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A global licensing deal last month with Spain's Grifols (NASDAQ:GRFS), valued at up to $90-million plus royalties, gives Aradigm (OTCBB:ARDM) a well-heeled partner to complete pivotal testing of its inhaled formulations of ciprofloxacin for the treatment of severe respiratory diseases, including non-cystic fibrosis bronchiectasis (BE).

"We had a number of licensing deals in the works, but amazingly, several of those companies were acquired before we were able to finalize any agreement," president and CEO, Igor Gonda, says in an interview with BioTuesdays.com.

"There are multiple reasons why we are excited about the transaction with Grifols," he says, noting that Aradigm will take the lead on the development front, taking its Pulmaquin once-daily inhaled ciprofloxacin into global Phase 3 clinical trials for BE. "We believe Pulmaquin for BE is a billion-dollar-plus opportunity globally," he adds.

Under the accord, Grifols will pay $65-million of the development costs for the first indication. Aradigm is eligible for $25-million in development milestones and a tiered royalty structure on global sales.

In addition, he says Grifols and Aradigm can develop Pulmaquin, or other forms of inhaled ciprofloxacin, for other diseases. For example, Aradigm's liposomal ciprofloxacin has been successfully tested in patients with cystic fibrosis and in animal models of several bioterrorism infections.

Dr. Gonda says that Grifols will be responsible for the commercialization of Pulmaquin, which complements its "current capabilities to reach out to respiratory physicians who treat patients with severe respiratory diseases in key global markets."

As a leading producer of plasma medicines, Grifols has a presence in more than 100 countries and is a global leader in the treatment of alpha-1 antitrypsin deficiency, a disease that often leads to emphysema. It has a dedicated pulmonary sales force in the U.S., Germany, Canada and Spain, with full coverage of prescribers that treat chronic obstructive pulmonary disease (COPD). In 2012, Grifols' sales exceeded 2.6 billion euros.

In addition to the licensing agreement on inhaled ciprofloxacin, the two companies have signed an option agreement for the use of Aradigm's proprietary inhalation delivery platform, AERx, for a specified molecule.

"The AERx technology platform has demonstrated on multiple occasions a highly efficient delivery of small and large molecules in humans with a variety of diseases, and we hope to be able to demonstrate this ability again if Grifols executes the option," Dr. Gonda adds.

To shore up its balance sheet, Aradigm plans to raise about $41-million through the sale of new shares to Grifols and four other investors, giving Grifols a 35% stake in Aradigm and two seats on the board. The transactions are expected to close during the second half this year and are subject to certain closing conditions.

BE is a severe obstructive lung disease, which typically results in a vicious cycle of lung injury, infection, inflammation, airflow obstruction and eventually death due to respiratory complications. There are some 110,000 BE patients in the U.S., where the incidence is growing at 9% a year, and 210,000 patients in Europe. The disease is also common in other parts of the world.

There is no approved treatment for BE. Patients experiencing pulmonary exacerbations and needing hospitalization continue to occur at a high rate, Dr. Gonda points out, noting that hospital stays can typically last six-to-seven days at an average cost of $42,000 in US.

"Our slow-release ciprofloxacin delivered to the lung holds the potential to reduce or eliminate pulmonary exacerbations, improve quality of life and reduce escalating medical costs," he contends. The company's IP portfolio extends patent protection until 2031.

Ciprofloxacin is a broad spectrum antibiotic. What makes ciprofloxacin attractive, he explains, is that there is no cross-resistance against currently used inhaled antibiotics. "So if a patient isn't responding to one treatment, we have the potential to replace it," he says. "Additionally, many physicians believe that rotating two antibiotics with different mechanisms of actions would be a good idea."

Ciprofloxacin is currently approved as tablets and injections to treat acute lung infections, but it is rarely used chronically for the prevention of pulmonary exacerbations because of systemic side effects and concerns about the emergence of antibiotic resistance in the community, he adds.

"Our inhalation delivery method can offer: rapid onset of action; improved efficacy, with rapid and sustained high antibiotic concentrations at the sites of infection in the respiratory tract; and less likely systemic side effects and resistance."

Moreover, he points out that as a slow-release liposomal formulation, inhaled Pulmaquin reduces the frequency of dosing to once daily, compared with the two inhaled antibiotics approved for cystic fibrosis patients: Novartis' TOBI, which is taken twice daily and Gilead's Cayston, which is taken three times a day. These two inhaled antibiotics generate annual sales of some $400-million.

Competitive Landscape: Comparison of Pulmaquin to Approved Products

In Phase 2 testing, Aradigm demonstrated that a controlled release of Pulmaquin in the lung resulted in excellent anti-infective activity in BE patients, coupled with good safety and tolerability, leading to a significant increase in the median time to the first pulmonary exacerbation, an approvable primary endpoint. The median time to the first pulmonary event was 134 days for Pulmaquin, compared with 58 days for a placebo.

ORBIT-­‐2 Phase 2b Study of Pulmaquin vs. Placebo in Bronchiectasis Patients
(42 Patients, 3 cycles of 28 days on/28 days off (~6 months))

In addition to BE, Aradigm has successfully tested its once-daily Lipoquin inhaled version of ciprofloxacin in a small Phase 2a study with 21 cystic fibrosis patients. Lipoquin is a liposomal formulation of ciprofloxacin. Pulmaquin is a dual release formulation that is a mixture of Lipoquin with unencapsulated ciprofloxacin.

The study demonstrated statistically and clinically significant reductions in the density of Pseudomonas aeruginosa, the organism that is responsible for, or plays a role in, BE, cystic fibrosis, COPD and diffuse panbronchiolitis. The study also resulted in a 6.9% increase in lung function and no serious adverse events.

Aradigm has been granted orphan drug designation for liposomal ciprofloxacin for cystic fibrosis in the U.S. and the Europe and orphan drug designation for the combination of liposomal ciprofloxacin and free ciprofloxacin for BE in the U.S. The FDA and European Medicines Agency previously had agreed on the design of pivotal trials Pulmaquin in BE patients.

Beyond its therapeutics, Aradigm also has developed a treatment for what Dr. Gonda considers may be the world's greatest medical need: a nicotine inhaler for smoking cessation.

"The craving for cigarettes can only be satisfied by rapid delivery of high concentrations of nicotine into the brain," he contends. "However, nicotine is not the cause of respiratory diseases and cancers-tobacco smoke, tar and carbon monoxide are the culprits."

He notes that the "epidemic death toll" from cigarette smoking currently claims one person every 6.5 seconds around the world. According to the WHO, the number of smokers is expected to rise to 1.7 billion by 2025, from 1.3 billion currently. "While studies suggest that 75% of smokers want to quit, less than 2% are successful each year. The inability to stop the craving for cigarettes is the reason for many of these failures."

Dr. Gonda explains that previous attempts with nicotine inhalers have failed because of poor deep lung delivery required for rapid transport of nicotine to the brain to stop the craving, as well as upper airway irritation and problems with nicotine formulations.

AERx Nicotine Craving Reduction in Smokers

Aradigm's pure nicotine AERx inhaler, developed at a cost of more than $200-million over the past two decades, has achieved superior clinical data over marketed nicotine replacement products, he claims. By delivering "cigarette-like nicotine concentrations, with instantaneous high plasma levels of nicotine in a single breath," he says the palm-sized device has been able to eliminate the craving for cigarettes for at least four hours.

Dr. Gonda says Aradigm intends to spin out the nicotine inhaler as a separate company and launch it for the consumer market. "We would like to use this avenue and then work with the FDA to design clinical trials so the inhaler could be approved with health claims," he adds. "We consider this to be a very valuable asset and a spin-out is a more attractive option at the moment."

Aradigm Pipeline

Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.

After launching a breakthrough epigenetics diagnostic for prostate cancer in the U.S. last May, Belgium-based MDxHealth (NYSE Euronet:MDXH), with U.S. headquarters in Irvine, Calif., continues to demonstrate strong scientific data for its ConfirmMDx molecular test and its economic benefits.

"As many as one-in-four men are misdiagnosed with a false-negative biopsy result but have hidden prostate cancer," president and CEO Dr. Jan Groen says in an interview with BioTuesdays.com. "Our test can help urologists distinguish patients who have a true-negative biopsy from those who may have cancer."

As a result, the test can help rule out prostate cancer-free men from undergoing unnecessary repeat biopsies and rule in those men who may require repeat biopsies and potential treatment. "We also can provide prostate mapping of positive methylation results to guide repeat biopsy, because it is important that urologists know the likely location of the cancer."

Last month, the Journal of Urology published results of an efficacy study for ConfirmMDx, which received high marks from analysts.

In the study, researchers in Scotland confirmed that the biomarkers can identify a "halo" associated with the presence of cancer in adjacent negative biopsies and which may be indicative of aggressive prostate cancer. This epigenetic "halo" around a cancer lesion can be present despite displaying a normal appearance under the microscope.

Another study presented at the ASCO GU conference indicated that combining ConfirmMDx with other tests of a first biopsy resulted in an improved prediction of the presence of aggressive prostate cancer, with a sensitivity of 74% and negative predictive values of 91%.

In a research report last month, Roderick Verhelst, an analyst with Petercam in Belgium, said that the studies provide further evidence that DNA methylation-based tests are the way of the future in improving the diagnosis and subsequent treatment of cancer patients. "MDxHealth is on the forefront of this field and thus excellently positioned to benefit from this," he added.

In epigenetics, scientists seek to understand how environmental influences on genes can be used to predict people's risk of developing disease. Epigenetic changes are inherited changes to the DNA molecules that don't affect the actual sequence of DNA. They have been described as "Post-it Notes" on genes that, over time, can lead to cancer.

The performance of the ConfirmMDx test has been demonstrated in more than 42 published studies. It has been tested on some 5,000 patients at leading U.S. and European academic medical institutions. The test uses a proprietary three-gene epigenetic assay consisting of GSTP1, APC and RASSF1.

"As a global leader in epigenetics diagnosis of oncology, we are in an attractive space with a validated platform and biomarkers, plus a clear commercialization strategy," Dr. Groen said following his address at the BIO CEO conference in New York last month.

He points out that there are four FDA-cleared epigenetic drugs already on the market, with more than 60 companies working on new epigenetic therapies. "This sector is booming as part of the promise of personalized medicine to select patients who are more or less likely to respond to particular drugs." Studies suggest that the global market for epigenetics therapies and technologies will climb to more than $5-billion by 2023 from $2-billion this year.

Along with the two efficacy studies last month, MDxHealth released data from a peer-reviewed economic analysis of ConfirmMDx published in the Journal of American Health & Drug Benefits.

Among other things, the analysis demonstrated that a commercial health plan would realize cost savings within the first year of establishing coverage for the ConfirmMDx test for prostate cancer. The upfront cost would be recovered based on the savings associated with avoided biopsy procedures and associated complications.

Given these assumptions and the costs associated with the current standard of care, the inclusion of ConfirmMDx in the management of men screened for prostate cancer resulted in a net cost savings of $588 per patient or a budget impact savings of $500,000 in a managed care plan of one million members, according to the study.

"These numbers provide a strong economic incentive for the reimbursement of ConfirmMDx by commercial health plans," said Petercam's Mr. Verhelst.

Dr. Groen says MDxHealth is using epigenetic markers to develop diagnostic tests for cancer, with: ConfirmMDx products to assess the presence or absence of cancer; InformMDx products to distinguish between aggressive and non-aggressive cancers and to forecast the risk of recurrence; and PredictMDx products to decide which treatments are most likely to be effective.

"Our commercial partnerships demonstrate the value of our technology and biomarkers," he adds. The company runs clinical trials for pharmaceutical companies, out-licenses its platform to pharma companies for their research only, develops diagnostics for pharma companies and has partnered with diagnostic companies in the U.S. for use of MDxHealth's biomarkers.

The company operates a CLIA-approved lab in Irvine, Calif., and is awaiting a decision regarding its New York State license. It also has signed a co-marketing agreement with a commercial pathology lab, PlusDx, which has 25 sales reps in the field that target urologists for traditional pathology work. Dr. Groen says MDxHealth plans to expand the size of its own sales force to 15 from five this year and expand its marketing agreements in the U.S.

The company also will begin looking for commercialization opportunities to sell its prostate cancer test outside of the U.S. He says, "In the U.S., the business comes down to Medicare and commercial reimbursement, while in the rest of the world, reimbursement is tied to hospitals that are on government budgets." Dr. Groen says the company has submitted a substantial dossier for Medicare reimbursement in the U.S. and expects to receive a decision in 2013.

In addition to its prostate cancer test, MDxHealth is also developing ConfirmMDx for lung cancer and InformMDx for lung, colon and prostate cancers. These collaborations currently involve GlaxoSmithKline, Roche and Celldex. MDxHealth also has diagnostic programs in development for esophageal and breast cancer, with partners who wish not to be identified.

Product Pipeline

In January 2012, MDxHealth's licensing partner, Exact Sciences (NASDAQ:EXAS), submitted the second module of its premarket approval application to the FDA for its stool DNA colorectal cancer screening test, Cologuard, which includes an MDxHealth epigenetic biomarker together with MDxHealth's methylation-specific PCR platform.

Last week, MDxHealth reported that revenue for 2012 rose 71% to more than $6-million (EUR 4.6-million). The company initiated billing to U.S. third party private insurance payors in the third quarter of 2012 for tests performed in 2012.

"We are poised to build on this strong momentum in 2013," Dr. Groen says. "During the year, we achieved all of our key milestones in support of the commercialization of ConfirmMDx for prostate cancer, and moving forward, we will continue to execute on our licensed central lab strategy, increasing our market penetration in the urology community and driving the development and commercialization of new ClinicalMDx and PharmacoMDx products and services."

Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.

Results of a recent clinical trial of Vaxil Bio's (TASE:VAXL) ImMucin cancer vaccine in patients with multiple myeloma has validated the company's VaxHit technology by demonstrating safety and a strong immune response in all patients.

"This is not trivial for a first-in-man study," CEO Lior Carmon says in an interview with BioTuesdays.com, referring to 15 patients in the Phase 1/2 study who received some 150 injections in total, without any adverse side-effects. "For me, as an immunologist, the key outcome was the validation of the technology."

Earlier this month, Vaxil said 100% of patients in the study demonstrated a strong immune response of both CD4+ and CD8+ T-cells to ImMucin. In addition, a strong antibody response to ImMucin was observed in 65% of patients.

Dr. Carmon notes the significance of the antibody response, pointing out that, to the best of the company's knowledge, this combination of T-cells and antibodies does not exist in other MUC1 vaccines. "Moreover, these results in patients with a wide range of different immune repertoires support the company's hypothesis of the ability of ImMucin to be universal - that it can activate the patient's immune system with no need for personalization or prior selection based on the patient's immune system type."

Patients in the VAXIL-001 study received either six or 12 ImMucin injections at a dose of 100 or 250 micrograms, along with GM-CSF (Leukine) at a dose of 250 micrograms.

Vaxil contends that ImMucin teaches the patient's immune system to identify and destroy cells that display the cancer marker MUC1 on the cell surface. Because MUC1 appears on over 90% of all cancers, ImMucin has the potential to be used as a vaccine against a wide range of cancers.

However, the specific epitope that ImMucin targets on MUC1 is different from the target used by other MUC1 vaccines; the ImMucin epitope only appears on tumor cells and does not appear in soluble form in the patient's blood. This is a huge advantage, according to Dr. Carmon. If it were to appear in the blood, it could significantly interfere with the specific vaccine-induced immune response and hence reduce its effectiveness.

In addition to ImMucin's specificity to MUC1, its strong and broad immune response, and potential universal use, Dr. Carmon says the vaccine also is unique in its ability to counter cancer's attempt to hide from the immune system and develop resistance to treatment. A reduced need for an adjuvant also increases safety and reduces the cost of the vaccine, he adds.

As a therapeutic vaccine, ImMucin is designed to be given to patients who are already suffering from cancer to help their bodies fight off the disease rather than to prevent the disease in the first place. Multiple myeloma is the second most common hematological malignancy in the U.S., after non-Hodgkin lymphoma.

Dr. Carmon suggests that ImMucin's therapeutic value lies in treating patients in the early stage of disease relapse, providing a window of opportunity for immunity to be built-up. "In a way, we are attempting to change the paradigm of current cancer treatment, which focuses on patients already in relapse, not just in myeloma but in other cancers as well. Hence, we hope to use ImMucin to prolong the patient's remission, so the disease will not come back or, at the very least, to delay its return."

The company also noted that nine of the 15 patients in the latest study had a clinical response to the vaccine. Five patients ended the study with a complete response to treatment and four patients had stable disease, which required no further treatment. Of the six patients with progressive disease, one had demonstrated a significant decrease in the progression rate for a period of time while undergoing treatment.

"These are very encouraging results for a first trial but clearly it is not statistically significant, given the small sample size," Dr. Carmon notes.

Vaxil now plans to conduct a larger study in multiple myeloma this year and is preparing submissions to the FDA. Dr. Carmon says the trial is expected to have a treatment phase and maintenance phase. "We believe the immune response to the vaccine will not last forever, and we will have to boost immunity in these patients. That will allow us to follow more patients for a longer period of time to see the clinical potential of the vaccine."

The company also plans to conduct a small study in Israel with ImMucin this year in patients with solid tumors, possibly in breast or lung cancer.

Last September, Vaxil initiated VAXIL-002, a clinical study in Israel to evaluate the long-term safety, quality of life and long-term efficacy of those multiple myeloma patients who were treated with ImMucin in the VAXIL-001 trial and who had a clinical response and did not require further treatment.

Patients enrolled in VAXIL-002 do not receive ImMucin or any other treatment. They will be monitored until the end of 2015 or until the disease returns or progresses to a stage where further treatment is required.

Vaxil also is developing MTBuVax, a therapeutic vaccine for tuberculosis, one of the largest causes of mortality in the developing world. However, over the past few years, there has been an increase in incidence rates in the Western World due to: the low efficacy of the current TB vaccine, BCG; increased global travel; mutation of the TB bacteria to new strains that are resistant to drug treatment; and a strong link of TB with HIV infection.

Dr. Carmon notes that MTBuVax is in preclinical studies and that promising results have been achieved to date. Earlier this year, the company signed a research agreement with the University Santiago de Compostela in Spain to combine the vaccine with the university's nanoparticle technology to promote a more exact and controlled release.

While the company plans to continue preclinical development, it is searching for a partner for future clinical development.

Vaxil: Development Status

Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.