Cephalon’s New CLL Drug Should Please Patients and Investors

For the first time in seven years, a new therapy for Chronic Lymphocytic Leukemia [CLL] has been cleared in the U.S. by the FDA. Biotech firm Cephalon’s (CEPH) Treanda (bendamustine hydrochloride) was given final approval by the FDA on March 20, only six months after the company submitted the NDA in September of 2007.

CLL is one of the four main types of leukemia, and is characterized by a slow progression of abnormal white blood cells (lymphocytes) in the bone marrow, usually spreading to other parts of the body, including lymph nodes, liver, spleen, and the central nervous system.

A particular lymphocyte, the B cell, is affected. This pathological B cell then divides and accumulates in the bone marrow, leaving little room for healthy lymphocytes. This leaves patients with a weakened immune system to fight off infections.

The condition is usually diagnosed in white males of older age, with more than 75% of those diagnosed over 50 years old. The latest estimates peg the number of new CLL cases in the US at over 15,000 in 2007, with about 4,500 deaths.

While CLL is technically incurable, it is manageable and patients do have various options in prolonging their quality of life. Treating CLL is focused on managing symptoms rather than an outright cure.

CLL therapy has been shown to be far superior when used as a combination of agents; principally purine analogues combined with monoclonal antibodies.

Bayer Schering Pharma’s (BYERF.PK) Fludara (fludarabine) and GlaxoSmithKline’s (GSK) Leukeran (chlorambucil) are purine analogues which are usually designated as primary therapy. Monoclonal antibodies used in combination with purine analogues include Roche’s (RHHBY.PK) MabThera (rituximab) and Bayer Schering Pharma’s MabCampath (alemtuzumab).

Enter Cephalon’s Treanda, which has been shown to be far superior to using chlorambucil in CLL patients. In an international study of over 300 patients suffering from CLL, and who have never been treated for the disease, Treanda showed a longer progression-free survival rate of 18 months versus 6 months for those taking chlorambucil, and the response to Treanda lasted on average 19 months, much longer than that seen in patients taking chlorambucil (7 months).

Treanda is expected to be available to U.S. doctors in April of 2008, and gives CLL sufferers a new treatment option for the first time since 2001. It also received Orphan Drug Designation by the FDA, which gives Cephalon market exclusivity in the U.S. until 2015.

New competition is on the horizon, however, as two clinical stage agents are clearing hurdles, Oral Fludarabine by Xanthus Pharmaceuticals and Acadra (acadesine) by Protherics (PTIL) and Advancell.

Xanthus Pharmaceuticals, a privately held company in the U.S., announced on January 3rd of 2008 that it has received FDA orphan drug designation for its fludarabine phosphate oral tablets for the treatment of CLL, and on January 22 the FDA accepted the company’s New Drug Application [NDA] for review. While IV administration of fluradabine, which is currently the favored choice for first-line treatment of CLL, has been used for some time now, the option for a patient-friendly oral version could give Xanthus substantial market share quickly. Xanthus licensed the exclusive rights to develop and market oral fludarabine in the U.S. from Schering in October of 2006.

A little further down the road is the potential approval of Acadra co-developed by Prostherics of the U.K. and the Spanish based nanomedical firm Advancell. Acadra has great potential as yet another new form of nucleoside analogue for the treatment of CLL. The excitement behind Acadra is that it has been shown ex-vivo to target B-cells while exhibiting only a minimal effect on T-cells in the bone marrow, much less than current chemotherapeutic agents, according to the two firms. This means patients will suffer from less complicated and severe infections associated with CLL treatment, which can be a significant cause of death. Phase I/II trials were initiated on January 11 of 2008.

Cephalon’s Treanda still has plenty of time ahead of Acadra (that is, if Acadra gets approved at all), and would still be an attractive new alternative to oral fludarabine. Cephalon is also not a small development biotech firm. It was founded in 1987, is a Fortune 1000 company, and employs 3,000 people internationally.

The company has an extensive U.S. marketing and sales network already in force, promoting the company’s other big drugs, including Provigil (modafinil) and Fentora (fentanyl buccal tablet), among others. Cephalon should see minimal strategic and cost barriers to ensuring the success of Treanda in the U.S. over the next few years.

With the company’s shares trading at an attractive level (near 52-week low), and strong support just under $60 (high volume surge in mid-February), it behooves investors to take a good long look at initiating a long position in Cephalon stock.

The author does not currently have any investment position in any of the companies mentioned in this article.