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The founding members of Chimera Research Group have over 50 years of combined experience in the biotech and pharmaceutical sector. Their experience includes work at Investment Banks, Hedge Funds, Pharmaceutical Companies, top-tier Universities, and the U.S. Food and Drug Administration (FDA).... More
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  • Is Pharma Over Invested in Antibody Therapeutics?
    There is no doubt that antibody therapeutics have revolutionized medicine in the last decades. Sales of antibody drugs are estimated to be $30 billion in 2009 and expected to grow at a 14% rate through 2012- this is more than double the rate of growth for all drug sales. Biotech companies have produced blockbusters such as Avastin, Humira, Remicade, and Rituxan based on the technology. Antibody drugs are seen as having an easier development path, from target validation through regulatory review. They are also viewed as having stronger IP protection due to their more complicated method of production compared to small molecule compounds.
    Antibody drugs are touted as being highly selective with fewer side compared to their small molecule cousins due to a lack of off-target effects. While it is true they are highly selective, their side effect profile may not be as rosy as it appears. This is due to on-target effects, injection/infusion reactions, and immune reactions to the foreign antibody. Take Humira for example, this self-administered treatment for rheumatoid arthritis and Crohn’s disease often leaves patients feeling tired and at risk for infection. But that’s the nature of a TNF alpha blocker; these same effects are seen with competitors Remicade and Enbrel.
    Big Pharma has jumped on the antibody technology bandwagon. Through acquisitions, partnerships, and internal research efforts, antibody drugs now make up a significant portion of most pharma company’s drug pipelines- in some cases 30% or more. Have they gone too far?
    There are several mechanisms of action for antibody drugs:
    • Bind to a cell surface receptor, directly inhibit aberrant cell signaling
    • Bind cell surface receptors or antigens, recruit immune cells to kill the targeted cell in a process called Antibody Dependent Cell Mediated Cytotoxicity (OTCPK:ADCC)
    • Recruit Complement proteins which form pores in the cell, leading to cell death- termed Complement Dependent Cytotoxicity (NASDAQ:CDC)
    • Bind signaling proteins, preventing its downstream activity
    These mechanisms lend themselves to diseases involving cell killing and modulation of the immune system. Antibodies are used mainly in oncology and immunological diseases- particularly rheumatoid arthritis, the two accounting for the vast majority of sales. Global sales for all oncology and RA drugs were $68.6 billion in 2008, just 9% of all drug sales for the year. While sales in both indications are growing quickly thanks to the uptake of and high prices of new antibody drugs, neither compare to the size of the CNS or cardiovascular markets, both of which top $100 billion.
    In light of such a limited market, it appears to me pharmaceutical companies are dedicating substantial resources for what may be marginal returns. With every biotech and now, pharma, crowding the oncology space, it will become increasingly difficult for companies to differentiate their products.
    To take antibodies to the next level, companies will need to go after new markets. This is happening to a degree, with drugs now approved for Multiple Sclerosis and Osteoporosis. Late stage molecules are in testing for diseases ranging from Alzheimer’s to Diabetes. Yet oncology continues to takes the lion’s share of the effort by far. Additional scientific advances will be required before the full potential of antibodies will be reached in these other indications.
    Perhaps the biggest Achilles heal of antibody drugs is their method of administration. All antibody drugs must be administered either by injection or infusion; none are orally available. This is okay in debilitating diseases such as cancer and RA, but as these drugs move into less severe indications such as CNS and asthma, patients may be more inclined toward easy to use oral medications.
    Convenience has long been a selling point for pharmaceuticals. It has led to the multidrug combinations that are now a staple in HIV treatment, and though antibodies have a stronghold in oncology, small molecule drugs continue to hold their own due in part to their relative ease of use. Most recently, the drug Gilenya from Novartis, was hailed as the first orally available Multiple Sclerosis therapy.
    For antibodies to maintain their robust growth and succeed outside their core therapeutic area, a non-invasive, or minimally invasive delivery system will need to be development. Potency and selectivity once thought attainable only with antibodies is now possible with small molecules. Only continued innovation will keep antibodies relevant.

    Disclosure: Long NVS
    Sep 28 1:47 PM | Link | Comment!
  • Garage Biotechs: The Modern Day Startup
    Is there such a thing as a “garage biotech”? According to a 2007 study by the Ewing Marion Kauffman Foundation, a nonprofit devoted to entrepreneurship, 40% of youths between the ages of eight and 21 say they would someday like to start their own business. In our highly entrepreneurial society, risk-takers and innovators propel our continued economic growth. With little funding, today's biotech startups, working on shoestring budgets, have sometimes been termed garage biotechs.
    The seeds of a biotech startup often have their humble beginnings deep in the trenches of academic laboratories. A professor or post-doc may work on a promising technology for years before the outside world ever hears about it. Starting out in the world of “publish or perish”, the entrepreneurial researcher pursues an altogether different calling, where protection of IP is of utmost importance, where the world becomes, “publish AND perish.” Because of our antiquated patent system, any previously published invention cannot be patented. As the scientist becomes an entrepreneur, goals must be realigned.
    During the early stages of development, startup biotechs have no saleable products- there is only an idea and a promise. At least initially, the customer is likely to be its investor; the startup therefore must take into account what this customer is shopping for. Investors such as VCs, pharma and biotech companies, and the public market, each have different expectations and requirements. The major investor for startups is likely the VC.
    For a startup seeking Venture Capital financing, an exit strategy should be a an integral part of its planning. As Bob Mulroy, CEO of Merrimack Pharmaceuticals, advised in a presentation to the Harvard Biotechnology Club- “Want to get your biotech start-up financed? Then begin by thinking of an exit strategy.”
    VCs must make a return on their investment. High numbers of failures are expected when investing in early stage companies; just a few successful blockbusters contribute the majority of a VC fund’s returns. A profit is only generated when investors are able to exit their investment, accomplished through the sale of their shares in the portfolio company either through an IPO or trade sale. Biotech companies require long holding periods- now approaching ten years- and continued investments. Considering the life of a VC fund typically lasts only ten years, it is no surprise venture funding is drying up for early stage companies.
    The entrepreneur must run through a gauntlet of obstacles before VCs will even consider providing the first round of financing. By the time a VC is willing to invest, the startup has proven the viability of its technology, developed a clear business plan, and formed a competent management team. In the eyes of the entrepreneur, a key hurdle standing between his company and success is the lack of financing. But for a VC, it is the company’s ability to succeed that will determine whether it receives an investment.
    The startup can strengthen its position and improve its chances of success by forming a strong board of directors, usually consisting of only a few members, but each should be an individual who can provide guidance and connections. Along with the board of directors, a scientific advisory board consisting of experts in the company’s area of work will not only provide important counsel, but may also lend credibility to a young firm. 
    Generating interest from today’s risk-adverse VCs requires startups to show they can quickly reach important milestones without burning through too much cash. Venture funds have shifted their investments to more validated startups in order to reduce risk, although that has substantially limited their potential upside. To recoup their investments, VCs need their portfolio companies to maintain a tight timeline and low budget. With a closed IPO market, VCs may need to fund their companies through the latest stages of clinical development, adding to their investment costs.
    Keeping market conditions in mind, the startup can prepare an exit strategy- with a likely scenario being a strategic acquisition. This may have repercussions in the type of partnerships formed, as well as the selection of partners. Although an acquisition doesn’t have the glamour of an IPO, pharma’s appetite for novel compounds has resulted in a wave of biotech acquisitions, keeping this door open.
    On the other hand, institutional investors are increasingly demanding late stage data before participating in biotech IPOs, increasing the time and cost of financing a biotech startup. The cost of going public can also consume 10-30% of all the proceeds of an IPO. Add to this the continued distractions and costs of complying with Sarbanes-Oxley regulations and investor relations, and an IPO may not be in the best interest of a small firm[1]. However, for a fast growing biotech in advanced stages of development, access to the public markets can provide a significantly higher return to its shareholders. By staying independent, the company has the ability to continue growing, with the potential for an even larger payoff if its product succeeds.
    An exit strategy may not be the first thing on a startup’s to-do list and may change over time- as drug development and the markets are impossible to predict. But without one, the entrepreneur may find it difficult to get his enterprise off the ground. 
    1. Park Life Scienc LLC: Biotech M&A as an Exit Strategy

    Disclosure: No Position
    Sep 20 4:18 PM | Link | 1 Comment
  • Four Emerging Taiwan Drug Developers
    Taiwan’s drug makers have largely focused on generics; few are in the business of developing novel medicines. This is partially due to the large resources required for such an endeavor combined with Taiwan’s small market potential. To justify the costs of developing a new drug, companies must have the ability to navigate across borders in the hopes of selling their drugs in far larger markets. Few have this capacity.

    Of the ten largest drug manufacturers in Taiwan, four are publicly traded, none of which are drug developers. The largest of these, Yung Shin Pharma Industries, sells products ranging from generics to cosmetics, and has a market cap of over $8 billion. The other three are China Chemical & Pharmaceutical, Standard Chemical & Pharmaceutical, and Sinphar Pharmaceutical. The first two are makers of generic drugs and the latter makes Chinese herbal medicines and nutraceuticals.

    Let’s take a look at four companies that have made the leap. All are private, all are drug developers, but each does drug development slightly differently. These are some of the leading edge biotechs in Taiwan, helping to reshape the industry.

    TaiGen Biotech resembles a US biotech in that it is a pure-play drug developer. It has two compounds in US clinical trials- Nemonoxacin (TG-873870), an antibiotic licensed from Proctor and Gamble for the treatment of community acquired pneumonia and diabetic foot infections is in Phase II, and internally discovered TG-0054, a CXCR4 antagonist, is being tested in certain cancer indications. The company is well capitalized, having raised $37 million from investors in January 2009. It has operations in the US, China, and Taiwan.

    TTY Biopharm remade itself from a generic drug manufacturer and distributor into a global company with a focus on developing new drugs. Founded in 1960, it slowly improved its technology over the decades through technology transfers from western pharmaceutical companies. It later partnered with then tiny Taiwan Liposome Company to develop and sell Lipo-Dox in 1997, transforming itself into a seller of branded generics. It now continues to partner with early stage companies in their drug development, providing technical resources and financial support.

    AbGenomics has an early stage pipeline of antibody therapeutics. Its most advanced product, AbGn-168 targets CD162 on activated T-Cells and has been licensed to Boehringer Ingelheim and is in Phase I testing for the treatment of autoimmune diseases. AbGenomics’ other candidates are all preclinical and oncology focused. It seeks to partner its products either after the preclinical or Phase II stage. The company has offices in both the US and Taiwan. 

    Taiwan Liposome Company (TLC) began operations in 1997. It focuses on developing novel liposome formulations of off-patent drugs, improving its performance by reducing the drug’s toxicity, improving its stability, targeting its delivery. With its technology, it has developed Lipo-Dox, licensed to TTY Biopharm for sale in multiple Asian countries. It has also built a pipeline of newly formulated drugs in various stages of development. TLC has a US office driving the development of its compound, Lipotecan- a novel Topotecan analog in its proprietary liposome formulation. The compound is in Phase I studies.

    Since the 1980s when the Taiwan government deemed biotech to be an important to the country, billions of dollars have been poured into industry. Industry however, has been slow to take root. We may have reached an inflection point. Generic drug companies have saturated the market, forcing drug makers to look for profit farther up the value chain. The large number of contract research organizations is now allowing small companies with nothing but an idea to outsource nearly all the necessary research, even conducting studies overseas.

    This set of four companies represents just the first wave of innovative biotechs coming out of Taiwan. 

    Disclosure: No Position
    Aug 10 4:06 PM | Link | 5 Comments
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