ACT Biotech, Scooping Up Bayer’s Cast-Off, Shows Promise With Stomach Cancer Drug

6/6/11Follow @xconomy

You know saying about one man’s loss being another man’s gain? That looks like the storyline that’s playing out at San Francisco-based ACT Biotech, which presented some promising results over the weekend with a new cancer drug it picked up off the scrap heap a few years ago from Germany-based Bayer (NYSE: BAY).

ACT Biotech, a tiny 7-person operation led by executives from Onyx Pharmaceuticals and Proteolix, showed off the data for its lead drug against stomach cancer. When given in combination with standard chemotherapy, the ACT Biotech drug was able to shrink tumors by at least 30 percent or more in about two-thirds of all patients (25 of 39) in a mid-stage clinical trial. The compound, telatinib, was found safe at its highest dose, with high blood pressure and fatigue being the most common side effects, researchers said. The findings were presented at the American Society of Clinical Oncology meeting in Chicago.

ACT Biotech got ahold of this oral pill, originally developed by Bayer to cut off blood flow to tumors, in early 2008 after it got squeezed out of the company’s new drug portfolio following the merger with Schering, according to Ali Fattaey, ACT Biotech’s president and chief operating officer. The drug appears to have a milder side effect profile than others in its class, which should make it attractive in various combinations with chemotherapy against multiple types of cancer, he says. Stomach cancer, once it has spread, is a notoriously fast-moving, tough-to-treat malignancy that typically leaves patients only six to seven months to live. The disease strikes about 21,000 new people in the U.S. each year, and kills about half that many every year, according to the American Cancer Society. About three times as many patients are thought to be affected in Europe, and the highest concentration of patients is in Asia.

“I’ve been meeting investigators every half hour, from the EU, the U.S., Central America who want to participate in our upcoming trial,” Fattaey said on Friday, the first day of the ASCO conference. “There’s incredibly high interest in participating in the trial. The investigators see the drug as being active, and the safety profile means they aren’t worried about giving the drug. Plus, not a lot of organizations are going into stomach cancer, so there’s a very big opportunity.”

Ali Fattaey

It must be noted that the results ACT Biotech presented at this year’s ASCO are quite preliminary, coming from such a small trial. The real test is supposed to get going by the end of this year. The next trial, which ACT Biotech is negotiating over with the FDA, is expected to enroll about 750 patients who will be randomly assigned to get the new drug plus standard capecitabine (Xeloda) and cisplatin, or the two chemo drugs alone. Researchers will compare tumor shrinkage rates in the two patient groups, but the primary goal will be to demonstrate the new drug helps people live longer, the gold standard measurement in cancer drug R&D. ACT Biotech’s bet is that its new drug will extend lives at least 30 percent, or a minimum of 2.5 months, compared to the chemo alone, Fattaey says.

Fattaey, who spent about 10 years at Emeryville, CA-based Onyx Pharmaceuticals (NASDAQ: ONXX), was familiar with the Bayer drug years ago, partly because Onyx and Bayer have a close relationship through their co-marketing of sorafenib (Nexavar) for kidney and liver cancer. What he saw in early 2008 was a drug that Bayer took into Phase 1 clinical trials, and saw was safe in a small number of patients. When Bayer and Schering merged, telatinib didn’t make the cut for further investment, and so ACT Biotech’s founders in-licensed it. The company raised its first $15 million from NGN Capital to see what they could do with it in further development.

One of the first things ACT Biotech did was study the molecular way telatinib worked, to better understand why it looked so safe. Others in its class, called tyrosine kinase inhibitors, are known to be designed to hit certain biological targets specifically, but they actually block other biologic targets as well, creating what are known as “off-target” effects. What was unusual about telatinib is that it appeared to be much more selectively aimed against just two targets—the VEGF receptor and the PDGF receptor. Both of those targets are implicated in angiogenesis, the process of helping form new blood vessels that nourish tumors and help them to grow.

After seeing telatinib’s potency against those selected targets, ACT Biotech decided it might have a real drug for a couple reasons. It could go after stomach cancer partly because there wasn’t a lot of competition, and it’s a tumor type that’s fast-moving and thought to be highly dependent on angiogenesis, Fattaey says. But stomach cancer shouldn’t be the end of the story. With its reportedly mild side effect profile, telatinib should be easily combined with other chemo agents, against other cancers, because it doesn’t do much to exacerbate the toxic side effects of chemo.

A lot of work needs to be done right away before ACT Biotech can go down that road. It needs to nail down an agreement with the FDA on the pivotal trial design in stomach cancer. It also needs to decide how to pay for, and execute, such a big undertaking. The company is attempting to raise $40 million to $50 million for the trial, which could come from venture investors, a partner, or some combination of the two, Fattaey says.

Clearly, there was some time to talk at ASCO over the weekend with not just clinical investigators, but potential investors and partners hanging around the conference in Chicago. Fattaey was definitely brimming with confidence, and talking the dealmaker talk.

“For a disease like this, the market size is very large and development timeline is very short,” Fattaey says. “We are right there.”

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