Lipid Signaling Could Shake Up Biotech In 2012

Modern medicine has undergone a revolution in the past three decades with the advents of genomics and more recently with the field of proteomics. Lipidomics, the study of pathways and networks of cellular lipids in biological systems, could likely start dominating biotech headlines as pharmaceuticals and the medical community start focusing on lipid signaling and how its control could be used to fight disease. The modern biotech and Big Pharma experience with lipids had been focused on what was thought to be the only important functions of lipids in the biological system, energy storage and structural component of cell membranes. However, the newly discovered third function of lipids, lipid signaling, could be leading a revolution in how many diseases and their treatments are approached.

Lipid signaling refers to any physiological signaling event involving a lipid messenger that binds a protein target, such as a receptor, kinase or phosphatase, which in turn mediate the effects of these lipids on specific cellular responses. These cellular responses include the ability of cells to perceive and correctly respond to their biological environment and are the basis of development, tissue repair, and immunity as well as normal cell (and thus tissue) homeostasis. Any disruption of these processes can lead to a host of cancers, autoimmune diseases, inflammations and other ailments. Current regulation of these signaling pathways involve two predominate approaches, elimination of these bioactive lipids or tying up their receptor sites which effectively neutralizes the signaling function.

Novartis (NVS), in terms of regulatory approval, led the way with its September 2010 approval of Gilenya, a first-line treatment for relapsing forms of multiple sclerosis. This approval made Gilenya the first oral treatment indicated for relapsing forms of MS available in the US and underscores the importance of where this fledgling field is headed. Gilenya is the first in a new class of drugs called sphingosine1-phosphate receptor (S1PR) modulators. Although the exact mechanism by which the drug itself works is still unclear, it is thought to work by reducing the immune system’s attack on the central nervous system by retaining certain white blood cells in the lymph nodes. This prevents them from reaching the CNS, where they could attack the protective covering around the nerve fibers, resulting in less inflammatory damage to the nerve cells seen in multiple sclerosis patients. Gilenya’s efficacy data speaks for itself with Phase III data showing a reduction in MS relapses by over 52% relative to Biogen Idec’s (BIIB) Avonex. Additional data from a two-year placebo-controlled study showed a reduction in relapse rate (54% reduction P<0.001, relative to placebo) and risk of disability progression among Gilenya patients (30% reduction confirmed at three-month follow-up visit P=0.02, relative to placebo).

Peregrine Pharmaceuticals’ (PPHM) pipeline includes a monoclonal antibody that targets a conjugated protein-lipid. Its lead candidate, Bavituximab, is a first-in-class phosphatidylserine (PS)-targeting monoclonal antibody, a new approach to treating cancer. PS is a highly immunosuppressive molecule usually located inside the cell membrane of healthy cells. However it inverts and becomes exposed on the outside of cells that line cancer tumor blood vessels. For cancer researchers, this becomes a key target by which to attack the cancer. PS-targeting antibodies target and bind to PS and block the immunosuppressive signal, enabling the immunity system to recognize and fight the tumor.

Bavituximab has shown promise in several oncology indications but is currently in Phase II studies for Peregrine in front-line and second line non-small cell lung cancers (NSCLC), breast cancer and pancreatic cancer. The front-line NSCLC Phase II trial is evaluating Bavituximab with Paclitaxel and Carboplatin versus Paclitaxel and Carboplatin in 86 patients. Enrollment in this trial has completed with interim data from the study likely released in Q4 2011. In June 2011 Peregrine released interim data indicating a Median Overall Survival (MOS) of 12.4 months using Bavituximab in combination with Carboplatin and Paclitaxel compared to 10.3 months MOS from a separate historical control trial using Carboplatin and Paclitaxel. Phase II data for patients with locally advanced or metastatic breast cancer were released in August 2011 with promising results. A 20.7 month MOS from a prior single-arm Phase II trial evaluating Bavituximab in combination with Docetaxel compared very favorably relative to Docetaxel alone with a historical MOS of 11.7 months, a 77% improvement. Key here is the lipid-signaling approach they’re taking by focusing on the phosphatidylserine bioactive lipid appears to be working and has demonstrated efficacy across a broad range of cancers thus far.

Lpath, Inc. (LPTN.OB) has taken the approach of targeting bioactive lipids and the science of lipidomics to a different level with its proprietary platform, Immune Y2 technology. Instead of attacking or neutralizing the receptor sites involved with the pathways, Lpath has created monoclonal antibodies against the lipids themselves. These antibodies are the foundation behind the company’s lead product candidates iSONEP, ASONEP, and Lpathomab. Essentially, these antibodies “sponge up” the targeted lipids and fully bind all receptor sites, stopping the pathway signaling cold.

iSONEP is a monoclonal antibody against SP1 with indication of treating retinal diseases. Lpath initiated the first of two proof-of-concept trials in September of 2011, the first of which is termed the PEDigree trial in which iSONEP is being studied as a treatment for retinal pigment epithelium detachment. Lpath plans to dose 32 subjects that have PED secondary to wet age-related macular degeneration (wet AMD) or polypoidal choroidal vasculopathy (PCV). In October 2011, Lpath initiated its Nexus Phase II trial on iSONEP as a treatment for wet AMD. In the earlier Phase I trial, iSONEP met its primary endpoint of being well tolerated and also succeeded in meeting a key secondary endpoint in that a positive biological effect was observed in most patients in a single dose, many who had failed to respond positively to Lucentis and/or Avastin (off-label indication for the latter) treatments. In order to succeed for this indication, iSONEP needs to have non-overlapping success relative to current treatments. Lpath thinks iSONEP will meet these non-overlapping efficacy requirements based on Phase I data. In that trial an occult sub-group indicated regression of the CNV lesions with 2 of 2 patients showed good resolution of RPE detachment, both key endpoints in which could allow a path to regulatory acceptance if the results carry over to final trials with at least similar efficacy on the other symptoms Lucentis regulates.

Although still early in the regulatory path, Pfizer (PFE) is apparently convinced enough with the Immune Y2 technology that is has already inked a contract with Lpath for iSONEP, one that netted Lpath $14 million on January 2011. Additional clauses in the deal could net Lpath regulatory and commercial milestone payments that could total up to $497.5 million plus double-digit royalties to iSONEP pending approval. The agreement also gives Pfizer a time-limited right of refusal on ASONEP (another formulation of the same SP1 antibody as iSONEP) for the treatment of cancer. A Phase II trial on ASONEP will initiate in 2012 for the treatment of renal cell carcinoma and will be a huge catalyst for the company’s common stock and will add to the excitement that the PEDigree trial results should give investors in Q2 2012 as well.

Lpath has huge plans for 2012 with its growing pipeline and possible uplisting to the NASDAQ or AMEX stock exchanges. As icing on the cake, the agreement with Pfizer and other funding obtained has shored up Lpath’s balance sheet giving it sufficient cash to likely operate into June 2013 per current plans. Stock offering (dilution) concerns present in so many development Phase biotechs should be minimal to 1Q 2013 at least. Not thinking short-term, Lpath has been securing its intellectual properties with patents it hopes to protect its technology and applications. These patents add value to the company and its pipeline by protecting against competition and giving it a stronghold by which to license out its technology in the future as trial successes build its pipeline.

This is the biotech arena, and it not forgiving to investors who choose poorly but can be profitable to those lucky enough or wise enough to make the correct decisions. Although late-entry positions in Lpath, Inc. or Peregrine Pharmaceuticals will likely still afford investors moderate gains after trial results are reported and milestone payments are announced, entry well before those huge catalysts will likely afford investors substantial gains many multiples over the later entry ones. Entry into NVS common stock at this time with its $131 billion market cap, although a much safer investment, does not have nearly the potential gains with its successes as positive trials in $72.5 million market cap PPHM or $55 million LPTN. Investors, Big Pharma and the medical community will be watching as the lipidomics medical revolution comes with Novartis, Peregrine Pharmaceuticals and Lpath, Incorporated leading the way

http://seekingalpha.com/article/309606-lipid-signaling-could-shake-up-biotech-in-2012-with-pending-lpath-and-peregrine-trial-data

The Biomedical Century WSJ

By JOSEPH RAGO

‘Here is a staggering fact,” marvels John Lechleiter, the CEO and chairman of the drug maker Eli Lilly & Co. “In 1960 the average life expectancy in East Asia was 39. Thirty-nine! In 1990, 30 years later, it was 67. Think about that. Does that explain the Asian economic boom? I think it might go a long way.”

Longer, healthier, more productive lives, and more of them; more workers; an expanding middle class; more opportunities for the formation of capital-this virtuous medical-economic cycle, as Mr. Lechleiter sees it, is helping to generate the equally staggering growth in China and elsewhere in the region. “Wealth follows health, and it ain’t the other way around,” he says earlier this week, as the dawn catches the lenses of his horn-rimmed glasses here in his office atop Lilly’s sprawling research campus.

Mr. Lechleiter’s thoughts are in Asia not merely because he just returned from a trans-Pacific trade summit, or because emerging markets make up an increasing share of the pharmaceutical industry’s business. Amid fears of American decline, Mr. Lechleiter wonders, “What is it about this country, what do we need to do today not only to pull ourselves out of the vestiges or the grips of recession, but resume the strong economic growth that we need to provide the jobs that I reckon are our biggest current problem.”

Mr. Lechleiter has a few reforms in mind. The corporate tax code contains “one of if not the highest marginal tax rates in the world” and nicks income earned abroad when it returns to the U.S. “We need to move to a territorial system, period. Yes, companies like Lilly have a lot of cash outside the U.S. The question isn’t repatriation, the question is why that is happening in the first place. Those tens of millions of dollars, probably hundreds of millions of dollars depending on how you care to count, could be used to invest in this country and put people back to work.”

More broadly, Mr. Lechleiter says, prosperity depends “on the free movement of capital and talent, human capital.” More trade, for example, both foreign and domestic: He points out that Indiana is the country’s third largest exporter of medical products, after California and Texas. Stronger intellectual property protection is another, as is more immigration: He thinks every advanced degree in math, science, engineering or technology should come with “a green card stapled to the diploma. . . . The fact is, we go to Harvard University and hire a Chinese scientist and we have to work damn hard to keep that person here. That’s hurting this country.”

But above all, Mr. Lechleiter explains, “There’s no better investment that we can make than in biomedical research and in our health. This is not something that we’re trying to steal away from someone else. This is not a nascent industry.” Pounding his desk on each word-”America leads the world, okay?”

“I believe this will be the biomedical century,” he continues. “We’ll look back a hundred years from now and say the 20th century was the century of chemistry and physics, and the 21st century was the century of biomedicine.”

Mr. Lechleiter adds that “The challenge or the opportunity we have is that never before has the science and our knowledge base been riper for exploitation.” For most of the pharmaceutical industry’s existence-since Civil War veteran Col. Eli Lilly began to improve on the patent medicines of the day-”it was akin to feeling your way around a dark room and trying to make sense of what’s what. Suddenly the lights are on and we can see, aha: In a cell, this pathway and that pathway both contribute to, say, tumor formation.”

Not only is there an ongoing revolution in genomics and systems biology, Mr. Lechleiter continues, we increasingly have the tools to make use of this basic research and commercialize it. “A process that used to take years and years and rely too much on serendipity and conjecture can now be accomplished in a period of time that looks closer to months and months.” Researchers are more “mission driven and deliberate” and, with a biological target, can “come up with a viable clinical candidate, something that we could hope to take into human testing” faster and with more confidence than ever before.

“That’s happening,” he says. “It’s happening within these walls, it’s happening across the industry. It’s the first evidence that we’re gaining the sorts of productivity that people had hoped for or predicted based on this explosion of knowledge. . . . I’m telling you, behind the curtain bench-level discovery is changing for the better day in and day out.”

Mr. Lechleiter’s optimism runs against the growing laments that new drug development has stalled and progress against disease is slowing down. And it certainly runs against the markets, where pharma’s P/E ratios-which anticipate profits growth-are historically low and trail most other consumer businesses. “People do tend to look at that and say, ‘Lechleiter, if you’re right, what’s your stock multiple doing at eight then?’”

Some large part of the reason is the industry-wide “patent cliff,” the intellectual-property expirations that expose the drugs of the 1990s heyday like Pfizer’s cholesterol medicine Lipitor to generic, cheaper copies. “When you work in pharma, it’s a little different from the fast-food industry,” Dr. Lechleiter says, not a little sharply. “I can’t just order up a replacement for the Big Mac and have it sitting there in the drive-thru the next day. There’s an ebb and a flow that we can’t always predict or control.”

Lilly has responded by betting on “the biomedical resurgence” and investing in its drug pipeline, which contains 66 new molecules, 34 of them in the late-stage Phase II or III clinical trials. The company is also broadening its portfolio from traditional mainstays of neuroscience, oncology and diabetes. The list includes a potential experimental breakthrough for Alzheimer’s that could flush out the brain plaques that contribute to the disease.

Mr. Lechleiter, who came to Lilly as an organic chemist in 1979 and became CEO in 2008, says the company is testing “whether innovation is sustainable over the long haul.”

This strategy is in marked contrast to many of Lilly’s peers, which may also help to explain those P/E ratios. Over the last decade, most of the industry has been slashing research and development in favor of M&A and megadeals; many of the blockbusters coming off-patent were created by companies that no longer exist. “One current challenge the industry faces is that the wave of consolidation really leaves only about a dozen multinational pharma companies that have global reach. That’s it,” says Mr. Lechleiter. (Down from 30 or more not so long ago.)

Fewer companies means fewer R&D departments, fewer scientists looking at the same problem from different angles, fewer teams capable of making the investments needed to run the regulatory gauntlet to get an idea into the pharmacy. While Mr. Lechleiter cautions that “far be it from me to criticize the direction any other company or any other enterprise has decided to take,” note that he is the only big pharma CEO with a scientific background.

“There’s an innovation ecosystem, and like any ecosystem it can get out of balance,” as Mr. Lechleiter puts it. Another organism in need of adaptation is the Food and Drug Administration. “We can’t have a 1950s or 1960s or 1970s regulatory system when we’re doing 2011 or 2012 or 2020 science,” he says. The number of therapies the FDA has approved over the last five years is the lowest “since I joined the company.” He concedes that there’s been “a very recent bit of an uptick” but says he’s “hesitant to draw sweeping conclusions.”

The FDA, he says, ought to be better prepared for what he calls “tailored” therapies. “Maybe in your type of cancer it’s pathway A that’s lit up, and maybe in my type of cancer, because we have different genetics, it’s pathway B. Well, if we knew that, we could give you a type of drug that tackles pathway A, and I’d get a type of drug for pathway B. . . .

“One would think,” he continues, “that you could screen patients in your clinical trials and enroll the people who are most likely to respond to begin with, maybe study smaller numbers of patients to show a treatment effect. If you’ve got the right population you’re going to need fewer to see the effect versus studying it in everybody. And then, perhaps, gain some expedited path to make that medicine available to patients on terms that basically say this is only for people who have this type of cancer, measured by this test.”

So what about drugs where the evidence is more ambiguous, where only some people respond for reasons that aren’t fully understood? “This business reminds us everyday how profoundly ignorant we are,” Mr. Lechleiter says. “I think we’re likely to go for many years before we’re able to always say, well, why is it that drug XYZ works in this patient but doesn’t work in that patient.”

Since “the need for better medicines that are more tailored and more specific will only increase,” Mr. Lechleiter says that “we need a new partnership, carefully defined and wisely executed” between regulators and the regulated. Congress needs to reauthorize the FDA drug approval process by next year, and “we need policies in place that at least don’t destroy this innovation ecosystem.”

Mr. Lechleiter also worries about global price controls and says that if such controls come to the U.S., the likely artery will be the Medicare prescription drug benefit, which by some miracle avoided setting the fee schedules that apply to the rest of health care when it was created in 2003. The irony is that “if there’s ever been a government program that’s cost less and worked better than anybody envisioned, this might be it. The reason is that private competition is in the middle of it.”

One liberal ambition is to suppress such competition through so-called “rebates” that are really back-door price controls, like many states impose through Medicaid. Mr. Lechleiter says that in one scenario Lilly modelled the industry stood to lose $135 billion over a decade. For Lilly, “that’s a billion dollars to two billion a pop, so that’s 70 to 130 new medicines that will never be developed.”

The truth is that for all the political ructions about Soliris, Elaprase and the Avastins of the world, drugs account for about 10% to 12% of U.S. health-care spending, and seven of 10 prescriptions are for generics. “Medicines are a dime on the dollar and no matter how you look at it they’re the bargain of the century,” Mr. Lechleiter says. “Who knows, it may be the best investment we’ve ever made.”