technology platform to provide new, enhanced versions of current recombinant proteins in a safe, efficacious, and reliable manner. By utilizing this strategy, Prolor hopes to achieve less expensive and faster clinical trials since endpoints and study protocols will be the same as those used for existing therapies. Additionally, Prolor believes its strategy of targeting therapeutic proteins already approved by the FDA, with proven safety and efficacy, allows them to lower the risk profile of their proprietary development portfolio compared to de novo therapeutic protein development.
Background: Originally, researchers at Washington University in St. Louis discovered a naturally occurring 28 amino acid long sequence (dubbed CTP) at the end of the protein that was responsible for the increase in hCG (human chorionic gonadotrophin, life span of up to 2 days) vs. LH (luteinizing hormone, life span of ~20 minutes) which have very similar chemical composition. Through numerous experiments, the researchers confirmed that CTP was responsible for the longer life span of hCG as compared to LH. Washington University in St. Louis now licenses the technology exclusively to Prolor [with the exception of 4 proteins (FSH, hCG, LH, TSH) licensed to Merck (MRK)]. Merck has gone ahead and developed FSH-CTP and received approval in the EU. This treatment (Elonva) replaces seven daily injections of FSH for a single one of FSH-CTP, providing a solid proof of concept.
Attention is currently focused on the lead drug candidate hGH-CTP, a modified form of human growth hormone which is currently in Phase 2 trials and has received orphan drug status in both adults and children. Recently, on Feb. 9, the Independent Data Safety Monitoring Board reviewed safety data and concluded the study was safe to continue as planned. The study has enrolled approximately 50 adult patients, split into 4 cohorts, given repeating injections with escalating doses weekly or 2x per month. Previously, all were on daily hGH treatment. IGF-1 (an accepted marker of hGH activity) levels will be measured to select proper dosing for a potential Phase 3 trial. While many drugs fail in Phase 2, I believe Prolor has an above-average chance of success given its promising Phase 1 results. In the Phase 1 trial, 24 healthy adults were given one of three doses of hGH-CTP or placebo, and their IGF-1 activity was measured.
The study results suggested that the daily injections required by patients using conventional hGH could potentially be replaced with just two monthly injections of hGH-CTP. While this by no means guarantees success in hGH deficient adults, the predictable behavior of the hGH-CTP (judged by the IGF-1 monitoring levels) provides reasonable predictive power in the current trial. The study is scheduled to be completed in 2Q 2011, with top-line data reported in 3Q 2011. Current treatment for hGH deficiency generally involves daily injections (2-7x per week), allowing Prolor to potentially corner large portions of the ~$3 Billion hGH market. However, the market is currently crowded with five producers of hGH, making this a potential challenge. The hGH-CTP program is scheduled to begin in children later this year, which presents a particularly significant market opportunity given the difficulty of multiple injections in children. Following approval, Prolor can be expected to take significant market share in this indication.
Competitive Landscape: Prolor is by no means the first pharmaceutical firm to take a look at long-lasting versions of recombinant proteins. A survey of the field reveals PEGylation (attachment of polyethylene glycol polymers to the protein of interest) and glycosylation (alterations of the structure generally required) as the preferred techniques. Schering-Plough’s (SGP) PEGIntron and Roche’s (RHHBY.PK) Pegasys are both PEGylated forms of interferon alpha for the treatment of Hepatitis C. Amgen’s (AMGN) Neulasta is a PEGylated form of G-CSF for the treatment of neutropenia and Amgen’s Aranesp is a glycosylated form of erythropoietin for the treatment of anemia. Enzon’s Oncaspar is PEGylated form of L-asparaginase for the treatment of acute lymphoblastic leukemia in patients who are hypersensitive to the native unmodified form of L-asparaginase. Collectively these drugs bring in annual revenues of over $8 Billion. For all their success, the above techniques have significant drawbacks. In general, PEGylation is only applicable to larger proteins and requires larger dosing due to lower activity (the protein is masked by the polyethylene glycol!). With glycosylation, development is a challenge (modification of protein structure and identification is not straightforward) and the new structures are sometimes targeted by the immune system (immunogenicity).
Novo Nordisk (NVO) announced this past fall that they would be terminating their PEGylated hGH program due to an administration profile requiring more than 1 injection per week. This further serves to highlight the challenges in dealing with long-lasting therapeutics. Ambrx and Merck-Serono are collaborating on a PEGylated hGH formulation as well, and while announcements were made about Phase 1 and 2 trials around 2007-2008, I have been unable to ascertain the status of the program.
Pipeline: While the lead candidate (hGH-CTP) is in Phase 2 trials, the pipeline contains various early-stage candidates. Most promising is the factor IX – CTP program for the treatment of hemophilia B (patients with this disease have low levels or are missing a critical blood-clotting protein, factor IX), a smaller (~$700 MM) but fast growing market (~14% annually) with clear room for improvement. In preclinical models, mice treated with Prolor’s long-lasting treatment lost half as much blood as the beneFIX (current marketed drug) treated mice did, and approximately 1/3 as much as the untreated group. In second bleeding events the beneFIX treated mice bleeding persisted over 3x as long compared to the Factor IX - CTP. Furthermore, the Factor IX - CTP group experienced no spontaneous rebleeding events 12 hours post-second bleeding event, compared to 50% for the beneFIX group. Prolor intends to begin roughly a 70 patient Phase 2 trial sometime in 2012. We believe these preclinical models are promising and bode well for this Phase 2 trial. From an investor standpoint, treatments for hemophilia can move through clinical trials quickly and inexpensively (smaller patient sizes required) because Phase 1 can be skipped.
Prolor also has a long-lasting protein in preclinical development for the treatment of obesity (by targeting the body’s natural hunger mechanism) with a new platform involving reversible PEGylation. While details are thin on this project, some of the preclinical and scientific publication data are promising (suppression of appetite without loss of energy levels). Overall, I view this project as highly speculative given the FDA’s strict approach to obesity drugs [ask Arena (ARNA), Vivus (VVUS), and Orexigen (OREX) investors!]. Any compound at this stage of development for an obesity indication must be viewed as extremely risky.
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While the SEC Form 10-k filed in 2010 points an Epogen-CTP program, to the best of my knowledge this has been put on hold. This should not be viewed as a large negative due to the fact significant improvements over Amgen’s Aranesp would need to be realized in order to take significant market share. It also appears that at this time Prolor will not pursue development of its Interferon b program.
Fundamentals: According to the most recent 10-q filed with the SEC (9/30/10), and with its equity raise in early 2010 of $24. 4 MM, the company has a strong balance sheet and relatively small cash burn and expects this to last through 2012. The company has 54 MM shares outstanding, and 60 MM fully diluted.
Conclusion and Future Directions: Overall, I believe Prolor’s higher risk obesity program offers significant potential upside in addition to its (relatively) lower risk hemophilia and growth hormone programs. More globally, I view the approach of greatly improving existing biologics by increasing their therapeutic life as an attractive niche and believe Prolor possesses a respectable competitive advantage in this area (as judged by the competition abandoning their extended release projects). While questions remain to be answered concerning Prolor’s potential market share, the data suggest it could be significant given the large decreases in administration of hGH (and therefore, convenience) with what appears to be similar efficacy, especially in the potential pediatric indication. A strong marketing/distribution agreement might help in this regard. Over the long-term I believe that Prolor’s proprietary CTP system mitigates the high risk of drug development relative to completely novel formulations, given its improvements over the current technology and European approval of Merck’s Elonva.
Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.
