Neurologix Forges Ahead on Gene Therapy Treatment for Parkinson’s

6/23/11Follow @arleneweintraub

On June 8, Neurologix (NASDAQ: NRGX) released positive data from a trial of its experimental gene therapy treatment in patients with Parkinson’s Disease. It was the latest in a string of impressive announcements from the Fort Lee, NJ-based company, which has been on a roll since March, when the journal Lancet Neurology published six-month results from the study, a Phase 2 clinical trial involving 45 patients.

Has Wall Street applauded? Not exactly. Neurologix, a perennial penny stock, hasn’t traded over a buck since last December—the June 8 announcement bumped its stock from $0.67 to $0.70 a share. (It’s now at $0.79.) But with its Phase 2 completed, the company needs to raise about $50 million to complete the pivotal Phase 3 study that will be necessary to win FDA approval. It won’t be easy, admits Neurologix co-founder Michael Kaplitt, an associate professor of neurological surgery at Weill Cornell Medical College in New York. “The biggest concern” among investors, he says, “is fear of the unknown.”

Such are the frustrations of being a biotech company that’s trying to pioneer an entirely new approach to treating neurological diseases—and one that involves gene therapy, no less. The basic idea of gene therapy is to correct a dysfunctional disease-causing gene by replacing it with a functional gene that’s inserted into the body. It was once a hot concept in biotech, and a technique that many scientists believed could treat a range of diseases.

Then disaster struck. In 1999, 18-year-old Jesse Gelsinger died after receiving an experimental gene therapy for a rare disease, during a trial being conducted at the University of Pennsylvania. Funding for research into gene therapy around the world became scarce.

But Kaplitt and co-founder Matthew During were undeterred. They formed Neurologix in 1999 around a technique that they believed would ameliorate the risks inherent in earlier gene therapy attempts. One main approach to gene therapy involves packing copies of healthy genes into viruses known as “vectors,” which then transport the genes into cells. Scientists believe Gelsinger’s death was caused by an immune reaction to the vector—not to the gene itself. Neurologix’s brain treatment, which During and Kaplitt first described in a 1994 paper, uses a vector called adeno-associated virus 2, which doesn’t trip an immune reaction in humans.

Kaplitt and During also figured out how to deliver the gene only to the part of the brain that goes bad in Parkinson’s patients. Parkinson’s occurs when there’s an imbalance of two brain chemicals, GABA and glutamate, During explains. That, in turn, causes dopamine-producing cells in the brain to die—resulting in the symptoms characteristic of the disease, including shaking, freezing, and difficulty walking. “The gene we’re putting in restores the balance between GABA and glutamate,” says During, professor of molecular virology, immunology, medical genetics, and neuroscience at Ohio State University Medical School. “That enables the network that controls movement to restore that movement.”

Neurologix’s treatment is designed for Parkinson’s patients whose disease has progressed to the point where dopamine-boosting drugs have lost much of their effectiveness. The therapy is injected into the brain during a brief surgical procedure that patients undergo while awake, with local anesthesia. No follow-up procedures are required, making Neurologix’s treatment quite different than “deep brain stimulation,” a therapy that involves implanting a device in the brain that delivers electrical signals to relieve symptoms.

Kaplitt believes the convenience of Neurologix’s gene therapy will matter—not only to patients, but also to insurers. “With deep brain stimulation, we have patients coming back numerous times after surgery for three months or longer,” he says. “That’s limiting to patients and cost-inefficient to the healthcare system. Ours is a one-time procedure. Patients do not have anything left in their brain. There’s no batteries or wires in the body. We reduce the complications related to hardware. And patients don’t have to come back for repeated visits.”

In the Phase 2 trial, patients who received the gene therapy were compared to those who got a sham surgery. The gene-therapy recipients, who continued to take their medication, reported significantly more “on” time during the day—hours during which they were able to move and function normally. Improved motor control persisted for a year after the treatment. “The take-home message is that our therapy is effective to a degree that is sustainable,” Kaplitt says.

The FDA agrees, but the agency has given Neurologix a tall task. First, the company needs to complete a “crossover study”—meaning it needs to offer the gene treatment to the patients in the Phase 2 study who originally received the sham surgery. Assuming those patients don’t experience any unforeseen side effects, the company can then proceed to the Phase 3. Kaplitt and During estimate that if all goes smoothly, they’ll be able to start the Phase 3 trial at the end of 2012 and complete it one year later.

All that will take money, and that’s where the company is focusing its immediate attention. Neurologix CFO Marc Panoff says Neurologix has hired a strategic advisor to explore corporate partnerships as well as private financing options. The company previously raised $12 million in 2006 and $20 million in 2007, both in the form of preferred stock.

But having preferred stock on top of common stock makes Neurologix unattractive to some institutional investors, Panoff says. “We’re a public company but we’re capitalized as a private company,” Panoff says. “That makes it difficult for companies to invest. Our goal is to clean up the capital structure so we have a single security.”

Neurologix already has one strong corporate partner—Medtronic, which partnered to make the device used to deliver the gene therapy and which has invested $4 million in the company. Neurologix has had discussions with other potential corporate partners, Panoff says.

The Gelsinger death rarely comes up in conversations with potential investors or partners anymore, Kaplitt says. But that nagging fear-of-the-unknown does. “Nobody has made a gene therapeutic for sale,” Kaplitt says. “The main limitation is getting people’s heads around being the pioneer in a new area of medicine.” Still, Kaplitt says he has not lost his resolve to see his project make it to market. “We think gene therapeutics will change the way neurological diseases are treated.”

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