Pharmaceutical Companies Coley, Idera, Dynavax: Leaders in the Use of TLRs

Includes: COLY, DVAX, IDRA
by: Anthony Payne

Among the many different receptors that participate in the recognition of microbial invaders, toll-like receptors [TLRs] play an essential role in mediating the innate immune response. The responses of the immune system can be divided into two broad types - innate and adaptive immunity.

The adaptive immune responses is a powerful system and one of the main mechanisms the body uses to fight disease, but it has the limitation in that it takes time to develop and respond to infections, typically four to seven days. In many infections, that would give an invading pathogen enough time to take over the entire body and inflict fatal damage, so to control infections is vital during the first few days. The body relies on the evolutionarily ancient and more universal innate immune system. The adaptive immune system recognizes foreign attackers through T and B cell receptors on the surface of white blood cells which allows them to respond to individual antigens.

In contrast, innate immunity works through a more general set of recognition molecules called pattern recognition receptors (PRRs). These are evolutionarily ancient proteins, which seem to have evolved originally to allow the body to distinguish “self” from “non-self” during development, but are also important in fighting diseases. There are various groups of pattern recognition receptors, some of which are secreted from cells, while others expressed on the cell surface or in intracellular compartments. Part of this system are TLRs which seem to be one of the most ancient and conserved parts of the immune system.

Ten different TLRs have been identified in humans and the overlap between them allows recognition of a diverse range of pathogens. Drug development efforts in a number of companies, we profile in this article, have focused primarily on compounds targeting one specific TLR, known as Toll-like receptor 9 (TLR9).

TLR9 is found in certain human immune cells. TLR9 functions to detect a pattern that is present in the DNA of invading intracellular pathogens, but is not present in the body's own DNA. When TLR9 detects this pattern, which is called a CpG motif, it triggers a response. TLR9 agonists are usually oligonucleotides comprising short, DNA-like sequences, which mimic the CpG motifs found in some intracellular pathogens, thereby triggering the body's immune response. When TLR9 is stimulated,the companies believe, it triggers both the innate, or short-term, immune response, and adaptive, or sustained, immune response which is being used for the potential treatment of cancers, infectious diseases and asthma and allergy.

Corporate profiles

In this article we profile three companies, Idera Pharmaceuticals (IDP), Coley Pharmaceuticals (COLY) and Dynavax Technologies Corporation (NASDAQ:DVAX) who are using this technology to develop drugs.

Idera Pharmaceuticals

In December 2006 IDERA (IDP) announced an agreement with Merck (NYSE:MRK) to research, develop and commercialize vaccine products containing IDERA’s compounds targeting certain toll-like receptors (TLR’s) in the fields of oncology, infectious diseases and Alzheimer’s disease. Under the terms of the agreement with Merck, Merck was granted worldwide exclusive rights to a number of IDP’s agonist compounds targeting TLR7, 8 and 9 for use in combination with Merck’s therapeutic and prophylactic vaccines under development.

IDERA is also collaborating with a European pharmaceutical company, Novartis (NYSE:NVS), for the discovery, optimization, development and commercialization of IMO drug candidates targeting asthma and allergy. No products from this collaboration are yet in clinical trials. One of IDP’s molecules, called IMOs (Immune Modulatory Oligonucleotide), IMO-2055, is in Phase II clinical trials against renal cell carcinoma. The molecule is an agonist for TLR9. In February 2007 IDP was issued a patent covering oligonucleotides which activate toll-like receptors. IDP has a long history in the use of therapeutic oligonucleotides and has 140 patents or patent applications simply in the area of immune stimulation.

IDP 1-yr chart

Coley Pharmaceuticals

Coley Pharmaceuticals (COLY) product, CPG 7909 (PF-3512676), licensed to Pfizer in May 2005, also targets TLR9 and is in Phase III trials. In November 2005, Pfizer initiated two pivotal international Phase III clinical trials as a first-line treatment of advanced non-small cell lung cancer [NSCLC] in combination with standard of care chemotherapy and to compare efficacy and safety to standard of care chemotherapy. Further studies in earlier trials against breast cancer and with different combinations of existing therapies for NSCLC are also being conducted by Pfizer (NYSE:PFE).

COLY also has an agreement with Sanofi-Aventis (NYSE:SNY) for the development of certain TLR Therapeutics for the treatment of asthma, allergic rhinitis and chronic obstructive pulmonary disease. Sanofi-Aventis completed a Phase I clinical study of one of the TLR Therapeutics in 2004 COLY is also was working in Hepatitis C but in January 2007 the company suspended the independent development of ACTILON, its product candidate for the treatment of Hepatitis C virus [HCV] infection, based on clinical data obtained from two separate clinical trials evaluating ACTILON for use among treatment-refractory patients with HCV.

Both COLY and IDERA have vaccine adjuvants acting to enhance the effect of vaccines; IDERA has Amplivax licensed to the Immune Response Corporation for use with the HIV vaccine under development and Coley has VaxImmune a TLR9 agonist used as an adjuvant in infectious disease and cancer vaccines, licensed to Novartis and GSK.

COLY 1-yr chart

Dynavax Technologies Corporation

Dynavax (DVAX) is another company competing in this race. Their TLR9 agonists are based on immunostimulatory sequences, which are short DNA sequences that enhance the ability of the immune system to fight disease and control chronic inflammation. In January their lead program TOLAMBA, a ragweed allergy immunotherapeutic, produced disappointing interim results and ongoing development strategy is being reviewed. Other programs are HEPLISAV [TM], a hepatitis B vaccine is in Phase 3; a therapy for non-Hodgkin's lymphoma [NHL] in Phase 2; and a therapy for metastatic colorectal cancer in Phase 1. Pre- clinical asthma and chronic obstructive pulmonary disease [COPD] programs are partnered with AstraZeneca. Its program against Hepatitis C [HCV] entered Phase I clinical trials in January 2007.

DVAX 1-yr chart

Investment Summary

The obvious take-away from the large pharmaceuticals companies mentioned above is evidence of the interest in these receptors and their possible use in disease treatment. The collaborations serve to support the technologies of the companies. All three companies are valued below $250 million; IDB is the lowest at $150 million, then DVAX at $190 million and COLY at $230 million.

The stock performance of IDB has been better recently; DVAX has been badly affected by the results from the ragweed allergy trial. COLY has been disappointing over the past 12 months. Trading volumes in all three stocks is thin especially IDP; average 3 month volume is IDP (100K), COLY (116K) and DVAX (433K), the latter volume reflects the increase in volatility surrounding its recent ragweed trial failure. COLY stock has been eroding gradually for over 12 months and is close to its 52 week low, whereas IDP which has been trading at very low levels for a number of years, is near its high. DVAX is also near its low for the year due to the significant drop associated with the disappointing Phase III results. We believe the technology is very exciting but somewhat early stage with corresponding risks. The broad interest from the pharmaceutical community is impressive but not conclusive, as the amount invested so far has been small.

The valuations are quite low for all three companies and well below peers with equivalent stage clinical pipelines. Analysts appear to favor COLY at present, with opinions and breadth of coverage which appears to support our view that it is probably the company most likely to see good stock appreciation in the near term.

Disclosure: Author has no position in any of the above-mentioned companies