Cancer vaccines still have the power to captivate the public imagination, but Bob Kirkman isn’t betting his company on them anymore. The CEO of Seattle-based Oncothyreon has reinvented this little biotech firm in a way that puts a pair of experimental cancer drugs, not vaccines, on the corporate front burner.
Kirkman learned from hard knocks a few years ago at Seattle-based Xcyte Therapies, which failed, like many others, to develop a treatment that stimulates the immune system to fight cancer. Nobody has pulled off this feat with an FDA-approved cancer vaccine yet, and the list of failures in the last two years includes Cell Genesys, Genitope, and Favrille. (Seattle-based Dendreon is holding its breath for important clinical trial results next month.) So I was curious last week, on a visit to Kirkman’s Belltown office, how Oncothyreon is positioned to keep some skin in the cancer vaccine game, while shifting most of its resources toward oral pills designed to block a couple of hot targets on cancer cells.
The company that Kirkman runs now looks completely different from when chairman Christopher Henney recruited him to take over as CEO in September 2006. The company changed its name from Biomira to Oncothyreon, which is Greek for cancer shield (and pronounced like on-koh-THEAR-ee-on). It reincorporated in the U.S. and moved its headquarters from Edmonton, Canada, to Seattle, where Kirkman lives. He bought a small company called ProlX Pharmaceuticals for about $20 million in cash and stock to diversify with two cancer drugs that showed promising results in animal tests, and were poised to enter clinical trials. He also did a very unpopular thing, a reverse stock split, which took six shares from the company’s investors and gave one back, in a painful but necessary move to keep its public listing (NASDAQ: ONTY).
Then, last December, as cash was running dangerously low and investors weren’t willing to pump in any more capital to keep the company going, Kirkman pulled the proverbial rabbit out of the hat. He sold off the company’s facility in Edmonton that makes Stimuvax cancer vaccine to his partner, Merck KGaA, for $13 million. The deal provided Oncothyreon another year’s worth of cash, shifted more of the manufacturing risk to his partner, helped avoid layoffs of 52 people there, and still allowed Kirkman to walk away with a “double digit” percentage royalty on future sales (even though he made some undisclosed concessions to take a smaller royalty rate).
The end result is a virtual company–you can hear a pin drop, walking through the office now—but it will live to see some intriguing results that will be presented this year. Rodman & Renshaw analyst Simos Simeonidis recently initiated coverage of the company, saying he thinks its stock has potential to more than double to $4.
“We’ve done a huge transformation here,” Kirkman says.
The company’s lead program in development, Stimuvax, like a lot of cancer vaccines, has a tortured history. It failed in a mid-stage clinical trial in 2004 of patients with lung cancer. But rather than giving up, the company dredged through the data and discovered after-the-fact (always a somewhat dubious statistical practice) that a subgroup of patients with Stage III forms of disease, confined to the local organ, lived for a median time of 30.6 months on Stimuvax and the best supportive care, compared with 13.3 months for those on best supportive care alone. No benefit was seen in patients with more aggressive Stage 4 disease, which caused the trial to fail.
Yet among Stage III patients, that kind of survival advantage is basically unheard of, in a field where a drug that prolongs life by just a few months can become a billion-dollar seller. So Oncothyreon and Merck KGaA decided to test this hypothesis in a pivotal trial of 1,300 patients, called START, that is currently enrolling patients, and expected to produce a result in 2011.
Merck KGaA likes this program a lot, and touts it to investors as one of its prized pipeline assets, Kirkman says. Part of the reason is that Stimuvax is designed to stimulate the immune system against a market on tumor cells called MUC-1, which is also found on prostate, breast, and colorectal cancer tumor cells. That’s prompted Merck KGaA to say it plans to double down on the program—before waiting for results from the START trial—to start a second pivotal trial in one of those diseases later this year.
Kirkman is clearly relieved to have handed off the expense of the 52 employees the company had in Edmonton, and the manufacturing process refinement work they do there. The $13 million he got from Merck KGaA will allow the company time to get a good look at the potential of its two oral drugs. “We view the renegotiation of the Stimuvax agreement as a savvy management decision,” Rodman analyst Simeonidis wrote in a note to clients on March 18. “The new deal provided Oncothyreon with $13 million in non-dilutive capital, which was sorely needed in a time when the financial markets were closed, without giving up much—if any—of the upside that can come if Stimuvax is successful.”
So now Oncothyreon is free to concentrate its remaining 17 employees on what it hopes will be even greener pastures with its two cancer drugs in the pipeline. The first, called PX-478, is designed to block a protein called HIF-1 alpha. Tumors often live in a low-oxygen environment in the body, and HIF-1 alpha protein pulls the nifty trick of detecting oxygen loss, and activating genes that allow tumors to metabolize sugar that’s needed for fuel in that environment, while also turning on genes that can nourish the tumor with new blood vessels. The concept is pretty simple—block HIF-1 alpha, and you cut off its sugar and blood supply.
Oncothyreon expects to see results from an early-stage clinical trial of this drug by the middle of 2009, Kirkman says. It is the only oral drug made to block this target in clinical trials, although Enzon has an antisense therapy in the clinic, he says. It’s made into a once-daily oral pill, being tested in an estimated 36 patients. Data that could demonstrate the drug’s safety could be available by the American Society of Clinical Oncology (ASCO) meeting in late May and early June, he says.
The second drug, PX-866, is designed to block one of the hot targets in cancer biology today, the PI3 kinase. There is a lot of competition here from some of the big guns in cancer research—Novartis, Roche, GlaxoSmithKline, and Exelixis (as well as a startup in the same neighborhood, Seattle-based Calistoga Pharmaceuticals.) Calistoga’s niche is that its PI3 kinase blocker is made to block a particular isoform of this protein, found on blood cancer cells and in autoimmune disease. Oncothyreon’s drug is made to apply more broadly across various types of PI3 kinase, and its calling card is that it is an irreversible blocker that forms a tight covalent bond with the target, which is thought to prevent it from sloughing off, Kirkman says.
That means it has the potential to be more potent, work at lower doses, and lower the cost of raw materials in manufacturing, Kirkman says. It’s made to be given once a day, instead of some other drugs that are given twice a day. Data from the first phase of clinical trials is expected this year, and could arrive as early as the ASCO conference, Simeonidis wrote.
Even though this is the sixth PI3 kinase in clinical trials, “there are still some Big Pharma companies in oncology who don’t have a PI3 kinase inhibitor,” Kirkman says. Since Oncothyreon owns 100 percent of this drug, it might be in a position to strike a partnership that could bring in a load of more cash and accelerate this drug’s path to the marketplace—if it passes the safety test.
“There’s a lot of interest in the drugs,” Kirkman says. “I’m not particularly interested in giving them away, but I’ll do what I have to do. There are really several things that could happen to change the perception of this company.”
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