Seeking Alpha

Bio Tuesday's  Instablog

Bio Tuesday
Send Message
Stephen is the President of Kilmer Lucas Inc. (www.kilmerlucas.com) and BioTuesday Publishing Corporation (www.biotuesday.ca). Prior to founding both firms, he was the VP of Investor & Public Affairs for OccuLogix Inc., a Boston-based medical device company. Before managing OccuLogix’... More
My company:
BioTuesday Publishing Corporation, a wholly-owned subsidiary of Kilmer Lucas Inc.
My blog:
BioTuesday
  • AEterna Zentaris pursuing aggressive milestones for trio of drugs 0 comments
    May 6, 2010 8:04 PM | about stocks: AEZS
    AEterna Zentaris pursuing aggressive milestones for trio of drugs

    April 20, 2010 by leonardzehr · Leave a Comment 

    AEterna Zentaris (AEZS 1.54 ↑24.19%) (NASDAQ:AEZS; TSX:AEZ (1.59 ↑22.31%)) is working hard to regain the hearts and minds of investors after the disappointing failure of its cetrorelix drug last year, which also ended a marketing alliance with Sanofi-Aventis (SNY 31.77 ↓2.99%).

    “We started doing road shows in the U.S. in March after being quiet in January and February, and we received a good reception from shareholders who were in the story last year,” Dennis Turpin, a senior VP and CFO, told BioTuesday.ca in an exclusive interview.  “Our challenge is to shift the story from cetrorelix to perifosine, AEZS-108 and AEZS-130.”

    The strategy seems to be working.  So far in April, trading volume has soared to the highest levels since last August when the company announced the initial Phase 3 failure of cetrorelix as a treatment for non-cancerous enlargement of the prostate.  That sent the stock careening from a high of $3.01 (U.S.) to a December low of 75 cents.  It closed at $1.22 on NASDAQ yesterday, giving the company a market capitalization of $77 million.

    The stock run-up also allowed AEterna to shore up its balance sheet, by directly offering $15 million of common shares to institutional investors at a per share price of $1.35 through agents Rodman & Renshaw, with warrants that could raise another $7 million.  The transaction is set to close no later than today.

    Looking beyond cetrorelix, AEterna is forging ahead with three drugs this year that are in mid- to late-stage clinical studies: perifosine, AEZS-108 and AEZS-130.  “We have an exciting pipeline that is underappreciated in its therapeutic potential and financial benefits,” says Paul Blake, a senior VP and CMO.  “Frankly, I don’t think we’ve told our story effectively enough.  Companies of our size and market cap might be one- or two-product dependent companies.  But we are far deeper.”

    For example, the company is making presentations at the annual meeting of the American Association for Cancer Research, which wraps up tomorrow, about its preclinical Erk/P13K inhibitor oncology candidate, AEZS-129.  The Erk and P13K cellular pathways are activated in many cancer types and influence both tumour development and progression.

    While the AEZS-129 compound represents early-stage research coming out of the lab, much of AEterna’s cachet these days is its cancer drug perifosine, which is partnered with Keryx Biopharmaceuticals (KERX 5.95 ↑6.82%)(NASDAQ:KERX) of New York.  Keryx is testing perifosine in two Phase 3 indications: multiple myeloma and advanced colorectal cancer, with both clinical trials due to be completed in the second half of 2011.

    The FDA has given Keryx, which holds the North American rights to perifosine, special protocol and fast track status in both indications—a clear acknowledgment of the medical need for effective therapies.  Should it also receive priority review, the FDA’s decision timeline for marketing approval would be reduced to six months from 10 months.

    Multiple myeloma is the second most prevalent blood cancer, affecting 200,000 people worldwide and resulting in nearly 60,000 deaths a year.  The U.S. market opportunity for the disease is expected to exceed $3 billion in the coming years.  Metastatic colon cancer is the fourth most commonly diagnosed cancer and second leading cause of cancer-related deaths in the U.S.  First- and second-line therapies have overall annual sales of $4 billion.

    “We continue to believe perifosine is a potentially valuable cancer drug and appreciate the risk/reward associated with its novel Akt target,” Dundee Securities analyst, David Martin, said in a recent report.  Akt is involved in cellular survival pathways, by blocking apoptosis or cell death.  As a result, it has been implicated as a major factor in many types of cancer.

    In the 400-patient multiple myeloma study, perifosine is being combined with Takeda (TKPHF 43 ↑1.54%)Pharmaceuticals’ Velcade drug, which is one standard of care against the disease.  As Dr. Blake explains, Velcade does a good job, but it runs out of horsepower over time.  As that happens, the Akt pathway is activated, stopping normal cell death or apoptosis, which is the opposite of what you want a cancer therapy to do.

    By combining the two drugs, the hope is to show that perifosine can reenergize Velcade, inhibit Akt and restore normal cell death.  Progression-free survival is the primary efficacy endpoint in the trial, which will include follow-ups for overall survival.

    There is a similar effect in colon cancer, Dr. Blake points out, although with a slightly different mechanism.  By combining perifosine and Roche (RHHBY 36.63 ↓1.48%)’s Xeloda drug in Keryx’s 430-patient Phase 3 study, the hope is to show that perifosine will inhibit Akt activation and restore normal functioning of Xeloda.

    Aeterna holds rights to perifosine outside of North America, which represents a market size virtually similar to the U.S.  Last week, the European Medicines Agency suggested that the data collected by Keryx should be sufficient to support registration of perifosine in Europe to treat multiple myeloma.  The EMA decision is a big win for AEterna, which will not have to spend any money conducting clinical trials in Europe and most likely Asia, if the U.S. trial is successful.

    The EMA decision also prompted Versant Partners to raise its 12-month price target on AEterna to $2.50 from $1.50 as analyst Doug Loe said sales of perifosine in Europe to treat multiple myeloma are now included in his forecasts.

    Keryx, which is funding the two Phase 3 perifosine studies in the U.S., has a market capitalization of around $300 million, and some analysts question whether it has the financial muscle to shoulder the studies on its own.  “We have a very good working relationship with them and I think they do have the money for these two studies,” Dr. Blake says.

    Noting the wide discrepancy between the respective market capitalization of Keryx and AEterna, he contends that “intrinsically, there isn’t any reason why we should be valued lower than Keryx, because we’re going to get more than half of whatever the eventual market for perifosine is.”

    AEterna was best known in the 1990s for touting the anti-cancer potential of its shark cartilage drug Neovastat, which failed in clinical testing in 2003.  The company became a clinical workhorse at around the same time when it acquired German-based Zentaris AG from Degussa AG for around $45 million in order to “manage our risk,” Mr. Turpin recalls.

    “Zentaris is the pipeline of products that you see in AEterna today,” says Dr. Blake, referring to five compounds in preclinical testing and two each in Phase 1, Phase 2 and Phase 3.  Zentaris also came with a marketed product called Cetrotide, which is sold by Merck (MRK 34.27 ↓3.71%) Serono to prevent premature ovulation in women in order to increase fertility success rates.

    For one of those drugs, AEZS-108, AEterna reported positive preliminary Phase 2 results last November in patients with advanced ovarian and endometrial cancer.  It expects to have final data this year, leading to additional studies with the drug in other cancer types that express receptors for the luteinizing hormone releasing hormone (LHRH).

    AEterna also has high hopes AEZS-130, which is now called Solorel, as a diagnostic test that shows whether patients can still produce growth hormone.  The company is investigating the safety and efficacy of the drug as a growth hormone stimulation test for diagnosis through a blood test of adult growth hormone deficiency.

    The FDA has given Solorel orphan drug status, which gives AEterna seven years of market exclusivity.  If testing is successful, Dr. Blake predicts a new drug application for Solorel will be filed with the FDA before the end of the year. It also plans to initiate a clinical program in pediatric growth hormone deficiency this year and update investors on its development and registration strategy outside North America.

    In addition to Solorel’s diagnostic indication, AEterna believes that based on the results of Phase 1 studies, the drug has potential applications as a pill for the treatment of cachexia, a body wasting condition frequently associated with severe chronic diseases such as cancer, chronic obstructive pulmonary disease and AIDS.



    Disclosure: No positions
    Stocks: AEZS
Back To Bio Tuesday's Instablog HomePage »

Instablogs are blogs which are instantly set up and networked within the Seeking Alpha community. Instablog posts are not selected, edited or screened by Seeking Alpha editors, in contrast to contributors' articles.

Comments (0)
Track new comments
Be the first to comment
Full index of posts »
Latest Followers
Posts by Themes
Instablogs are Seeking Alpha's free blogging platform customized for finance, with instant set up and exposure to millions of readers interested in the financial markets. Publish your own instablog in minutes.