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Jonathan Verenger
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Independent analyst focusing on small caps and special situations.
  • Exciting Field In Cure For Parkinson's 3 comments
    Dec 7, 2012 8:20 AM | about stocks: AMBS, AMGN, BMY

    I recently wrote an article covering some companies attempting tofind a cure for Parkinsons. As a follow up, I wanted to write about an exciting field of neutrophic factors that are being used in an attempt to treat Parkinsons.

    Neutrophic factors are a family of proteins that are responsible for the growth and survival of developing neurons and the maintenance of mature neurons. Recent research has proven that neurotrophic factors promote the initial growth and development of neurons in the central nervous system and peripheral nervous system and that they are capable of restoring damaged neurons in test tubes and animal models. Neurotrophic factors are often released by the target tissue in order to guide the growth of developing axons. Currently, neurotrophic factors are being intensely studied for use in bioartificial nerve conduits because they are necessary in vivo for directing axon growth and regeneration. In studies, neurotrophic factors are normally used in conjunction with other techniques such as biological and physical cues created by the addition of cells and specific topographies.

    In this article I'm going to cover 3 different neutrophic factors, glial cell-derived neurotrophic factor or GDNF, cerebral dopamine neurotrophic factor or CDNF, and mesencephalic astrocyte-derived neurotrophic factor or MANF as part of a two part series. Providing assistance in this article is Henri Huttunen, Ph.D., CSO and Partner from Hermo Pharma Oy Ltd., a privately owned, venture capital backed company based in Finland working on therapeutic approaches for currently untreatable medical needs, particularly Parkinson's disease. Hermo Pharma is a recent recipient of approximately $700,000 in grants from the Michael J. Fox Foundation.

    It is important to start with GDNF since it was one of the first to be tested on humans via delivery directly to the brain. GDNF is a protein that, in humans, is encoded by the GDNF gene. GDNF is a small protein that potently promotes the survival of many types of neurons. GDNF showed promising results in two Parkinson's disease clinical trial and in a number of animal trials; however, a study came out later that reported the results as a placebo effect and as a result the clinical studies performed by Amgen (AMGN) and Medtronic (MDT)were halted. Additionally, a safe and easy method of delivery became a significant roadblock for GDNF. Work on perfecting the delivery of GDNF to the targeted is ongoing and it is still believed to have clinical importance for the treatment of ALS and more recent studies suggest it could be used in reducing drug and alcohol addiction.

    Below is a Q&A I had with Henri. My comments and questions below are in bold for clarity:

    Me: GDNF was at one point very promising yet clinical studies were halted after roughly $300 Million was spent on research. From what I can gather a big problem that GDNF ran into was the ways in which it was delivered. Are there alternative ways in which to deliver MANF/CDNF that would make it less risky for humans?

    Henri: GDNF was one of the first biologicals to be tested in humans via intracerebral delivery. There are many simple technical reasons that contributed to the failure of GDNF, and as you correctly pointed out, many of these point to the delivery being critical for efficacy. In the past ten years, intracerebral delivery technology for protein drugs has developed quite a bit - of course many lessons were learned from the GDNF trials. Also, during this time deep-brain stimulator has become a widely accepted aid for PD patients. The surgical operation for implantation of DBS electrodes is highly similar to implantation of infusion catheters. So, in a way, we are now well-positioned to start testing the efficacy of therapeutic proteins - instead of developing delivery technologies. Prof. Steven Gill has recently initiated a new Phase 2 study with GDNF in Bristol, using improved delivery methods.

    Me: Were the GDNF tests performed with a naturally occurring version (or variant) or with a modified or non-natural variant?

    Henri: One important contributor of GDNF's failure in the clinic was likely its very limited distribution in the brain. Natural forms of GDNF and many other related proteins such as Neurturin (Ceregene) bind strongly to extracellular matrix proteoglycans which limit its distribution after infusion. There are some strategies in development to alter these sites in GDNF/Neurturin to improve their distribution in the brain. Very importantly, the natural forms of CDNF and MANF do not bind to these heparin-type proteoglycans and distribute much more widely than GDNF/Neurturin when injected into the brain.

    Me: I am curious to know what ties you have with MANF. I see that you recently challenged patents held by another company called Amarantus BioScience (OTCQB:AMBS) which were held up in court. Does Hermo Pharma hold patents on this? Could you shed some light on this for me?

    Henri: Regarding the recent patent challenge, we strongly believe that the European Patent Office has made a significant mistake in granting the Amarantus's MANF patent a 90% sequence homology protection. The reason why we believe this is based on the following:

    1.) Amarantus originally patented a non-natural form of the protein (probably a cloning artifact resulting in an amino acid change vs the naturally occurring form of MANF).

    **My NOTE: Amarantus separately claims to have additional patents on the protein in SEC filings.

    2.) A single amino acid change in a critical site in the MANF protein will entirely destroy its biological activity (several independent laboratories have confirmed this).

    3) Their patent covers all sequences with 90% homology to MANF (182 amino acid protein --> variation in 18 amino acid residues allowed, 20 options for each position --> you do the math; the result is an astronomical number of variants!). According to the patent law this causes "an undue burden" to anyone who would like to test these variants for activity. This is the explanation why we have challenged the EPO granted patent on MANF for Amarantus.

    Amarantus Therapeutics owns the MANF sequence patent. For clarity, human CDNF shares 59% amino acid identity with human MANF, so the MANF patents are by no means limiting CDNF development, or vice versa.

    Me: Who owns the IP for CDNF?

    Henri: Hermo Pharma owns all IP rights to CDNF. The composition of matter patent for CDNF has been granted in a large number of countries, including US and EPO region. In addition, we have filed a number of use patent applications for CDNF that are currently pending.

    Me: Are there any large pharmaceutical companies involved in the research and testing of the novel family of neutrophic factors that MANF and CDNF are a part of?

    Yes, there is interest in the big pharma. The field is burdened by the stigma caused by GDNF failures. Over the past 3-4 years, we have discussed with a large number of companies, small-mid-big pharma, and it has become very clear that if one of the small biotechs can provide proof of efficacy in human PD patients, this will bring the big players back in the game.

    So what is the play?

    At this time the only publicly traded company that is playing in this field is Amarantus (AMBS.OB). Amarantus owns sequence patents on MANF which were upheld in court after Hermo Pharma challenged them. As Henri mentioned, they challenged the patents because they believed that they covered too many possible variants of the protein and it therefore "causes "an undue burden" to anyone who would like to test these variants for activity". The only way I can interpret this is that anyone looking to test different variants of MANF will be forced to go through AMBS as it has patents "that cover all sequences with 90% homology to MANF".

    After looking further at AMBS I came away with a list of some positives and negatives. Negatives always come first when assessing a micro-cap investment.

    Negatives:

    1.) Balance sheet is a risk, despite recent financing efforts. The company currently has roughly $600k in cash and a history of losses.

    2.) There is still a stigma surrounding delivery methods of these neutrophic factors to the brain and other areas of the body; however, Henri seems to believe that there is already a good deal of progress on this front.

    3.) Dilution risk - given that the company is very small and has had to issue shares in the past to raise capital, there is still further risk that they will need to raise capital via equity raises. Additional capital will need to be obtained through partnerships with larger pharma companies or through grants.

    4.) The company is tiny, with only 3 full time employees and an outsourced clinical staff. While this is not uncommon (e.g., Hermo Pharma has 4 full time employees and an outsourced staff of around 20), it places additional emphasis on working with well seasoned advisors and directors that have had big pharma experience.

    Positives:

    1.) Probably the most important positive: Patent protection on MANF that was recently upheld in court.

    2.) Almost equally as important, the company has a strong group of advisors with big pharma backgrounds and experience in bringing novel drug therapies to market. Below is a list of recently appointed advisor and what they had to say about the company's MANF program.

    • Dr. Joseph Rubinfeld, co-founder of Amgen, was recently appointed as an advisor to the company and had some very glowing things to say about MANF: "I believe in MANF," said Dr. Rubinfeld, "I have reviewed a great number of technologies in my 45 year career in the biopharmaceutical field, and I believe that MANF could be one of the biggest successes that I have ever seen. The fundamental scientific premise of reducing protein misfolding is basic, yet very profound. The data, while early, demonstrates very clearly at the cellular level and in animals that MANF reduces apoptosis, improves cellular function, and restores behavioural deficits in a number of disease models, including Parkinson's, Stroke, Myocardial Infarction and Traumatic Brain Injury. These are all indications with very large markets and clear unmet medical need. I believe that if we are able to further de-risk MANF with positive toxicology studies and early clinical data, the Company's new orphan drug strategy could get MANF to market rather expeditiously. MANF has the commercial potential to become a blockbuster drug."
    • Dr. Robert Zimmerman from Bayer (OTCPK:BAYZF): "I have been involved with Amarantus formally and informally for the past three years supporting the founders as they work tirelessly to advance MANF to a stage where it has real commercial potential," said Robert J. Zimmerman, SD. "While that effort has been centered on Parkinson's disease, I believe additional opportunities exist to diversify this therapeutic candidate. Ischemia/reperfusion, cardiovascular disease, stroke, traumatic brain injury, diabetes and potentially other disease conditions appear to be impacted by MANF based upon preclinical studies and the literature."
    • Clinton O. Allen from Bristol Myers Squibb (BMY): "I am very excited to join Amarantus at this critical time in its growth cycle," said Clinton O. Allen, newly appointed advisor to Amarantus. "The team at Amarantus has been working tremendously hard over the last few years to bring the MANF Program closer to actualizing its true potential. Now that the Company is looking at various partnering and funding opportunities to drive shareholder value, it is an opportune time to join the team in order meticulously evaluate proposals and make recommendations for future growth."

    3.) The company has received two separate grants from the Michael J. Fox Foundation in 2010 and 2011 as well as a grant from the Center of Excellence in Apoptosis Research.

    If AMBS is able to continue showing positive results in toxicology studies and preclinical data it is possible that larger pharmaceutical companies will seek a partnership with them. Having patent protection will certainly help them in negotiations and having a recent patent challenge upheld in courts could prove to be quite positive for them.

    RISKS:

    As always, micro caps are subject to significant risks and uncertainties. The micro cap field is littered with a lot of pump and dump companies and traders looking for short term moves. Volatity in this space is very high. Please do your own due diligence.

    Disclosure: I am long OTCQB:AMBS.

    Additional disclosure: After doing a good deal of research on this field I am long AMBS. Please understand the risks of micro cap companies. They are highly volatile and subject to significant risks.

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Comments (3)
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  • Coolbluelake
    , contributor
    Comments (542) | Send Message
     
    Jonathan, your research on Parkinson's must have taken you a great deal of time and effort to accumulate. Outstanding work. Thank you. Gregg
    8 Dec 2012, 12:46 PM Reply Like
  • olsen46
    , contributor
    Comments (2) | Send Message
     
    Might interest the author to know a large segment of the population who suffer from Parkinson's Disease feel the Amgen Trials with GDNF were pulled purely for financial reasons; seems the delivery system was too costly. A book chronicling the trials was written by investigative reporter, Nick Nelson, titled "Monkeys In The Middle: How One DrugCompany Kept A Parkinson's Breakthrough Out Of Reach". And Big Pharma is reluctant to embark upon further trials with neurotropic factors needing intraputamenal infusion because "The field is burdened by the stigma caused by GDNF failures." What failures exactly, other than the one involving making egregious amounts of money?
    14 Dec 2012, 02:25 AM Reply Like
  • olsen46
    , contributor
    Comments (2) | Send Message
     
    Might interest the author to know that a large segment of the population with Parkinson's disease feel the Amgen trials with GDNF were pulled purely for financial reasons; the delivery system was too costly. A book chronicling the trials was written by an investigative reporter, Nick Nelson, titled "Monkeys in the Middle: How One Drug Company Kept a Parkinsons Disease Breakthrough Out of Reach".And Big Pharma is reluctant to continue trials with neurotropic factors needing intraputamenal infusions because "The field is burdened by the stigma caused by GDNF failures". What failures exactly? Other than the one associated with money?
    14 Dec 2012, 02:27 AM Reply Like
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