Cancer: A Need Creating Novel Treatment Platforms
The adage "necessity is the mother of invention" sums up man's leap into the modern era with the phenomenal growth in technology creating greater efficiency in food production, improved transportation, an exponential increase in data storage capability, more efficient energy generation and a host of other modern marvels. With all the successes that we as a society can lay claim to, we are still forced to realize that we have a long way to go in many areas. Arguably, mankind's greatest need is still its daily battle with disease. Regardless of how poorly or how well its financial, social, political or religious advancements play out, a losing battle with a devastating disease can overshadow society's greatest successes.
The need to fight illness, injury or disease has resulted in a proliferation of medical devices, drugs and therapies designed to alleviate symptoms or cure diseases. Nowhere has the battle been more apparent than in our fight against cancer. Even though we've made great progress over the last decades fighting it in many of its manifestations, a cancer diagnosis strikes fear into the victim as one must begin the often long and grueling physical, emotional, philosophical, and financial battle that would now loom. Like any other area of technology, success builds upon success and can itself create additional needs as any invention needs improvement in some form or fashion. For our fight with cancer, the improvements desired commonly revolve around the seemingly formidable battle of efficacy versus safety for the treatment regimen. With many of our cancer treatment regimens, and most notably chemotherapy and radiotherapy, the more effective treatments are often the most toxic to the patients' bodies. Conversely, the safest chemotherapy agents or radiotherapy sessions are often the least effective at treating cancer. However, as denoted above, success breeds success. Companies with novel treatment options continue to emerge trying to take the best of many existing treatments and utilize them via their own platforms to create more hope for patients and healthcare professionals in great need of more weapons in their arsenals. Following are summaries of companies and their platforms that not only hope to contribute to the ongoing battle against cancer, but hope to benefit in the process with highly-marketable products that will grow their bottom lines and reward investors who are wise enough, patient enough and lucky enough to be part of their successes.
Immunotherapy: Response to the Need for a Programmed Immune Response Against Cancer Recurrence
Galena Biopharma (GALE) has had an eventful year behind it beginning with its separation from RXi Pharmaceuticals as announced in September of 2011. The spinoff was to allow the two entities to focus on their own separate product lines, with Galena seemingly walking away with the most hopeful therapies in terms of blockbuster potential in an ongoing phase 2 breast cancer therapy, NeuVax®, and Folate Binding Protein E39, a therapy potentially utilized to target a host of cancers. The official separation occurred on March 8, 2012 with Galena retaining a minority interest in RXi. Although the specific terms of the deal were not declared, Galena is eligible to receive up to $45 million in milestone payments from RXi, most likely regulatory and marketing milestones of RXI-109 for the treatment of dermal scars associated with planned surgeries. RXi now trades under the ticker RXII.OB with a market capitalization of $17.5 million at the time of this article's composition.
Galena's NeuVax® has been generating a lot of buzz with promising efficacy and a good safety profile for the prevention of breast cancer recurrence. The therapy is an immunotherapy agent that teaches the immune system to target, oddly enough, low and intermediate expression HER2 antigens in cancer cells. Genentech's (RHHBY.OB) Herceptin is the current blockbuster and standard of care for highly-expressed HER2 in breast cancer (in adjuvant setting after surgery to prevent recurrence). The therapy's indication is for about 25% of breast cancer sufferers and generated revenue to the tune of about $6 billion in 2011. Herceptin's mechanism actually makes logical sense by inhibiting the effects of overactive HER2 receptors in the highly-expressed setting. NeuVax's indication, as determined from phase 2 data, will be for about 50% of breast cancer patients, those possessing the low and intermediate expressions only. While the reason for the higher efficacy for the low and intermediate expressions of HER2 is puzzling, it does provide for a therapy potentially targeting a larger portion of the market share for breast cancer patients (if Herceptin made $6 billion in 2011 for the highly-expressed HER2, then the potential market for NeuVax could be construed as $12 billion annually). It also makes it an ideal candidate to be given with Herceptin to cover a broader portion of the indication, or perhaps the therapies could enhance each other's efficacy. As a matter of fact, Genentech and Galena are both providing money and their therapies through the Henry M. Jackson Foundation for a phase 2 trial expected to initiate enrollment soon targeting breast cancer recurrence. The trial not only provides for a potentially large target market, but it also lets investors know that Genentech's parent company, Roche Holding Ltd., has full knowledge of the NeuVax® efficacy and potential which provides for a speculative future ahead for the company as a potential acquisition target as the trials progress.
In terms of upcoming catalysts, Galena's phase 3 PRESENT trial is the follow-up to the promising phase 2 clinicals. The trial initiated enrollment in January of this year, and estimates for interim data look to be in 2Q or 3Q 2013. The final data analysis of the promising phase 2 NeuVax trials (separate node positive and node negative patient sets) is expected to occur in 4Q of this year and should provide a solid foundation for the company's lead candidate going forward. A subset of 53 patients receiving booster shots in the phase 2 trial (once every six months) after the initial treatment regimen to keep the immune response from waning is the basis for the phase 3 trial design. At 60 months, the disease-free survival (DFS) of the booster subset was 96.2% versus 80.5% in the control group for a (P=0.01); and the recurrence rate for the booster group was 3.8% versus 18.9% in the control group. The SPA-designated trial's primary endpoint will be disease-free survival at 3 years or 139 events (recurrence of cancer). Anticipation for this trial's interim data could be a huge catalyst for 2013, not to mention the phase 2 trial with Herceptin enrollment initiation likely any day. The company also has a phase 1/2 trial underway that initiated in February using its Folate Binding Protein (E39) targeted peptide vaccine for ovarian and endometrial cancer. The company anticipates interim data for that trial sometime early in 2014, another significant catalyst as success there could help validate the vaccine for any of the several potential cancer types it could address including breast, lung, colorectal and renal cell carcinoma.
The company's common shares are currently trading in a fairly tight consolidation range of $1.50 to $2.00 where it has traded since mid June with strong support at $1.50 and current SMA of $1.72. There appears to be short term weakness in the stock which could provide for entry at the SMA or even down at support level. According to Galena s 2Q earnings, the development-phase company had cash and equivalents at the end of the period of $19.2 million with a current quarterly burn rate of about $7.8 million. According to its financials, money is currently sufficient to fund operations through 2Q 2013.
Radiogel: Response to the Need for a Safer, Targeted Radiotherapy Agent Administered Directly to the Tumor Site
Advanced Medical Isotope Corporation (ADMD.OB) is a speculative medical isotopes provider that just recently entered the realm of cancer treatment via its own therapy for fighting cancer. On April 10, 2012, the company announced that it had obtained an exclusive license to 8 patents for injectable radiogel technology that will be used to fight solid tumors. The $16.4 million market capitalization company hasn't yet provided an update on how it will proceed with the newly-acquired product, but the possibilities are intriguing as it could potentially be used for any solid tumors that are construed as inoperable, including many liver cancers, brain tumors, head and neck tumors, kidney tumors and pancreatic cancer. The science behind radiogel appears to be sound as it utilizes the widely-used yttrium-90 (Y-90) radioisotope in a polymer base that can be administered intradermally or intraoperatively as a viscous liquid. Once the polymer warms to the patient's body temperature, it forms a lattice (cage-like structure) that holds the Y-90 at the site of administration where it effectively irradiates the targeted tissue while keeping marginal and system exposure of healthy cells to a minimum.
While awaiting news of regulatory and marketing plans for radiogel, investors should note the diversification in the company's product line as it provides multiple isotopes for both diagnostic and therapeutic purposes. Although the product line appears to just be getting off the ground, an April 19, 2012 press release noted a contract with its newest customer, Kennewick General Hospital of Kennewick, Washington, for the supply of radioisotopes to be used for its PET (positron emission tomography) imaging system as well as other imaging and therapeutic indications. In an industry where networking can play a large role via "word of mouth" advertising, this and other such contracts could have a huge effect on growing the fledgling medical isotopes business.
Investment in ADMD is a risky venture and is not for all investors as it's currently traded on the OTCBB and is subject to the volatility, limitations and risks therein implied. Although it is marketing radioisotope products, the company is still in the early stages of development which should be considered when making investment decisions. Potential investors should consider the qualifications of its management group and its April 2012 corporate update via a slide show to get more of an idea of the company's current and future highlights and projections. The company's common stock is trading with short term weakness after hitting its' 52-week high back on August 1st. It is currently trading at support of $0.19 which is also at the lower Bollinger. The next solid support level is at $0.15, about 21% away. 2Q 2012 financials reveal the risk in investment in the company which is why it's currently trading at these levels (but also offers much upside depending on any upcoming catalysts). The company had just under $13.8 thousand in cash on June 30th with a current average quarterly burn rate of about $17.1 thousand. A subsequent financing announced on September 4th of about 35 million shares (including warrants) gave the company approximately $5.2 million in additional funding which should help them get through at least 2013 depending on regulatory costs associated with radiogel.
Chemosaturation: Response to the Need for a Much More Aggressive Means for Fighting Metastatic Melanoma of the Liver While Keeping Safety Profile Intact
Delcath Systems' (DCTH) novel chemosaturation platform is a seemingly simple concept with far-reaching ramifications. The basic premise behind the device is to isolate the targeted organ's blood supply and then infuse a high dose of a chemotherapy agent that would be highly efficous. Normally, the higher dose of the agent (several times more at the targeted site than normally administered) would be systemically toxic and have an extremely poor safety profile. However, Delcath's chemosaturation device spares the body from exposure to the agent. Delcath's most advanced candidate is its chemosaturation device, termed "percutaneous hepatic perfusion" (PHP), which utilizes melphalan hydrochloride as its agent of choice to fight metastatic melanoma of the liver. Isolation balloons are placed at strategic locations in a patient's vessels bringing blood to and from the liver. A high dose of melphalan hydrochloride is then fed into the inferior vena cava via the patient's femoral vein. The agent is fed directly into the liver and its associated tumor(s) where it is allowed to work for 30 minutes at the elevated dose. The isolation-aspiration catheter then collects the agent-saturated blood as it exits the liver between two inflated balloons (in the blood vessels) and then filters most of the melphalan from the blood via an external filtration device. The blood is then returned to the patient's bloodstream via a third catheter in the jugular vein. The isolation balloons are then deflated and the catheters removed.
Delcath has already had one regulatory chance with the FDA which resulted in not a complete response letter (CRL), but rather a rejection of filing for the new drug application (NDA) in February of 2011. The company noted statistical, safety and sterilization issues as the reasons for the rejected NDA. However, it has taken a long time for the company to get back around to refiling an NDA, approximately 18 months to be exact. Although the company doesn't give a lot of details about the amendment to the NDA this time around, Eamonn P. Hobbs, President and CEO of Delcath Systems, stated in the press release "We believe that our chemosaturation system provides the opportunity to satisfy a high unmet medical need to treat patients with unresectable metastatic melanoma in the liver. We also believe including our Generation 2 filter in the CMC module represents the fastest regulatory review path for the Generation 2 system, and that it is in the best interest of U.S. patients that we accelerate the potential availability of Generation 2." According to a previous release, the Generation 2 filter has demonstrated much greater efficiency in removing the melphalan from patient's blood before it is returned to the body. Although investors have reason to be concerned about the delayed resubmission of the NDA, trial data as reported by the company was impressive, with median hepatic progression free survival (hPFS) of 6.4 months longer than the best alternative care (BAC) in their phase 3 trial according to reported blinded intent-to-treat (ITT) analysis. A subsequent independent review committee (IRC) ITT analysis had a somewhat different outcome (likely related to the "statistical issues in the CRL") with a 5.4 month extension of hPFS, somewhat less but still an obvious improvement over BAC.
Delcath expects a PDUFA date sometime in February 2013 if the NDA is accepted this time. Investors are advised to more deeply research the Generation 2 data along with the IRC analysis of the original data in order to make determinations of probability of acceptance of the NDA and the chance of marketing approval. Is there enough data available from the Generation 2 filter to support approval that will be primarily based on the phase 3 trial which utilized the older-generation filter? Are there any additional underlying statistical issues which the IRC has already either fully or partly evaluated? To the company's credit, it did receive a CE Mark approval for its device two months after the FDA rejected its NDA. It also received marketing approval in 1Q of this year for its Generation 2 filter, somewhat confirming the device's upgrade. The European approval to market the device was significant, not only to begin generating some revenue with the platform ($106,000 in Q2, 2012), but also to help generate some much needed additional data that may be required to keep progressing through the regulatory process here in the U.S.
Delcath's common shares are currently trading at short term weakness at $1.71 at the lower Bollinger, just 4% above its next support level of $1.65. With the PDUFA possible in early 2013, this support should hold unless the NDA is once again rejected. The stock traded well above $4 earlier in the year, but that was before substantial financing occurred. 2Q 2012 financials noted $29.3 million in cash and equivalents with a current quarterly burn rate of about $15 million. On August 31st, the company filed additional financing of up to $100 million. Although financing was expected, the amount was surprising although share price was not particularly affected. The stock dilution for 2012 was substantial but should provide new shareholders with a good entry point at current levels. However, the downside risk of a rejected NDA or complete response letter from the FDA even if the NDA is accepted should be taken into consideration for new and existing shareholders.
The above-mentioned companies each have novel approaches to meet the need of greater efficacy for various types of cancers while additionally attempting to address the issue of increasing the safety profiles of the agents involved. They are each in varied stages of development with none generating significant revenue at this time. With varying market capitalizations, differing targeted indications and often-scary financial conditions, the upside and corresponding downside risk for each of these possible investments is typical of the small pharma sector with its infamous risk/reward tradeoffs.