Tetrandrine derived from Chinese herb blocks Ebola infection in mice

The Ebola outbreak in West Africa highlights the need for anti-Ebola drugs. In a new study published in the journal Science[1], an alkaloid called tetrandrine derived from Chinese herb blocked Ebola infection in mice.

Scientists found that Ebola virus entry into host cells requires the endosomal calcium channels called two-pore channels (TPCs). The Ebola virus could not enter cells lacking TPCs or cells treated with a TPC inhibitor. Ebola virus initiates host cell entry by first binding to several types of cell surface proteins. Then the virus is taken into the cell in structures called endosomes. TPCs in endosomes control the movement of endosomes containing virus particles.

The authors tested a few existing calcium channel blockers and found tetrandrine was especially potent, with an IC50 of 55 nM. When the drug (90 mg/kg, QOD) was given to mice who had been given a lethal dose of Ebola the day before, half of the mice survived.

Tetrandrine is only approved in China for the treatment of pain, lung cancer, and silicosis at the dose of 60-300 mg/day. The anti-Ebola dose in humans equivalent to the one given to the mice would be 500 mg or more. I hope the dose needed to control Ebola will be safe.

Prof. Norbert Klugbauer, a co-author, said “tetrandrine is now one of the most promising candidates that could be used to inhibit Ebola virus infection”. The next step is to test the drug in non-human primates.

A big concern is that the effectiveness of tetrandrine was reduced when the treatment was delayed by a single day. Anyway, the identification of tetrandrine as an anti-Ebola drug is significant. The paper explained the mechanism behind the survival effect, which is a crucial step if you want to make better drugs. Moreover, it is likely that all filoviruses require TPCs to infect cells and that tetrandrine is a broad -spectrum filovirus inhibitor.

[1] Science. 2015, 347(6225), 995-998.

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Could Sangamo Biosciences cure HIV?

About 20 years ago, scientists found that a few individuals carry a deletion mutation known as CCR5 delta32 are resistant to HIV infection[1], because HIV needs CCR5 and/or CXCR4 as a co-receptor to enter T cells.

This information led to the development of CCR5 antagonists to inhibit viral entry into T cells. In August 2007, the FDA approved Pfizer’s Selzentry (maraviroc) for the treatment of adults infected with HIV. A diagnostic test is used to confirm if a patient is infected with only CCR5-using HIV (R5).

Unfortunately, maraviroc generated sales of only £96 million in 2012, far short of expected $500 million. The drug’s label includes a black box warning about hepatotoxicity and allergic reaction. It is ineffective in patients infected with CXCR4-using HIV (X4 or mixed). Moreover, the drug costs more than competitive therapies.

While the marketing disaster disappointed investors, scientists were excited with the story of Timothy Ray Brown, the first and only person in the world cured of HIV.

Timothy was an acute myeloid leukemia patient with HIV. His doctors arranged for him to receive a hematopoietic stem cell transplant. But they added a game-changing twist to this standard treatment: they picked a donor with CCR5 delta32 mutation.

Three months after the first stem cell transplant, levels of HIV rapidly plummeted to undetectable levels while his CD4 T cell count increased. Timothy is considered cured. The results were published in the New England Journal of Medicine[2].

The case of Timothy opens the possibility of curing HIV infection with stem cell. While suitable matched donors with CCR5 delta32 mutation are rare, we can take patient’s blood-forming cells called HSPCs out, edit them, and transplant them back. Both CRISPR/Cas9[3] and ZFN[4] gene editing technology could precisely knock the CCR5 gene out of HSPCs.

Sangamo Biosciences (NASDAQ: SGMO) is a leading company focused on ZFN technology. The company’s lead candidate, SB-728, is an autologous T-cell product in which the CCR5 gene is disrupted via ZFN technology. The first-in-man study of SB-728 has been published in the New England Journal of Medicine[5].

Patients received a single infusion of 10 billion autologous T cells, 11-28% of which were CCR5-modified. The CD4 T-cell counts significantly increased from a median of 448/μL at baseline to 1517/μL at week 1. The median concentration of CCR5-modified CD4 T cells at week 1 was 250 cells/μL, accounting for 13.9% of circulating CD4 T cells. The decline in CCR5-modified cells was significantly less than the decline in unmodified cells (-1.25 vs -7.25 cells/day).

Median increase in CD4+ T cell counts was 256 cells/μL at the end of 36 weeks. Is the increase in CD4+ T cell counts clinically meaningful? Hard to say. Actually, SB-728 did not demonstrate sustained and profound viral load suppression. Ultimately, patients had to goes back on the highly active antiretroviral therapy. To date, no patient with HIV has been cured by SB-728.

Sangamo’s approach is obviously far different from the treatment of Timothy. Timothy received stem cells from a donor while Sangamo provides mature T cells. Timothy’s entire immune system was replaced by one from a donor. However, in the trials of Sangamo’s SB-728, patients’ HIV-susceptible immune system remains in place.

Sangamo has an ongoing Phase II trial, SB-728-mR-1401, where patients will receive repeat doses of SB-728 (up to 40 billion) after Cytoxan pretreatment, a common method to enhance engraftment of T-cells. I believe repeat doses of SB-728 will work better than a single infusion. However, it is still difficult to predict whether SB-728 will cure HIV.

[1] Nature. 1996, 382(6593), 722-725.
[2] N Engl J Med. 2009, 360(7), 692-698.
[3] Cell Stem Cell. 2014, 15(5), 643-652.
[4] Nat Biotechnol. 2010, 28(8), 839-847.
[5] N Engl J Med. 2014, 370(10), 901-910.

Cidara Therapeutics raises $42 million to develop once-weekly anti-fungal therapy

Cidara Therapeutics (formerly K2 Therapeutics) grabbed $42 million in a private Series B funding round Wednesday to continue developing its once-weekly anti-fungal therapy. Just in June 2014, the company completed a $32 million Series A financing led by 5AM Ventures, Aisling Capital, Frazier Healthcare and InterWest Partners, which was the fourth largest A round in 2014 for innovative startups[1]. FierceBiotech named the company as one of 2014 Fierce 15 biotech startups.

Cidara has an impressive executive team. The company was co-founded by Kevin Forrest, former CEO of Achaogen (NASDAQ: AKAO), and Shaw Warren. Jeffrey Stein, former CEO of Trius Therapeutics (NASDAQ: TSRX) and Dirk Thye, former president of Cerexa, have joined Cidara as CEO and CMO, respectively. Trius successfully developed antibiotic tedizolid and was acquired in 2013 by Cubist Pharmaceuticals (NASDAQ: CBST) for $818 million.

Cidara’s lead candidate, biafungin (SP3025), was acquired from Seachaid Pharmaceuticals for $6 million. Biafungin’s half-life is much longer than that of similar drugs known as echinocandins (e.g., caspofungin, micafungin, anidulafungin), which may allow it to be developed as a once-weekly therapy, instead of once daily. The company is also developing a topical formulation of biafungin, namely topifungin. Cidara intends to file an IND and initiate a Phase I clinical trial in the second half of 2015.

Merck’s Cancidas (caspofungin), launched in 2001, was the first of approved enchinocandins. The drug generated annual sales of $596 million in 2008. The approved echinocandins must be administered daily by intravenous infusion. Biafungin with improved pharmacokinetic characteristics has the potential to bring in hundreds of millions of dollars per year.

[1] Nat Biotechnol. 2015, 33(1), 18.

CTI BioPharma is a bad company with good product

A month ago, CTI BioPharma (NASDAQ: CTIC) announced several anticipated key objectives for 2015. The company expects to report top-line data from the PERSIST-1 trial of pacritinib in patients with myelofibrosis in 2015Q1. I expect CTI to be the first company to break the Feuerstein-Ratain rule that no company with a market cap less than $300 million managed to conduct a positive phase III oncology clinical trial.

Pacritinib (SB1518) is a dual JAK2/FLT3 inhibitor (IC50=23 nM, 22 nM) discovered by Singapore-based S*BIO Pte Ltd. In April 2012, CTI acquired this compound for $30 million. In November 2013, Baxter acquired exclusive rights to pacritinib outside the U.S. for $112 million. The companies will share U.S. profits equally and CTI will receive royalties on net sales outside the U.S.

The FDA approved Incyte’ (NASDAQ: INCY) JAK1/2 inhibitor Jakafi (ruxolitinib) for the treatment of myelofibrosis in November 2011. Incyte expects Jakafi to generate sales of $350-360 million in the U.S. in 2014.

According to the phase II data presented at ASH2013 (abstract #395), pacritinib appears to be less effective than ruxolitinib but could be better tolerated. Spleen response (≥35% reduction in spleen size by MRI at week 24) were observed in 27% of patients. There were no grade 3 or 4 hematologic adverse events.

Spleen response Grade 3/4 hematologic AEs
pacritinib (400 mg, once daily) 27% none
ruxolitinib (15-20 mg, twice daily) 42% thrombocytopenia (12.9%), anemia (42.5%), neutropenia (7.1%)

Because of significant hematologic side effects, only patients with a platelet count above 100,000/uL are recommended to take Jakafi at dose of 15-20 mg/day. For patients with platelet count below 100,000/uL, the dosage has to be reduced to 5 mg/day.

There are 18,000 patients with myelofibrosis in the U.S., and 26% of patients are thrombocytopenic with platelet count below 100,000/uL. Pacritinib has the potential to treat patients with low platelets or who are intolerant to Jakafi.

CTI is conducting two phase III studies of pacritinib in myelofibrosis: PERSIST-1 in a broad set of patients without limitations on blood platelet counts and PERSIST-2 in patients with low platelet counts. In October 2013, CTI reached an SPA agreement with the FDA for PERSIST-2.

Because the control arm is the “best available therapy” excluding Jakafi, it shouldn’t be too difficult for pacritinib to beat the control arm which never yielded higher than 2% spleen response rate in historical clinical trials.

If all goes well, CTI will report positive results soon and launch in 2017. Assuming $300 million annual sales (half of Jakafi) two years post approval, pacritinib alone would be worth about $3.5 per share. Moreover, CTI has three other candidates in the pipeline and around $90 million in cash. However, CTI’s market cap is just about $320 million ($2.2 per share).

Many investors are not willing to own CTI because of the extremely negative history. CEO James Bianco even won the Worst Biotech CEO Award of 2012 with 37% of the record-breaking 30,239 total votes cast. Here is James Bianco’s big story reported by Adam Feuerstein. Since 2005, the company’s shares have lost 99.9% of their value.

Updata on Avalanche Biotechnologies (NASDAQ: AAVL)

In the past one month, the highly hyped gene and cell therapy companies such as Avalanche Biotechnologies (NASDAQ: AAVL), Juno Therapeutics (NASDAQ: JUNO), and Kite Pharma (KITE) have slid significantly. But I still have a bullish view on these stocks and see the sharp pullback as an attractive buying opportunity. Here is my own due diligence on Avalanche.

Overview
Avalanche is a biotechnology company focused on developing gene therapies for the treatment of eye diseases. Avalanche shares closed at $33.27 or market capitalization of $747 million on February 6, 2015. The company has no marketable product, and so it completely bakes in future success.

Pipeline
Avalanche’s lead product candidate is AVA-101 for the treatment of wet age-related macular degeneration (AMD). AVA-101 is a subretinal injection of AAV2 vector transmitting the sFlt-1 gene, which encodes a soluble isoform of the VEGF receptor, an endogenous anti-VEGF protein.

AVA-101 is currently in Phase IIa testing and top-line results from the trial are expected in mid-2015. The upcoming Phase IIa data could be a major catalyst. Following the ongoing Phase IIa trial, the company plan to conduct a Phase IIb trial in the U.S. in the second half of 2015.

Avalanche’s next generation anti-VEGF gene therapy, AVA-201, delivers the same sFLT-1 gene but uses next-generation AAV vector. It is an intravitreal injection for the prevention of wet AMD. The company intends to initiate IND-enabling studies for AVA-201 in 2015.

Avalanche’s third candidate is AVA-311 for the treatment of X-linked Retinoschisis (XLRS), a rare disease caused by mutations in the RS1 gene (approximately 10,000 patients). Avalanche has completed a preclinical study with AVA-311 in a mouse model.

Clinical data
In animal models, AVA-101 expression has been shown to last up to 17 months. Thus, Avalanche completed a twelve-month Phase I trial in Australia.

Eight patients were randomized into three groups: control, low AVA-101 dose (10^10 vg) and high AVA-101 dose (10^11 vg). All patients received two initial doses of Lucentis at Day 0 and Week 4 and the patients in the active arms received AVA-101 on Day 7. Beginning with the Week 8 visit, Lucentis was given as frequently as needed.

No significant drug-related safety concerns were observed. The AAV vector was not detected outside of the treated eye. From Week 8 to Week 52, the control patients and the patients receiving AVA-101 needed 3.0 and 0.33 Lucentis injections, respectively.

Visual acuity improved in the high and low dose AVA-101 treated groups by an average of 8.7 and 10.3 letters from baseline, respectively. By contrast, the control patients lost 3.5 letters of visual acuity. The visual acuity data appear comparable to standard Lucentis treatment.

Potential
AMD is the leading cause of vision loss in the elderly. While wet AMD represents only 10% of the number of cases of AMD overall, it is responsible for 90% of the AMD-related severe vision loss. The incidence of new cases of wet AMD in the U.S. is approximately 150,000 to 200,000 a year.

Current standard-of-care therapies include Avastin (bevacizumab), Lucentis (ranibizumab), and Eylea (aflibercept). Lucentis costs $2000 per dose, in other words, $48,000 for the recommended two years of treatment. In 2013, Lucentis and Eylea achieved worldwide sales of $4.3 billion and $1.9 billion, respectively.

Current standard-of-care therapies require frequent injections into eyes. Gene therapy offers a potential long-term solution to treat wet AMD with one injection. Assuming AVA-101 was priced at $20,000 per treatment, it would be realistic to expect peak sales at $2 billion. Moreover, Avalanche may pursue other indications, such as diabetic macular edema (DME) and retinal vein occlusion (RVO).

Collaboration
In May 2014, Regeneron Pharmaceuticals (NASDAQ: REGN) inked a $640 million deal with Avalanche. Regeneron has a time-limited right of first negotiation for a potential license to develop and commercialize AVA-101. Avalanche has the option to share up to 35% of the development costs and profits. Regeneron has successfully developed Eylea for the treatment of wet AMD and DME. The collaboration would reduce risks and increase chances of success.

Competition
There are multiple companies developing gene therapies for ophthalmic diseases. Genzyme, a fully owned subsidiary of Sanofi (NYSE: SNY), is testing AAV-sFLT in a Phase I trial. Genzyme’s AAV-sFLT is an intravitreal injection, which are commonly performed, and represent a relatively convenient and low-risk procedure. Applied Genetic Technologies (NASDAQ: AGTC) intends to develop gene therapy for wet AMD as well. Both Genzyme and Applied Genetic fall behind Avalanche.

It’s hard to say Genzyme or Avalanche gene therapy approach is superior over the other at such an early stage of development. Interestingly, the tight financial relationship between Sanofi and Regeneron might have influence on the competition between Genzyme and Avalanche.

Management
CEO and co-founder Thomas Chalberg is a former Genentech executive who helped launch and commercialize Lucentis. CMO Samuel Barone served as a Medical Officer in the Office of Cellular, Tissue and Gene Therapies at the FDA before he joined in the company in June 2014.

Finances
Avalanche has a healthy balance sheet with $165 million in cash and no debt. With a burn rate of about $20 million/year, Avalanche should have enough cash to fund the remaining Phase II studies for AVA-101.

5% and Greater Stockholders include Zygtech (10.3%), Venrock (9.6%), Fidelity Management & Research (13.7%), Regeneron Pharmaceuticals (7.4%), Deerfield Management Company (6.6%), and Thomas Chalberg (7.3%).

Given $1.5 billion annual sales, 35% profits share, 50% odds of approval and 5× sales multiple, I set my price target at $58 (or market capitalization of $1.3 billion). If Avalanche’s Phse IIa results are negative, game over.

In hindsight: what the AbbVie/Express Scripts deal means?

In December 2014, AbbVie (NYSE: ABBV) kicked off a price war with Gilead Sciences (NASDAQ: GILD) in the hepatitis C market by inking an exclusive deal with Express Scripts (NASDAQ: ESRX), the largest Pharmacy Benefit Manager (PBM) in the U.S.

There are 3 million patients with hepatitis C in the U.S. But it is a prevalence market with no future. As more patients are treated and cured, demand for the drug could drop. These concerns induced AbbVie to gain market share via a price war.

Gilead fought back soon with several similar deals with PBMs and health insurers including CVS Health (NYSE: CVS), Anthem (NYSE: ANTM), Aetna (NYSE:AET), Humana, Harvard Pilgrim, EnvisionRx, UnitedHealth (NYSE: UNH).

It appears that Gilead has won the price war. However, this is a war without winners. Gilead estimates 2015 gross to net adjustments (discounts) at 46% vs. 22% at end 2014. This means Gilead will offer Sovaldi/Harvoni at nearly half of its list price.

Gilead announced total revenues for 2014 were $24.9 billion compared to $11.2 billion for 2013. Hepatitis C drugs, Sovaldi and Harvoni, generated total sales of $12.4 billion in 2014. However, the company’s forecast for 2015 is only $26-27 billion.

All the hepatitis C stocks are down sharply on February 4, 2015 (e.g., GILD-8.2%, ABBV-7.7%, MRK-3.2%, BMY-1.0%, ENTA-8.1%, ACHN-16.9%, RGLS-3.8%). The NASDAQ Biotechnology index slid as much as 3.85% intraday.

The AbbVie/Express Scripts deal might change the entire landscape of drug pricing. Whichever companies offer the deepest discounts and cut exclusive deals with the largest insurers will win the biggest market shares. In other words, insurance companies are in the driver’s seat.

This is just the beginning, and more drugs are not far behind, such as anti-PCSK9, anti-PD1/PDL1, and anti-CD19 CAR-T. Express Scripts CMO Steve Miller told Bloomberg “we look at this as being the first of what will happen in the field of cancer, rheumatoid arthritis and many other of the expensive specialty fields.”

Anti-PCSK9 mAbs, a new class of cholesterol-lowering drugs, like Sanofi (NYSE: SNY)/Regeneron (NASDAQ: REGN)’s alirocumab, Amgen (NASDAQ: AMGN)’s evolocumab and Pfizer (NYSE: PFE)’s bococizumab are most probable to be next. Alirocumab is expected to be priced at $10,000 per year and to generate $3-4 billion in peak sales.

At the JP Morgan Healthcare Conference, Express Scripts CEO George Paz said anti-PCSK9 mAbs are “the short term, and cancer is a long term.” The market for anti-PCSK9 mAbs might not be as big as investors expect, once discounting is taken into account.

Would the price war be good for patients? Undoubtedly, more patients could be treated. In turn, exclusive deals will limit patient’s therapeutic options. The exclusive options offered by insurers might not be optimal. In the case of Gilead/AbbVie, Gilead’s Harvoni is safer and more convenient than AbbVie’s Viekira Pak. However, Express Scripts forced its customers to take Viekira Pak rather than Harvoni.

Investors’ fear is that price controls may stifle innovation. Biotech companies have to rethink whether their new drugs are worth still developing. Drugs with unique safety and efficacy profile will remain safe from the negotiating skills of insurers.

Lysosomal Therapeutics raises $20 million to develop anti-synuclein drug

Lysosomal Therapeutics has raised $20 million in Series A financing from Roche, Lilly and Sanofi to develop glucocerebrosidase (GCase) activator for the treatment of Parkinson’s disease. In May last year, the startup gained a $4.8 million seed commitment from a syndicate led by Atlas Venture.

Lysosomal was co-founded by former Genzyme CEO Henri Termeer. In 2011, the company’s scientific co-founders Dimitri Krainc and Joseph Mazzulli revealed that functional loss of GCase in neurons causes accumulation of α-synuclein[1]. The less active GCase is, the more α-synuclein builds up.

Alpha-synuclein is a protein of unknown function primarily found in neural tissue. The aggregation of α-synuclein plays a role in Parkinson’s disease. Reducing α-synuclein expression or block its aggregation may prevent or delay the onset of Parkinson’s disease.

Mutations in GCase gene cause Gaucher disease but also increase the risk for Parkinson’s disease. Lysosomal aims to develop drugs that could keep GCase active.

Lysosomal isn’t the only company to develop anti-synuclein therapy. In September 2013, Biogen Idec (NASDAQ: BIIB) teamed up with Amicus Therapeutics (NASDAQ: FOLD) to develop GCase activators for the treatment of Parkinson’s disease.

Just two months ago, former Onyx CEO Tony Coles started a new company called Yumanity Therapeutics to develop small molecules that could reverse phenotypes caused by α-synuclein. In January 2015, Neuropore Therapies and UCB entered into an agreement to develop NPT200-11 which stabilizes conformations of α-synuclein and slows the progression of Parkinson’s disease. Moreover, Austria-based AFFiRiS is testing α-synuclein vaccine PD01A in clinical trials.

[1] Cell. 2011, 146(1), 37-52.