Physician's Financial News

PHYSICIANS’ FINANCIAL NEWS

Regeneron Poised for Growth

After a challenging year in which Regeneron has seen its per-share stock price tumble from a high in January of this year to a low of less than $14 per share less than six months later (June of 2008), industry analysts are becoming increasingly bullish on the future of the Tarrytown, New York—based biotechnology company.

The company—which emphasizes in-house drug development and employs more than 700 people (In addition to the Company’s corporate headquarters, Regeneron has a large-scale biologics manufacturing facility in Rensselaer, New York, where it produces commercial and investigational products for its clinical trials)— saw its stock market fortunes take a hit in May 2008 when a promising cancer drug candidate, aflibercept, yielded disappointing phase III data in an ovarian cancer population that failed to live up to investor expectations. The downturn was likely exacerbated by the broader market decline, which has been taking place of late.

Now that the dust has settled from the phase III trial disappointment, however, many are taking a fresh look at the company and wondering if the second quarter 2008 sell-off of Regeneron was not an overreaction. The potential strength of product candidates currently in development is significant and seems to be fueling a general reassessment of the company that is increasingly optimistic. Also, the company has some fiscal room to breathe and maneuver as it moves its drug through the development pipeline. According to a company spokesperson, Regeneron’s cash position is relatively strong and will be enough to last until the company attains profitability. The company is expected to post a profit in 2010. Currently, the stock has posted a mini-rally and has been hovering between $17 and $18 per share.

Still Moving Forward With Aflibercept

Aflibercept, despite its recent phase III ovarian cancer setback, continues to be studied in other cancers (i.e., brain cancer) and a future ovarian cancer indication, although delayed, may be attained eventually. Indeed, in a recent phase II trial evaluating the agent in relapsed and difficult-totreat brain tumors, response rates of 50% and 30% were achieved in patients with anaplastic glioma and glioblastoma, respectively. As Leonard Schleifer, MD, PhD chief executive officer, Regeneron, recently commented, “We’re moving ahead progressively (with aflibercept), and the big picture is still a significant competitor to Genentech’s Avastin.”

In addition to presenting a variety of promising data at the recent American Society of Clinical Oncology annual meeting (most notably two studies evaluating a potential metastatic colorectal cancer product and one study on a potential glioblastoma candidate), the company has further fueled investor optimism with the announcement of major partnerships with Sanofi-Aventis and Bayer Healthcare. The deal with Sanofi is to jointly develop and commercialize fully-human therapeutic antibodies utilizing Regeneron’s proprietary VelociSuite technology and the agreement with Bayer is designed to facilitate the global development of eye disease therapies based on Regeneron’s proprietary Trap technology. The Trap technology is expected to yield products in oncology and a number of other sectors. Also, such proprietary technologies and platforms make the company an attractive partner for potentially lucrative intercompany collaborations. The company has also developed a VelcoImmune technology that analysts expect will attract additional partners over the next few years.

According to the company website, “the company’s ability to develop product candidates is enhanced by the application of several proprietary technologies that Regeneron has incorpo- rated into a comprehensive drug discovery and development process. This process is designed to thoroughly understand the biology of specific diseases, discover potential therapeutic candidates, and evaluate these candidates in clinical trials.” In other positive news for the company, the FDA recently approved the company’s Arcalyst (rilonacept) for CIAS1-associated periodic syndrome, a rare genetic disorder.

Research and Development

The general consensus of industry watchers is that Regeneron’s future success or failure will be based on the performance of its research pipeline. Currently, Regeneron has therapeutic candidates in clinical trials for the potential treatment of cancer (Figure), eye diseases, and inflammatory diseases. Regeneron has four clinical development programs: (1) aflibercept in cancer, in collaboration with Sanofi-Aventis, and (2) the VEGF Trap-Eye, in collaboration with Bayer HealthCare, (3) rilonacept (IL-1 Trap), where the company is currently evaluating the potential role of rilonacept in other conditions in which Interleukin-1 (IL-1) may play a role, and REGN88, an antibody to the Interleukin-6 receptor (IL-6R).

Regeneron also has a number of solid pre-clinical drug candidates for a variety of disorders. The collaboration with Sanofi alone plans to introduce two to three new antibody candidates into clinical development each year going forward. Much of the preclinical company research into oncology has yet to yield dividends in terms of named agents.

However, the company, owing to its proprietary technologies and platforms (which have been utilized to identify specific cancer gene targets and better understand the processes of malignancy) has made significant progress toward this end. A Regeneron spokesperson explained, “the development of novel strategies to selectively target the tumor blood supply is bolstering traditional antitumor therapies. The growth of solid tumors requires the development of new blood vessels, or angiogenesis, to sustain the cancer by providing oxygen and nutrients. Regeneron has been a pioneer in discovering vascular specific targets such as angiopoietins. Regeneron is leveraging its discovery platforms, such as microarray and VelociGene, to identify genes that are over-expressed in tumors that could be targets for therapeutic intervention. Multidisciplinary scientists in the oncology, microarray, and VelociGene groups have worked together to identify the next generation of antiangiogenesis and antitumor targets.”

Denosumab Demonstrates Efficacy in Prostate Cancer Population

Amgen announced that the first pivotal study to evaluate its bone drug denosumab in men with nonmetastatic prostate cancer has met its endpoints.

The three-year, phase III HALT study, conducted on men undergoing androgen-deprivation therapy for nonmetastatic prostate cancer, enrolled 1,400 patients. Findings indicated that Amgen’s drug affected statistically significantly greater increases in bone mineral density at the lumbar spine and nonvertebral sites compared with the placebo at multiple time points—consistent with prior denosumab studies.

Men treated with denosumab also experienced less than half the incidence of new vertebral fractures compared with those receiving placebo, which was the secondary endpoint. There were also fewer nonvertebral fractures over the 36-month period. In fact, the drug demonstrated a clearly defined trend (albeit not statistically significant) in reduction of nonvertebral fracture over the 36-month follow-up period. The company said the incidence and type of adverse events were similar between the arms of the study. Serious adverse infections occurred in 5% of the placebo-receiving population and 6% of those in the denosumab arm.

According to an Amgen spokesperson, these data show that denosumab makes the spine stronger in patients whose bones thin out because they are taking hormone depriving drugs to combat their prostate cancer.

In the interests of clarity, it is relevant to note that the denosumab study results reported herein are separate from the denosumab data expected later this quarter on women with postmenopausal osteoporosis, the results of which are highly anticipated by Amgen stakeholders and industry watchers.

The fracture reduction data bodes well for the outcomes of the anxiously awaited osteoporosis study (known as the D-mab FREEDOM study), which has fracture reduction as its primary endpoint.

Amgen plans to publish the data in a major medical journal and present the data at an upcoming medical conference. Sector analysts point out that it remains to be seen if denosumab can show a better potency relative to generic alendronate (the current standard of care) in the osteoporosis setting.

In related Amgen news, the company announced that it will pay Johnson & Johnson $200 million to settle litigation alleging drug discounts offered by Amgen to cancer clinics violated antitrust laws. Johnson & Johnson’s Ortho Biotech unit had argued in a 2005 lawsuit that Amgen was bundling sales of its infectionfighting and anti-anemia drugs in a way that forced cancer clinics to buy Amgen’s Aranesp rather than Johnson & Johnson’s competing drug Procrit.

Aranesp is a longer-lasting version of Amgen’s anemia drug Epogen, which is marketed for treatment of patients with kidney disease. Johnson & Johnson holds a license for sales of the older drug (under the brand name Procrit) as a treatment for patients with cancer undergoing chemotherapy. Amgen said in a statement its conduct was not unlawful and it admits to no wrongdoing. Amgen also sells two other drugs, Neulasta and Neupogen, that increase production of infection-fighting white blood cells and are also used in chemotherapy patients.

Lilly Purchases SGX

Eli Lilly and Company and SGX Pharmaceuticals, Inc., have signed a definitive merger agreement providing for the former’s acquisition of the latter in an all-cash transaction. SGX, based in San Diego, is a biotechnology company focused on drug discovery and development in the area of oncology. Under the terms of the agreement, Lilly will acquire all of the outstanding shares of SGX common stock at a price of $3.00 per share, for a total purchase price of approximately $64.0 million.

According to industry watchers, the acquisition provides yet another example of a broader industry trend of consolidation in which large traditional pharma companies buttress their presence in specific sectors (i.e., oncology) through the purchase of smaller but up and coming biotechnology companies. (Many of these transactions have been covered in recent issues of Oncology & Biotech News.) This strategy allows major drug companies to leverage their purchasing power in order to become instant players in sectors that may have taken them years to compete in had they attempted to pursue in-house development strategies. The Lilly-SGX deal, for example, will allow Lilly to integrate SGX’s drug discovery platform into its drug discovery efforts and to develop and bring to market an impressive portfolio of preclinical oncology compounds focused on a number of high-value kinase targets.

Since entering into a collaboration in 2003, Lilly has partnered with SGX to determine 3-dimensional structures of key Lilly drug targets utilizing SGX’s proprietary X-ray crystallography technology. The ongoing collaboration also provided Lilly with access to the SGX synchrotron beamline facility, SGX-CAT, which is a state-of-the-art synchrotron facility enabling X-ray crystallography and protein structure determination built by SGX at the Advanced Photon Source (APS) located at the Department of Energy’s Argonne National Laboratory in Chicago.

“After a successful collaboration over the past several years, we are excited to bring the scientific and technological expertise of SGX into Lilly’s research organization, while at the same time expanding our presence in the San Diego area,” commented Steven M. Paul, MD, executive vice president, science and technology, Eli Lilly, “We will leverage the combined resources of both companies to strengthen our structural biology capabilities and seek out innovative therapies for patients.”

“We believe that this merger provides an excellent opportunity for the potential of SGX’s platform and pipeline to be realized, while simultaneously providing our shareholders with attractive financial terms,” stated Mike Grey, chief executive officer, SGX Pharmaceuticals, “As we have evolved from a platform technology organization to a drug discovery company, we believe that this transaction represents a timely opportunity to place our programs and technology assets in the hands of a world-class company with the experience and resources to advance innovative treatments for patients.”

The board of directors of SGX voted unanimously to approve the merger agreement and to recommend that its shareholders approve the transaction. The transaction is expected to close in the second half of 2008. Closing is contingent upon approval by SGX shareholders, clearance under the Hart-Scott-Rodino Antitrust Improvements Act and certain other closing conditions. Upon the closing of the transaction, Lilly will incur a onetime charge to earnings for acquired in-process research and development, but it is premature to estimate what that charge will be.

In related news, SGX Pharmaceuticals announced that it has submitted an investigational new drug application to the FDA for SGX393. The compound is designed to treat relapsed and refractory chronic myelogenous leukemia.

Hana Biosciences Presents Positive Data on Two Promising Oncology Candidates

At the recent European Society for Medical Oncology Conference in Lugano, Switzerland, Hana Biosciences, South San Francisco, presented data on Alocrest (vinorelbine liposomes injection, Optisome) and menadione topical lotion, two of the company’s potential oncology products.

Alocrest is currently in development for the treatment of certain solid tumor cancers and lymphomas. Menadione is being evaluated for the possible treatment and/or prevention of epidermal growth factor receptor inhibitor (EGFRI)— associated skin toxicities.

Hana presented data from the company’s phase I clinical trial of Alocrest. A total of 30 subjects with advanced solid tumors or non-Hodgkin’s lymphoma (NHL) were enrolled in the phase I trial. The majority of the patients were classified as heavily pretreated. Overall, this study achieved a disease control rate of 47%, including three of four elderly non— small cell lung cancer (NSCLC) subjects who achieved stable disease. Of 27 subjects with refractory solid tumors and three subjects with NHL evaluable for efficacy, one patient achieved a partial response (PR) (unconfirmed) and 13 patients achieved stable disease (SD). A maximum tolerated dose (MTD) of 28 mg/m2 administered via a 60-minute IV infusion on days 1 and 8 every 21 days was established in this population.

While a separate MTD was not determined for non-heavily pretreated subjects, Hana believes that the dose level could potentially be safely increased in patients who have received fewer rounds of prior treatment with other chemotherapy agents. Alocrest was generally well tolerated with reversible neutropenia as the most common dose-limiting toxicity. Optisomal encapsulation imparted no new toxicities and none of the patients experienced an injection site reaction. The phase I study was conducted at the Cancer Therapy and Research Center and the START facility in San Antonio and McGill University in Montreal.

“We are pleased to report phase I data for Alocrest demonstrating prolonged stable disease and a solid tolerability profile at an MTD comparable to unencapsulated vinorelbine in heavily pretreated patients,” said Anne Hagey, MD, vice president and chief medical officer, Hana Biosciences, “Based on these data, we continue to believe Alocrest has the potential to provide improved efficacy compared to conventional vinorelbine. Alocrest may be particularly beneficial to patient populations who cannot tolerate treatment with standard multi-agent chemotherapy regimens, such as elderly patients with NSCLC.”

In vitro

In a separate session at the same meeting, researchers presented results of preclinical studies of menadione that were conducted to better understand the potential interaction between topical menadione and systemically delivered erlotinib (Tarceva), an approved EGFRI. Analysis from tests conducted in an in vivo model demonstrated that topical menadione did not affect the antitumor effect of erlotinib. studies were also conducted to investigate menadione’s ability to restore kinase activity in the presence of specific kinase inhibitors. These data indicate that treatment with menadione may result in restoration of normal cell turnover rates and prevent skin toxicities that result from inhibition of protein kinases associated with tumor growth signaling pathways, such as the tyrosine kinases MEK, CDK and RAF.

“Results presented from preclinical studies of menadione topical lotion demonstrate that this compound does not interfere with the anticancer activity of Tarceva, an EGFRI, in a sensitive model. These data are encouraging and help provide the foundation of our strategy to develop this agent for the prevention and treatment of the skin toxicities associated with use of EGFRIs,” stated Dr. Hagey. “In addition, the initial data suggesting that menadione may also be useful in preventing and/or treating skin toxicities associated with the growing class of kinase inhibitors extends the exciting potential for this promising novel agent.”

Cephalon Drug Elicits Marked Response in Non-Hodgkin’s Lymphoma Population

Cephalon Inc. announced that its leukemia drug Treanda (bendamustine hydrochloride), when utilized in combination with Genentech Inc.’s Rituxan (rituximab), prompted a response in non-Hodgkin’s lymphoma (NHL) patients during a midstage study.

In the multicenter, open-label, single arm, phase II study, 66 patients with relapsed, indolent B-cell or mantle cell lymphoma without documented resistance to prior rituximab therapy were treated. Overall response rate was 92% with a complete response (CR) rate of 41%. A CR was defined as being achieved when after treatment with the Treanda and rituximab combination, patients had no detectable evidence of disease. Observed responses were durable, with a median duration of 21 months overall (19 months for the mantle cell population). Additionally, the combination of Treanda and rituximab was associated with progression- free survival of 23 months overall and for patients with mantle cell lymphoma.

As per the design of the study regarding dosing, patients received rituximab 375 mg/m2 intravenously on day 1and Treanda 90 mg/m2 intravenously on days 2 and 3 of a 28-day cycle for up to six cycles. An additional dose of rituximab was given one week before the first cycle and four weeks after the last cycle.

According to researchers, the combination of the two agents was generally well tolerated.

Journal of Clinical Oncology

The study results were published in the most recent issue of the and were part of a series of study data filed with the FDA over the past several months. Cephalon is in the process of seeking FDA approval for an expanded indication of Treanda. If the company is successful in its efforts, Treanda utilization will be expanded to encompass non-Hodgkin’s lymphoma. The drug, as of March 2008, was approved by the FDA for the treatment of chronic lymphocytic leukemia. The company expects an FDA decision on the use of Treanda in NHL by October 31st of this year.

Commenting on the significance of the newly published research, Charles Morris, MD, vice president, worldwide clinical research, Cephalon, stated, “A variety of treatment options have been employed in patients with indolent B-cell and mantle cell lymphomas, but resistance to treatment in this patient population often limits effective therapeutic options. Based on what we saw in this study, the combination of Treanda with rituximab appears to elicit a high rate of durable responses and encouraging progressionfree survival.”

Over the past year, Cephalon stock has been volatile, largely because of investor speculation regarding the amount of revenue that will ultimately be realized by Treanda.

Peregrine Pharmaceuticals Reports Positive Early Results for Breast Cancer Agent

Peregrine Pharmaceuticals, Inc., Tustin, California, reported that its lead product candidate bavituximab achieved the prespecified stage 1 primary endpoint in its ongoing phase II clinical trial in patients with metastatic breast cancer. The trial is an openlabel, Simon two-stage design to evaluate the safety and efficacy of a combination of bavituximab and docetaxel in patients with metastatic breast cancer.

The primary objective of the multicenter phase II clinical trial was to assess overall tumor response rate. Secondary objectives included measuring time to tumor progression, duration of response, overall patient survival and safety parameters. All tumor responses in the trial are being evaluated using Response Evaluation Criteria in Solid Tumors (RECIST) criteria. Patients may continue to receive bavituximab as solo therapy after completion of chemotherapy as long as the cancer does not progress and side effects are acceptable. According to the RECIST criteria, patients are categorized as having stable disease (SD) if they have less than a 20% increase to a 30% reduction in the sum of the target lesions, and they are categorized as having a partial response (PR) if they experience greater than a 30% reduction in the sum of target lesions. In addition, to be assigned a status of SD or PR, patients cannot have the appearance of any new lesions.

Fourteen of the 15 patients enrolled in stage 1 were deemed evaluable for tumor response, with seven achieving partial tumor responses and seven having stable disease at week 8 according to RECIST criteria. All 14 of the evaluable patients remain in the study and are continuing to receive treatment, along with continuing assessments of tumor response. With the stage 1 primary endpoint of six or more objective tumor responses achieved, the design of the clinical trial now allows for an additional 31 study patients to be enrolled.

“We are very pleased with the early positive results from this phase II breast cancer study,” said Steven W. King, president and chief executive officer, Peregrine, “We are particularly encouraged by the fact that at an early time point of eight weeks, half of the patients had achieved objective tumor responses. Equally encouraging is that with patients now out over four months since the start of the study, none have shown tumor growth or disease progression. As these patients continue on treatment, we will continue assessing them for signs of antitumor activity. We look forward to sharing more data from this study as patient treatment and follow- up progress.”

Bavituximab, a novel monoclonal antibody, is currently in two phase II combination therapy trials for the treatment of metastatic breast cancer and for the treatment of non—small cell lung cancer (NSCLC). In addition, a phase I bavituximab monotherapy trial in advanced solid cancers is ongoing. Data presented at the 2008 ASCO annual meeting showed that half of evaluable patients in a phase Ib trial of bavituximab plus chemotherapy achieved an objective tumor response or stable disease after eight weeks of dosing, that the safety profile of bavituximab and chemotherapy appeared consistent with chemotherapy alone and that the pharmacokinetic properties of bavituximab were not affected by co-administration with conventional chemotherapies. A second phase II combination therapy study in patients with breast cancer is expected to begin soon.

According to the World Health Organization, breast cancer is the most commonly diagnosed cancer in women, and is second only to lung cancer as a leading cause of female cancer deaths.

Robust Lung and Breast Data Reported by Cell Therapeutics Oncology Candidate

Journal of Thoracic Oncology

Seattle-based Cell Therapeutics, Inc., published results from a randomized phase III trial comparing Opaxio (paclitaxel poliglumex, CT-2103) with gemcitabine or vinorelbine for the treatment of patients with previously untreated non—small cell lung cancer (NSCLC) in the most recent issue of the . Results showed that overall survival was similar between the Opaxio and gemcitabine or vinorelbine arms. Patients treated with Opaxio required less supportive care including fewer red blood cell transfusions, hematopoietic growth factors, and opioid analgesics than those patients receiving either gemcitabine or vinorelbine. Additionally, patients receiving Opaxio required fewer clinic visits because of its administration schedule, (once every 3 wk), and short infusion time, compared with patients receiving either gemcitabine or vinorelbine.

The objective of the study, known as STELLAR 4, was to determine if Opaxio would improve overall survival when compared with the standard singleagent treatments of gemcitabine or vinorelbine in patients with advanced NSCLC who had not previously received chemotherapy. The multicenter trial was conducted at 83 centers in 10 countries.

A total of 190 patients with advanced NSCLC were randomized to the comparator arm (half of whom received gemcitabine, the other half of whom received vinorelbine) 191 were randomized to the Opaxio arm.

Survival, time to progression (TTP), and response rates were similar in both arms. Median overall survival was 7.3 months in the Opaxio arm and 6.6 months in the control arm. The estimated one-year survival rate was the same in both arms (26%), and the approximate two-year survival rate was numerically higher in the Opaxio arm (15%) than the comparator arm (10%). Opaxio patients experienced a statistically significant decease in adverse events when compared with the control arm. In addition, fewer Opaxio patients (12%) discontinued treatment as a result of adverse events, compared with 17% of patients in the control arm.

In a separate phase II trial presented at the 2008 Annual Meeting of the American Society of Clinical Oncology, researchers evaluated the efficacy and tolerability of Opaxio in combination with capecitabine in first-line treatment of patients with metastatic breast cancer (MBC). Results indicated that 20 patients (42%) of the 48 evaluable patients demonstrated a confirmed tumor response, including two complete responses and 18 partial responses. Median duration of response was estimated to be 9.9 months. Estimated six-month overall survival was 86% and estimated progression-free survival was 45%. Investigators concluded the combination of paclitaxel poliglumex and capecitabine was well tolerated and active in MBC.

“Given the goal of the study was to determine if Opaxio combined with capecitabine, an oral chemotherapy agent, as first-line therapy in metastatic breast cancer would prove to be an active and relatively well tolerated regimen, the combination of Opaxio and capecitabine had efficacy similar to other taxane/capecitabine combinations and was well tolerated and active in this patient population,” commented Jack W. Singer, MD, chief medical officer, Cell Therapeutics. He also touted the agent’s “convenient dosing schedule…(lack of) requirement for premedications and minimal hair loss…compared to other taxanes.”