TG Therapeutics Builds Pipeline Around Cancer and Immune Diseases

8/23/12Follow @arleneweintraub

On August 16, New York-based TG Therapeutics (OTCBB: TGTX) announced that it had formed a deal with a Swiss company called Rhizen Pharmaceuticals to co-develop a drug to treat blood cancers and autoimmune diseases. It was TG’s second transaction in the last five months related to “B-cell diseases,” which are disorders involving key cells in the immune system.

In fact, TG’s entire mission is to find new methods of attacking the toughest B-cell disorders, which include non-Hodgkin’s lymphoma, chronic lymphocytic leukemia, lupus, and rheumatoid arthritis. Its management team is so confident in its chosen niche that they took a shortcut to Wall Street. In April, TG reverse-merged into a struggling publicly traded biotech company called Manhattan Pharmaceuticals, in the hopes of tapping into the public money for research support. “We think there’s a huge opportunity in this area,” says Michael Weiss, TG’s interim CEO and a partner at Opus Point, a New York hedge fund company that invests in life science and healthcare innovations.

Weiss spearheaded the formation of TG in March, when he struck a deal with a French pharmaceutical company called LFB Group to license a B-cell targeting molecule that has shown some promise in treating chronic lymphocytic leukemia. The drug, ublituximab, is an antibody that targets a particular molecule called CD20, which is found on the surface of B-cells. The drug is currently in early-stage human trials and could be ready for late-stage testing within 18 months, Weiss says.

The anti-CD20 space is currently dominated by rituximab (Rituxan), a $7-billion-a-year blockbuster marketed by Roche’s South San Francisco-based unit, Genentech. Weiss says that what makes ublituximab different is that it is designed to amplify the immune response, depleting even more of the problematic B cells than rivals can. In the early trials, he says, 45 percent of patients responded well to TG’s drug, including some people who had relapsed after taking Genentech’s drug.

In addition to developing the drug in leukemia, TG recently started a trial in non-Hodgkin’s lymphoma. TG is also examining the compound’s potential in autoimmune diseases. Ultimately, Weiss says, the potential market could be worth $15 billion a year.

In conjunction with the LFB deal, TG raised $25 million from a consortium of unnamed investors that includes high-net-worth individuals, Weiss says. Then came the reverse merger. Weiss says he chose to go straight to the public markets with TG simply because it’s what he knows best. From 2002 to 2009, Weiss served as CEO of Keryx Pharmaceuticals (NASDAQ: KERX), a New York company developing a drug for patients with kidney disease. “All of my contacts are in the public markets, so it just seemed natural,” he says. (Manhattan Pharmaceuticals, the company TG acquired in the reverse merger, was developing two treatments for rare diseases. Weiss says TG is still determining what the future path will be for those drugs.)

The recent Rhizen deal expands TG’s presence in B-cell technologies. The compound the two companies are developing, TGR-1202, inhibits a molecular pathway called PI3K delta. Using the drug to interrupt signaling along this pathway has been shown in animals to be effective in fighting blood cancers. Weiss says the company’s goal is to begin human clinical trials in the first quarter of next year.

TG will be racing against a daunting rival: Foster City, CA-based Gilead Sciences, which recently started late-stage trials of its own anti-PI3K drug. Several other companies are also working on PI3K approaches. Weiss isn’t concerned. “We believe there is room for competition,” he says. “We think the drug we’ve now partnered on has some very interesting attributes that could make it a better molecule when it comes to safety, tolerability, and dosing.”

TG isn’t looking for deep-pocketed pharma partners for either of its two molecules just yet, Weiss says. “We could do it alone,” Weiss says, though he’s quick to add that the company will be “opportunistic” should anyone approach with a tantalizing offer. “When we move into the broader area of autoimmune diseases, it might be nice to have a partner.”

For now, it’s hard to predict whether or not TG will get enough support on Wall Street to be able to finance both drugs all the way through the development process. The company’s stock rose by a nickel to $6.25 just after the reverse merger in April, but has since fallen to $3 a share. “We have the skill set to run large-scale trials,” Weiss says. “But capital always becomes a question. We just have to wait and see if the markets are positive, and if they want to give us the capital to do this on our own.”

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