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In the first part of this series, the role of big, free-flowing pipelines in successful investments in small biotechnology companies were discussed. Big pipelines are vital to biotechnology and pharmaceutical companies. Biotechnology companies running large number of programs in their pipelines not only increase their chance of having successful compounds, but most importantly, it protects against substantial loss when one drug candidate does not meet expectations. The recovery of Antares Pharma (AIS) shares after the Biosante (BPAX) Libigel fiasco is a case in point. Failure in compounds is inherent in the drug development process. This is risky business. However, with proper diligence and patience, investors in small biotech companies can be immensely rewarded. As mentioned in the first part of this series, risk mitigation in the small-biotech sector requires that investors find companies with big, free flowing pipelines.

Astex Pharmaceuticals (NASDAQ:ASTX) and Exelixis (NASDAQ:EXEL) at market capitalizations of 260 million and 800 million, respectively, have solid pipelines and partnerships.

Astex Pharmaceuticals

Astex Pharmaceuticals, headquarted in Dublin, California, specializes in areas of oncology and hematology. Using their fragment-based drug discovery platform, Pyramid, Astex has generated a large number of lead compounds in areas such as oncology, inflammation, viral infection, inflammation and Alzheimer's disease. The company has one FDA-approved product, Dacogen, and many more molecules in their clinical pipeline with a large number of those in partnership with big pharmaceutical companies. Their approved product, Dacogen, is indicated for myelodyplastic syndromes, and is estimated to receive over 60 million in royalties for fiscal year 2011 from their partner Eisai (OTCPK:ESALY). The revenue from Dacogen is adding to the company's extremely strong balance sheet. At 125 million dollars, Astex's cash and equivalents represent half of the company's market capitalization. In addition, Dacogen is seeking FDA approval in the treatment of acute myelogenous leukemia-further expanding treatment indications and revenue for this compound.

With 15 programs-many of which are partnered with big pharma-currently underway, Astex has an impressive and robust pipeline. This is a testament to the lead-generating ability of Pyramid.


Product

Partner

Indication

Clinical Trial Status

Decitabine (Dacogen)

Eisai, Johnson & Johnson (NYSE:JNJ)

Myelodisplastic syndromes

FDA approved and marketed

Decitabine (Dacogen)

Eisai, Johnson & Johnson

Acute myelogenous leukemia

NDA, with a PDUFA date of March 6, 2012

AT13387

Astex

  1. Advanced refractory tumors
  2. Refractory gastrointestinal stromal tumors
  1. Phase I for advanced refractory tumors
  2. Phase II for refractory gastrointestinal stromal tumors

SGI-110

Cancer centers/Stand Up to Cancer Epigenetics Dream Team

Relapsed/refractory myelodisplastic syndromes

Phase I-2

SGI-110

Astex

Cancer centers/Stand Up to Cancer Epigenetics Dream Team

Relapsed/refractory acute myelogenous leukemia

Phase I-2

Amuvatinib/MP-470

Astex

Small cell lung cancer

Phase II

AT7519

Novartis (NYSE:NVS)

Multiple myeloma

Phase II

LEE011

Novartis

Cancer

Phase I

AZD5363

AstraZeneca (NYSE:AZN)

Advanced solid tumors

Phase I

FGfr Inhibitor

Janssen

Cancer

Candidate Selected

AZD3839

AztraZeneca

Alzheimer's disease

Phase I

AT9283

Astex/Cancer Research UK

  1. Solid Tumors
  2. Pediatric Solid Tumors

Phase I

AT9283

Astex/NCIC Clinical Trials Group in Canada

  1. Refractory multiple myeloma
  2. Pediatric leukemia

Phase II

Multiple targets

GlaxoSmithKline (NYSE:GSK)

Multiple targets (confidential)

Discovery

Oncology targets

Janssen

Cancer targets (confidential)

Discovery

Astex Pharmaceuticals has a market capitalization of 260 million and currently trading at 2.79 with a 52-week range of 1.51-3.35. The company has 125 million in cash and equivalents and no debt.

Exelixis

With a vast number of cancer compounds in their pipeline, the primary focus of Exelixis is in the oncology space. Their lead compound, cabozantinib, alone, has 14 clinical programs in various stages of development for multiple types of cancer. Cabozantinib has shown promise in the treatment of advanced renal cell carcinoma and medullary thyroid cancer with a high probability of FDA approval for the latter indication. However, prostate cancer has a larger market potential and Exelixis is pursuing this avenue as cabozantinib is in Phase II studies for this indication. Past studies have demonstrated that this compound is very effective in reducing pain in prostate cancer patients, but overall survival data is lacking at this point.

Cabozantinib:

Indication

Clinical Trial Status

Medullary thyroid cancer

Phase III

Metastatic castration-resistant Prostate Cancer

Phase II (Non-Randomized Extension)

Ovarian cancer

Phase II (Non-Randomized Extension)

Breast cancer

Phase II (Randomized Discontinuation Trial)

Gastric/GE junctional cancer

Phase II (Randomized Discontinuation Trial)

Hepatocellular carcinoma

Phase II (Randomized Discontinuation Trial)

Melanoma

Phase II (Randomized Discontinuation Trial)

Castration-resistant prostate cancer

Phase II (Randomized Discontinuation Trial)

Non-small cell lung cancer

Phase II (Randomized Discontinuation Trial)

Ovarian cancer

Phase II (Randomized Discontinuation Trial)

Pancreatic cancer

Phase II (Randomized Discontinuation Trial)

Small cell lung cancer

Phase II (Randomized Discontinuation Trial)

Differentiated Thyroid Cancer

Phase IB

Renal Cell Carcinoma

Phase IB

Exelixis has been working hard in securing resources and capital for the continued development of cabozantinib as this molecule can become a blockbuster and redefine the company. The licensing of compounds in their pipeline to big pharmaceutical/biotechnology companies adds to Exelixis' cash position without additional dilution. Although this strategy gives up some ownership of promising programs, it validates the drug discovery capability of the company and current molecules outside of cabozantinib. Arguably, cabozantinib, especially for prostate cancer, is the biggest compound and indication in the company's future at this point, but one must not lose sight of the other indications for cabozantinib and the promising drugs in the pipeline. There are currently 13 partnered compounds with each being explored for several indications and 5 molecules available for partnering.

Partnered Compounds:

Compound

Partner

Indication(s)

Clinical Trial Status

XL880

GlaxoSmithKline

Multiple Cancers

Phase II

XL147

Sanofi-Aventis (NYSE:SNY)

  1. Advanced or recurrent endometrial cancer
  2. Metastatic breast cancer
  3. Solid tumors
  4. Lymphoma

Phases I-II

XL765

Sanofi-Aventis

  1. Malignant gliomas
  2. Solid tumors

Phases I-II

XL518

Genentech/Roche (OTCQX:RHHBY)

Solid tumors

Phase I

XL652/XL041

Bristol-Myers Squibb (NYSE:BMY)

  1. Cardiovascular disorder
  2. Metabolic disorder

Phase I

XL139

Bristol-Myers Squibb

  1. Metastatic gastric, gastroesophageal, or esophageal adenocarcinomas
  2. Small cell lung cancer
  3. Multiple myeloma
  4. Advanced or metastatic cancer

Phases I-Ib

XL281

Bristol-Myers Squibb

Tumors

Phase I

XL475

Bristol-Myers Squibb

Metabolic disorders (diabetes)

Preclinical

XL550

Daiichi-Sankyo (OTC:DSKYY)

  1. Cardiovascular disorders
  2. Metabolic disorders

Phase I

PI3K (isoform selective)

Sanofi-Aventis

Undeclared/Cancer

Preclinical

ROR antagonists

Bristol-Myer Squibb

Undeclared/Inflammatory conditions

Preclinical

FXR

Wyeth/Pfizer (NYSE:PFE)

  1. Metabolic disorders
  2. Liver disorders

Preclinical

XL499

Merck (NYSE:MRK)

  1. Rheumatoid arthritis
  2. Allergic asthma
  3. Lymphoma

Preclinical

Compounds Available For Partnering:

Compound

Indication(s)

Clinical Trial Status

XL228

  1. Advanced malignancies
  2. Chronic myeloid leukemia/Philadelphia-chromosome-positive acute lymphocytic leukemia

Phase I

XL413

Tumors

Preclinical

XL888

Solid tumors

Phase I

XL 388

Tumors

IND

XL541

Tumors including:

  1. Lung cancer
  2. Ovarian cancer
  3. Melanoma
  4. Glioma

Developmental candidate

Exelixis has a market capitalization of 800 million and currently trading at 6.47 with a 52-week range of 3.94-12.82. The company has 220 million in cash and equivalents and 210 million in short and long-term debt.

Disclaimer: All information is provided for informational purposes only and does not serve as investment advice or an offer of management services. There is no guarantee that the information is accurate. All information is subject to change, amendment, and correction without any notice. Any mention of current and past results does not indicate any future expectations or results. All investments are associated with risks and loss of money. Consult with a professional tax, accounting, legal, and/or investment advisor before making any investment decision.

Source: Big, Robust Pipelines At Small Biotech Companies