Mark Corrigan, the chief executive of the biotech Zalicus (NASDAQ:ZLCS), has been shuttling back and fourth from Boston to New York this week as part of the Cambridge, MA-based firm’s effort to gain greater visibility on Wall Street. In fact, last Friday he was due to ring the closing bell at the NASDAQ stock market in Times Square.
Founded in 2000, the company, known for most of its history as CombinatoRx, has burned through more than $230 million to develop its drugs. It was one of the high-flyers in the local biotech scene until its lead treatment for arthritis faltered in a mid-stage clinical trial two years ago. Now the company, with a new name and a new FDA-approved drug, is out to reinvent its image in the investment community.
Last week the company changed its name from CombinatoRx to Zalicus (and no, the firm didn’t name itself after Zalicus, the armored character from the video game World of Warcraft). While name changes aren’t typically news, this company’s renaming deserves special attention because it relates to the December 2009 merger of CombinatoRx and Vancouver BC-based Neuromed Pharmaceuticals. By acquiring Neuromed, the new company obtained a long-lasting opioid pain reliever (Exalgo) that has been available on the U.S. market since April. It’s the first marketed product for Zalicus, and it changes the complexion of the company quite a bit.
Before the merger with Neuromed, Zalicus’s business was built entirely on its system that seeks synergistic combinations of compounds to form new treatments for diseases. That technology has helped the firm gain its research and development deals with the Swiss drug maker Novartis (NYSE:NVS) and Thousand Oaks, CA-based biotech giant Amgen (NASDAQ:AMGN). Neuromed, like the name used to suggest, developed neurological drugs like the long-lasting opioid pain reliever. The product (Exalgo) is marketed by health products giant Covidien (NYSE:COV). Zalicus has also chosen to maintain a research operation in Vancouver that is focused on discovering drugs that block proteins called calcium channels to treat pain.
Still, the company’s lead clinical candidate is an arthritis treatment called Synavive. It’s a combination of a cardiovascular drug and a corticosteroid that resulted from the firm’s original combinatorial drug-screening technology.
The name change gives the company an excuse to tell its story to investors and regain faith among stock buyers on Wall Street. Investors bolted from the firm’s stock after it reported in October 2008 that Synavive failed to provide statistically significant benefits in a mid-stage clinical trial as a treatment for knee arthritis. The company then went through a series of major layoffs in the months following the clinical trial failure. Later, in July 2009, the firm announced its planned merger with Neuromed and the resignation of its founding CEO, Alexis Borisy, who is now a partner at Third Rock Ventures in Boston.
Corrigan, who became the firm’s chief executive in January, is talking up the path his firm has been taking to boost its stock price, which was a meager $1.29 per share at the close of trading on Sept. 16. For one, the company has developed a new version of Synavive that patients take once per day. (A feature of the treatment is that it modifies the release of the cardiovascular compound used in the combination treatment to reduce the headaches that it commonly causes, Corrigan said.) The company plans to advance the treatment into a Phase IIb clinical trial for patients with rheumatoid arthritis in 2011.
Next year, the company also hopes to get permission to start an initial human study of an ion channel drug for pain, Corrigan said. The company has about 20 of its 60 employees working on that drug and program in Vancouver, where the University of British Columbia professor Terry Snutch has done seminal research on calcium channels and supervises Zalicus’s program. The firm’s ion channel blocker could become an alternative treatment to commonly prescribed opioid drugs that can become dangerously addictive to people.
It helps to have money to pay for multiple drug trials at once. Zalicus reported that it had $52.2 million in cash and or investments in the bank as of June 30, enough to fund the company with its current drug-development plan into 2014. Meantime, the company will be collecting royalty revenue from U.S. sales of Exalgo. That drug brought in $1.1 million in royalty dollars to the firm in the second quarter. Corrigan said he expects that royalty stream to slowly increase, but he didn’t provide a precise revenue forecast.
There’s reason to believe that Zalicus is gaining support in the investment community. Zacks Investment Research, based in Chicago, initiated coverage of Zalicus this week and gave its stock an “outperform” rating, saying that its stock was worth more than its Sept. 13 price of $1.31 per share.
Before I could end the interview, I had to find out, where did the name “Zalicus” come from? The name, it turns out, is actually the product of a companywide contest to rename the firm, won by one of its scientists in Vancouver.
“Zalicus doesn’t mean anything per se,” Corrigan said, “so it gives us an opportunity to essentially create the brand with our efforts.”
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