Please Note: Blog posts are not selected, edited or screened by Seeking Alpha editors.

Calistoga Pharmaceuticals and Plexxikon- Two Biotechs to Keep an Eye On

|Includes: EXEL, LLY, Roche Holding Ltd ADR (RHHBY), SNY
Calistoga and Plexxikon are on the leading edge of two of the hottest targets in drug development today. Both are privately held.
Seattle based Calistoga Pharmaceuticals was founded when Icos was acquired by Eli Lilly for its Erectile Dysfunction drug, Cialis. Former scientists acquired IP from the company in 2007 that formed the basis of their startup, Calistoga. They focused their research on developing isoform selective PI3K inhibitors, seeded with an initial $21 million in venture funding from Frazier Healthcare Ventures, Alta Partners, Three Arch Partners and Amgen Ventures.
Lead compound CAL-101, a PI3K delta specific inhibitor, is set to begin pivotal trials the second half of this year. CAL-101 has shown promising data in Phase I for leukemia and lymphoma. It is difficult to compare between trials, but CAL-101 appears to perform better than other PI3K inhibitors as a single agent. In all likelihood, however, these compounds will be used in combination with either other targeted therapies or chemotherapy. The compound will also be tested in solid tumors- a much larger market- as well as leukemia and lymphoma.
CAL-263, a second PI3K delta inhibitor is in Phase I for inflammation; it will enter Phase II later this year. A third compound is also expected to enter the clinic this year. PI3K delta is a very attractive target due to its clear role in mediating the inflammatory response. Aside from cancer, it has implications in the treatment of Rheumatoid Arthritis, asthma, and chronic obstructive pulmonary disease (COPD). This has piqued the interest of many small biotechs as well as large Pharmaceutical companies.
Calistoga has yet to partner any of their compounds. Indications are they are getting ready to do so, having recently hired a former dealmaker from Icos. Any partnership would be substantial. Looking at recent deals in this space: Exelixis partnered with Sanofi Aventis in 2009, with $140 million upfront and $1 billion in potential milestones for two Phase 1 compounds, and in 2008, Genentech paid $175 to purchase Piramed for its pre-clinical PI3K inhibitors, particularly interested in its PI3K delta selective compounds.
Calistoga has not had any problems raising money and will not be in a rush to partner with Pharma. Just last year it completed a $30 million Round B financing. Good data, an attractive target, and time are all on its side. In previous years, with a closed IPO market, Calistoga would have been ripe for a takeover. It has more options today as the economy mends and the biotech IPO window continues to stay open.
Plexxikon is an entirely different animal altogether. A Berkeley, CA company born in 2001, it is a drug discovery engine that seeks to partner its compounds at an early stage. Using its scaffold-based technology, it has developed compounds for a multitude of indications, including oncology, neurology, cardiology, inflammation, and metabolic disorders. The company has three compounds in various stages of clinical trials, including one in registration trials.
With only three rounds of financing netting $67 million in its nine years of existence, Plexxikon’s venture backers have faced minimal dilution. This is made possible by the significant sums the company commands for its early stage compounds. In 2004, Wyeth paid $22 million upfront for co-development rights to PLX-204, plus $350 million in milestones (recently discontinued). In 2006, Roche licensed PLX-4032 for $40 million and $660 million in milestones. Then in 2009, Roche took a second dip with PLX-5568 for $60 million and $275 million down the road. To date, Plexxikon has raised $170 million from licensing of its compounds.
Plexxikon’s most advanced compound is PLX-4032, a selective of the mutant B-RAF V600E. This mutation is a major driver of disease in more than 40% of melanomas, 80-90% of papillary thyroid carcinomas, and 8-30% of colorectal cancers. PLX-4032 has shown outstanding activity in B-RAF mutant melanoma patients in early stage trials. It has now initiated a Phase III trial in that indication with partner Roche.
RAF inhibitors took the scientific world by storm when Bayer received faster than expected approval for Sorafenib in renal cell carcinoma in 2005. Since then, a multitude of companies have also begun developing RAF inhibitors. Five years later, Sorafenib is still the only approved RAF inhibitor I know of, likely because much of its activity is attributed to inhibition of kinases other than RAF, particularly VEGFR2. PLX-4032, if approved, would be the only specific RAF inhibitor, and selective for B-RAF V600E as well. This will distinguish it from many compounds in development, as they are often non-selective, inhibiting multiple RAF isoforms. A regulatory filing for PLX-4032 in melanoma could come as early as 2011.
The specific RAF target in the PLX-5568 partnership with Roche has not been mentioned. My guess is it is likely to be B-RAF due to the enzyme’s involvement in Polycystic Kidney Disease, the indication to be pursued under the Roche partnership. Plexxikon is also developing PLX-5568 for pain management, but has yet to partner that program. Its chemistry expertise, particularly in designing highly specific kinase inhibitors, has served it well.
Both Calistoga and Plexxikon look to be on the verge of success. They have managed to make significant progress on their programs in a very short time, with relatively little spend. My hope is they go the public route and continue their growth rather than end up in the belly of a Pharmaceutical company; either one would make a nice addition to a biotech portfolio.

Disclosure: Long RHHBY.PK