Alder Sets Stage for Showdown With Roche, With “Fast Follower” Antibody Drug Strategy

9/18/08Follow @xconomy

Alder Biopharmaceuticals will find out next year whether it has what it takes to beat Roche, one of the world’s pharmaceutical giants. Alder, the Bothell, WA biotech company, is beginning a well-controlled clinical trial this month that will give it a clear sense of whether it has a drug for rheumatoid arthritis that is better than Roche’s, with the added advantage of being faster and cheaper to make.

Alder doesn’t do much to blow its own horn, so I was surprised to learn from CEO Randy Schatzman how fast it has progressed in the past year. Schatzman is a veteran scientist formerly of Roche and Celltech’s R&D operation in Bothell. Alder, founded in 2004 after Celltech closed its doors in Washington, is now one of the better-financed development-stage biotechs in Seattle. It pulled in a $40 million Series C round in January from Delphi Ventures, TPG Biotech, Sevin Rosen Funds, Ventures West, HIG Ventures, and WRF Capital.

Those investors are betting that Alder has a “fast follower” that might trump a rheumatoid arthritis drug approaching the market from Roche, called Actemra. The Basel, Switzerland-based drugmaker is currently awaiting FDA approval for the product. It’s designed to block an inflammatory molecule called IL-6 that attacks joints in rheumatoid arthritis patients, unlike other biotech drugs like Amgen’s Enbrel that hit a different target called TNF. An estimated 1.3 million adults in the U.S. have the painful joint disease, and the market for treatments is already worth an estimated $10 billion a year, according to IMS Health. So Alder’s first attempt at developing a new drug is really a swing for the fence.

“Our philosophy is about aiming for a best-in-class antibody as opposed to first-in-class,” Schatzman says. “Doctors will prescribe the best drug for their patients. You beat people with a better drug, not with a me-too drug.” To put it more succinctly, “it’s an improved fast-follower strategy.”

So what does that mean? Alder has engineered the drug, called ALD518, to block the same IL-6 molecules, but with a number of advantages over Actemra, Schatzman says. The Alder drug can last longer in the bloodstream, so it can be injected less frequently, possibly as little as three or four times a year instead of once a month, he says. It is made to be given intravenously or in a straightforward injection under the skin, while Actemra is IV only, Schatzman says. Alder can also give its treatment in one-tenth the dose because it’s more potent, meaning that it’s cheaper to manufacture. And, Alder’s drug is designed to snip off a carbohydrate chain that hangs off the genetically engineered antibody, which may help it avoid causing rare, but potentially dangerous allergic reactions during infusion, Schatzman says.

Alder does this through a technology that turns yeast cells into mini-factories for antibody drugs, instead of the standard Chinese hamster ovary cells, to better mimic the human environment. Since yeast is a cheap raw material, and the cells divide much faster than the hamster cells, drugs made this way could cut manufacturing costs to a fraction of what it takes to make big sellers like Enbrel or Genentech’s Avastin, Schatzman says. The trick, which Alder will need to continue to prove works in clinical trials, is that yeast-derived antibodies behave the same way in the body as those from hamster cells, or at least aren’t associated with any unusual side effects. (The company also had to prove that it could take small-scale batches of yeast antibodies and make them in large volumes, which it has done, Schatzman says.)

Once Schatzman explained the design of the next experiment, I could see why he needed to raise $40 million. The study of ALD518 for rheumatoid arthritis patients will enroll 120 patients, randomly assigned to drug or placebo, and measure the standard scores on joint pain and swelling for 24 weeks—the same test other drugs have passed in their pivotal trials—which isn’t cheap. If this trial shows positive results in mid-2009, then Alder will have to find a large drugmaker as a partner on the ensuing Phase III trial, which will need to enroll thousands of patients to satisfy FDA’s safety demands on rheumatoid arthritis drugs, Schatzman says. It will probably be 2013 before the drug could reach the market, he adds.

Still, Alder isn’t planning to give away the entire store in a pharmaceutical alliance. The company plans to keep rights to itself with ALD518 for use against cancer. Although anti-cancer medicines traditionally are measured by their ability to shrink tumors or prolong life, Schatzman says his drug could take a different tack, showing benefits for quality of life for cancer patients. Research shows that many tumors pump out lots of IL-6 inflammatory molecules, which contributes to fatigue, weight loss, muscle loss, and generally feeling miserable. The reasoning is that if ALD518 can block that molecule, the patients should not only feel better, but they could be sturdy enough for more chemotherapy, which could help them live longer, he says. That hypothesis is also being put to the test in a 120-patient, randomized clinical trial that should provide an answer on whether it can help patients with lung cancer, he says.

“These Phase II trials will drive value for us if we’re successful,” Schatzman says. “Then we’ll raise more money.”

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