By Patrick Crutcher
There are some exciting catalysts coming up in the 1st and 2nd quarter in biotech that investors should keep an eye out for. Below we present 3 biotech companies that have potential to deliver above average gains. We will continue to keep readers up-to-date on any developments at these companies over the coming months.
Cleveland BioLabs Inc. (CBLI) looks primed to hear news about a government grant related to their CBLB502 program. In just the past few weeks, the U.S. Biomedical Advanced Research and Development Authority (BARDA) has filled several contracts that had been expected for sometime. It appears that BARDA-HHS is finally making it’s way through their backlog of applications and getting funding out there. In CBLI’s recent presentation at BIO CEO, management noted that they expect a grant from BARDA-HHS to be over $50 million. We think that more financial commitment from the US government could eventually lead to foreign development contracts with countries like Israel. This grant also sets them up for a potential buying Request for Proposal from BARDA for a radiation countermeasure later this year. Of companies competing for these contracts, CBLI is by far the most advanced program in this field, in terms of their lead drug and time to market. Their treatment protects 2 important body systems, the blood and gastrointestinal tract, that are crucial to improving survival in acute-radiation syndrome (ARS). All of this additional funding will help CBLI further support CBLB502 thru development in ARS to eventual FDA approval and stockpiling.
Another benefit of CBLB502 is the reduced regulatory pathway due to the Animal Efficacy Rule, which is applied to drugs where the efficacy cannot be directly tested in humans due to ethical reasons. This allows them to bypass large Phase 3 studies, by demonstrating safety in humans and efficacy in 2 animal models along with GMP validation (related to manufacturing). They will be meeting later this year with the FDA to plan out their definitive safety study in humans and complete their pivotal animal effifacy study in primates. The expectation is that these studies, in conjunction with scaling up manufacturing, could lead to a BLA filing with the FDA in early 2012. They are also exploring CBLB502’s role as supportive therapy for cancer patients that have recently received total body irradiation. Their pipeline is also full of potential with CBLB612, as a stem cell inducing agent, which one could see as a competitor to Amgen’s billion dollar drug, Neupogen. They have adequate funding for 2011 and beyond; we expect additional government support to provide more financial stability.
Aastrom Biosciences (ASTM) is a stem-cell company that has a few upcoming catalysts that should get some attention. In relation to their autologous cell therapy in patients with critical limb ischemia (CLI), we expect an update on their SPA negations for "no option" CLI patients and full 12-month amputation-free survival results from the Phase 2b study in the second quarter, as the last of patient follow-ups is in March. These Phase 2b 12-month AFS results should give us a clearer picture of efficacy, as they had an unusually low event rate in the placebo arm at 6 months. They will be conducting two Phase 3 trials of their TRCs in CLI, one for those at are "no option" and one for "poor option." Management expects to begin the Phase 3 trial in "no-option" patients in the second quarter. The second Phase 3 trial will likely start later in 2011. This program has received Fast Track designation from the FDA.
Later this year, we also expect to hear 12-month data from the Phase 2 IMPACT-DCM trial and 6-month results from the DCM Catheter Phase 2 in 3Q-2011. We also anticipate the initiation of a Phase 2b in DCM (Catheter) later in the year, closer to 4Q. Aastrom has adequate cash on hand for 2011; they ended 2010 with about $31 million in cash. Positive outcomes from the 12-month AFS data and FDA SPA negotiations could make their partnership prospects more fruitful in 2011.
Spectrum Pharmaceuticals (SPPI) has an upcoming dance with the FDA for their sNDA for FUSILEV (levo-leucovorin) for use in advanced metastatic colorectal cancer (mCRC) patients and a Zevalin label adjustment request. SPPI received a CRL for their FUSILEV sNDA back in October 2009, with the FDA citing that their sNDA "did not demonstrate that FUSILEV is non-inferior to leucovorin." In brief, FUSILEV contains the active isomer of leucovorin, which is used to protects against the toxic effects of methotrexate, a chemotherapy agent. No new trial data was submitted for the FUSILEV sNDA, a decision which was based on their meeting with the FDA in January 2010. The expectation among analysts is that the FDA will approve the sNDA this time around. This seems likely given the shortages of leucovorin, approval status in mCRC in the EU for over a decade and its’ status as a reimbursable alternative to the generic for mCRC. Current shortages from generic suppliers of leucovorin helped boost their anticipated revenue for 4Q and FY2010, due to increased sales of FUSILEV.
On January 20th, they submitted a request to have the bioscan requirement removed from the Zevalin label; an FDA response is expected within 60 days. Zevalin is an FDA-approved and currently marketed for the treatment of non-Hodgkin’s lymphoma. Many see Zevalin as the main valuation driver over the next 12-24 months and see the bioscan removal as crucial to further market penetration. Data from over 8000 patients was submitted supporting their case (less 1% had an abnormal scan) and no new trials were required based on discussions with the FDA. Removal of the bioscan reduces the financial burden of treatment, reduce the overall treatment time required from 7-10 days to a short 1-day outpatient procedure. With regards to marketing the drug, additional long-term survival data at ASH 2010 demonstrating robust survival that could also help further adoption among oncologists.
We see additional upside coming later this year with updates on belinostat and apaziquone. They will complete enrollment in a pivotal study for PTCL, begin a rolling NDA filing in 2011 and expect to see Phase 2 data in cancer of unknown primary site in 3Q-2011. Apaziquone top-line results aren’t expected until 2012, but we could see an update at ASCO 2011 in June. We also are excited by their endeavors into developing a biosimilar version of Rituximab, a monoclonal antibody that did $5.6 billion in revenue in 2009. SPPI had more than $100 million going into 2011, which should adequately support their business into 2012, especially with the potential for increased sales of Zevalin and FUSILEV.
Disclosure: Long ASTM, CBLI and SPPI