What are Opko Health (NYSE: OPK) and the founding partner of private equity firm TPG Capital doing circling a seven-year-old biotech startup that isn’t even close to owning a marketed product? Apparently buying into the idea that that startup, Flemington, NJ-based Arno Therapeutics, may potentially be on to something.
This past week, Opko, its CEO Phillip Frost, and TPG Capital founding partner David Bonderman, teamed with a group of existing investors (among them affiliates of George Soros’ Soros Fund Management) to provide Arno—a small company whose stock trades over the counter—with a $30.7 million private placement of newly issued stock and warrants. As part of the financing, Opko was given the first crack at a potential strategic deal with Arno in the form of an exclusive 45-day negotiating window on a buyout, partnership, or licensing pact, should Arno decide to pursue one. Opko was also given a board observer seat.
“It’s definitely a good endorsement of what we’re doing here,” says Arno CEO Glenn Mattes.
The big-name group is clearly willing to bet on Arno’s plan for a well-studied drug candidate called onapristone, which is what’s known as an anti-progestin, a synthetic compound that suppresses the actions of the hormone progesterone.
Onapristone was initially kicked around two decades ago by Schering AG (now part of Germany-based Bayer) as a treatment for endometriosis, uterine leiomyomas (benign tumors in the uterus), and possibly as a contraceptive or a breast cancer treatment. Mattes says that Schering ran a Phase 2 cancer study on the drug in an “unselected patient population,” and while researchers found that onapristone could demonstrated an ability to shrink tumors, investigators discovered certain patients in the trial had elevated levels of liver enzymes.
“[This was] an unacceptable safety profile for benign gynecological conditions, but [it] can be acceptable and manageable in the oncology indications,” he says.
Even so, Schering discontinued development of the drug, and it eventually ended up in the hands of Bridgewater, NJ-based Invivis Pharmaceuticals, which was looking for a partner to help move it forward. Arno grabbed worldwide rights to it through a February 2012 licensing deal, paying $500,000 up front and tying $15.1 million in potential milestones to the transaction. Arno is now working with Invivis through a research collaboration to develop the drug.
“We looked at the whole concept of anti-progestins in the treatment of cancer and realized that [there] will be an emerging interest,” Mattes says of scouting the drug, noting that there are no currently approved anti-progestins for cancer.
It was timely for Arno. The company had just decided to abandon its rights to an experimental cancer drug it had licensed from the University of Pittsburgh. And though it has two other programs in its portfolio, it saw a quicker, clearer path to market with onapristone.
Arno’s resulting idea: pair onapristone with a companion diagnostic that highlights a clear molecular biomarker—an activated progesterone receptor, or APR, that Arno, citing preclinical data it’s obtained, thinks is abnormally turned on in certain tumors. It’ll then find patients with those biomarkers, and initially drive onapristone towards a cancer type where there isn’t a lot of competition—endometrial cancer, when cancerous cells grow in the lining of the uterus.
Patients with endometrial cancer can either get surgery, hormone or radiation therapy, or chemotherapy. But Mattes notes that the effectiveness of these options can be limited, invasive (in the case of surgery), or altogether difficult to tolerate. So by tailoring onapristone to a specific, targeted subset of endometrial cancer patients , Arno believes onapristone has a shot to be awarded status as an orphan drug, giving it longer market exclusivity. Arno’s also thinking about using the drug to treat prostate cancer patients possessing the APR biomarker that are no longer responding to hormone suppressing drugs like abiraterone (Zytiga, sold by Johnson & Johnson) or enzalutamide (Xtandi, sold by Medivation).
“We think that this space is less crowded and we can achieve a higher level of specificity going after those two tumor types as the initial development strategy,” Mattes says.
This is all a ways away, of course. With the new cash infusion, Arno will begin only its first human clinical trials of onapristone, and has to produce good results before it can think about the idea of holding the rights to an orphan drug, or wooing Opko or another suitor to form a partnership or buy it outright. Right now, it’s organizing two separate Phase I studies designed to find the best dose to give to patients in its next trials, and see what safety and efficacy signals it gets.
In one study, which is expected to start in the coming days, Arno will enroll women who have tumors—not just endometrial, but otherwise—that are progesterone receptor-positive, or PR+. In the other, which should start early next year, it’s enrolling men whose prostate cancer no longer responds to hormone therapy.
This will lead to a Phase 2 trial Arno aims to start in the fourth quarter of 2014 for patients with metastatic endometrial cancer. Since Arno will specifically target PR+ patients in that trial, it’s banking on getting the type of evidence that will wow the FDA, and give it enough juice to file a new drug application. Mattes is eyeing the idea of selling onapristone as an endometrial cancer treatment somewhere in late 2016 or early 2017.
“The most important thing is we think about developing onapristone right to the finish line,” he says. “If we do that, we’ll have options.”