Atherogenics, Genaera, Pfizer, Genentech, And MedImmune
I spent most of last week at the JP Morgan healthcare conference--it was a great meeting; the mood was definitely upbeat, and rooms were packed even for some not so interesting companies. There were a number of companies that had impressive presentations and I will detail some of these in future alerts. One company that is particularly interesting is Atherogenics (AGIX). I recently bought some of this for my own account in the mid $17 range. I will write about this company for subscribers shortly, but in essence, it is a play on the results of an upcoming Phase II study using an oral antioxidant agent to reverse coronary artery disease. Results will be available later this year. The market is huge and a recent short-term Phase II trial showed a significant increase in lumen volume--almost as good as the Esperion data using an IV infusion of an HDL molecule. The upcoming second Phase II results will be a binary event for AGIX.
I have recently sent out an alert to subscribers about Genaera and I thought I would update BioSpace readers as to my current thinking. I think what I said still holds true even though the stock just went up over 10% today.
GENR is a small cap company (market cap $217 million as of 1/20/04) with a lead antiangiogenesis product in trials for cancer and the wet form of age related macular degeneration (AMD). This company even in an expensive market still looks relatively cheap. AMD is a big market with no really good therapy. Visudyne is currently approved for a subset of patients but as a therapy it is not a spectacular success. Two competing products are in late stage trials--Macugen from Pfizer/ Eyetech and Lucentis from Genentech. The recent one year data from Macugen is also less than spectacular and may have to do with dosing problems and the fact that the drug is just not that good. Lucentis may be a better drug but the one year data is not in yet. Both drugs have to be given by direct injection into the back of the eye. The problems with that approach include infections and bleeding. I haven't talked to any retinal specialist who is excited about doing multiple vitreous injections. This approach might be more viable if you could get by with one or two injections but AMD is a chronic disease and will need chronic therapy. The initial Phase I/II data from GENR was from a single institution in Mexico. The trial was run by a very well respected retinal specialist using all modern endpoints. What impressed me was not only the early results but the efficacy at 4 months. Patients were reading better, retinal angiograms looked better and the drug appears safe. The data looks as good as the early trials for both Lucentis and Macugen. The really important aspect is that the GENR drug, squalamine, can be given by an injection into an arm vein (peripheral vein). This eliminates all the potential complications of direct injections into the eye. You also get the benefit of treating both eyes with one injection. Safety should not be a big issue especially short-term since the company is using the same drug in cancer trials at much higher doses with no complications.
The stock has not traded up much probably because of a lack of news flow and because they are perceived as being so much further behind in the development cycle when compared to Lucentis and Macugen. I think that is short-sighted. The company is negotiating with the FDA on a Phase II protocol and trials could start by mid-year. I think there is also a possibility they could do a lucrative partnership this year. Based on the kind of deal Eyetech did with Pfizer around the drug Macugen, you would have to say this company is very undervalued. Management is smart and I think up to the job. The company also has other assets. Their interleukin-9 (IL-9) patent estate has value and their partner MedImmune has filed an IND for a Phase I study in asthma using a humanized IL-9 antibody (PDLI license). GENR will receive a modest early milestone and if the drug is approved high single digit to low double digit royalties. There is good genetic and animal data (IL-9 knockout) to suggest that this cytokine is an important growth factor for mast cells and plays an important role in asthma and bronchospasm. Squalamine also has upside in the cancer market and is currently in trials for lung cancer (NSCLC) and metastatic prostate cancer. The company also has technology that may be important in the area of cystic fibrosis (CF) but development will depend on further funding from the CF foundation. There may some interest from big Pharma if patents issue on the protein and gene target of LOMUCIN (their CF drug). This target could be of interest for other indications as well.
The company's financials show only a modest amount of cash--as of the last report on 9/30, they had about $8 million cash and they raised another $8 million in November of '03. This could be enough to get them through a Phase II trial and to a partnership. However, there will likely be more rounds and dilution. I like this company because of the importance of the AMD market and the lack of any satisfactory therapies. Also, big pharma has shown a willingness to make huge deals in this area.
As a matter of disclosure, I want all readers to know that I own many of the stocks I write about in my personal account and always maintain a long position. I am not a stock broker or a registered investment adviser. I also write about some of these stocks in alerts for BioSpace, which can be found at www.biospace.com. Biotech Insight is a web-based newsletter published and archived at www.biotechinsight.com. Alerts and newsletters are sent electronically to subscribers. The following is further disclosure: Dr. Garren is an advisor to two funds investing in biotechnology. I recommend many of these same stocks to the investment funds mentioned above. It should be noted that certain funds go both long and short. The information in this column under no circumstances serves as a recommendation to buy or sell stocks. Please also see the disclosure about Biotech Insight archived on BioSpace.
Information transmitted via BioSpace has been provided by publishers of the "Biotech Insight" Investment Newsletter. It is not guaranteed as to completeness or accuracy by BioSpace, the Biotech Insight publishers, or any person. Such Information is neither an offer to sell nor a solicitation to buy the securities of any company. Opinions expressed are subject to change without notice. The Information and views provided by the Biotech Insight Newsletter are prepared by Garren Publishing and in no way reflect the views or efforts of BioSpace.com, Inc., any of BioSpace's employees or officers. BioSpace, and BioSpace's employees and officers, as well as Garren Publishing, and Garren Publishing's employees and officers, in no way accept responsibility for any of the Newsletter's content.
While all reasonable care has been taken to ensure that the Information contained herein is presented in good faith, and is not untrue or misleading at the time of publication, BioSpace, and Garren Publishing make no representation as to its accuracy or completeness and it should not be relied upon as such. The Information is supplied on the condition that the reader or any other person receiving the Information will make his or her own determination as to its suitability for any purpose prior to any use of the Information. From time to time, BioSpace and any officers or employees of BioSpace, as well as Garren Publishing, and any officers or employees of Garren Publishing, may, to the extent permitted by law, have a position or otherwise be interested in any transactions, in any investments (including derivatives) directly or indirectly the subject of this report. Also BioSpace and Garren Publishing may, from time to time solicit business from any company mentioned in this report. This report is provided solely for the information of viewers of BioSpace and/or viewers and subscribers of the Newsletters, who are expected to make their own investment decisions without reliance on this report. Neither BioSpace nor any officer or employee of BioSpace, nor Garren Publishing, or any officer or employee of Garren Publishing, accepts any liability whatsoever for any direct, indirect, special or consequential damages or loss arising from any use of this report or their contents. This report may not be reproduced, distributed or published by any recipient for any purpose without the prior express consent of the publishers. Nothing contained herein shall be construed as conferring by implication, estoppel or otherwise any license or right under any patent, trademark or copyright of BioSpace.com, Garren Publishing or any third party.
The value of the investment(s) to which this report relates and their income yield(s) may go up or down. The investment(s) referred to in this report may not be suitable for private investors: if you are in any doubt you should seek advice from your investment advisor. Changes in rates of currency exchange may have an adverse effect on the value, price or income of investments. Statements as to past performance of any investment are not a guide to future performance. The levels and bases of taxation can change, and if you are in doubt you should seek independent professional advice. In some cases it may be difficult for you to sell or realize your investment or to obtain reliable information about its value or the extent of the risks to which you are exposed.
THIS INFORMATION IS PROVIDED "AS IS" AND NO REPRESENTATIONS OR WARRANTIES, EITHER EXPRESS OR IMPLIED OF ACCURACY, MERCHANTIBILITY FITNESS FOR A PARTICULAR PURPOSE OR OF ANY OTHER NATURE ARE MADE WITH RESPECT TO THIS INFORMATION OR TO ANY EXPRESSED VIEWS PRESENTED IN THIS INFORMATION.
Ronald Garren, the editor of Biotech Insight is also a technical consultant to other biotech investment funds.