Allozyne Raises More VC Cash, Looks to FDA Meeting After Poniard Deal Fizzles

12/23/11Follow @xconomy

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randomly assigned to get AZ01 once a month, AZ01 once every two weeks, Biogen’s existing interferon-beta (Avonex), or a placebo, Chhabra says. The primary goal of the study will be to see if the Allozyne drug is roughly equal (non-inferior in regulatory parlance) to the Biogen drug in terms of reducing brain lesions on MRI scans over a 12-month period, Chhabra says. While the FDA has often asked for two Phase III trials to confirm the benefit of novel MS drugs before clearing them for sale in the U.S., Allozyne is wagering that a single pivotal trial will satisfy regulators because they are familiar with interferon-beta, which has been marketed since 1993. It’s also betting that the FDA won’t require extra measurements of whether brain lesion reduction correlates with reductions in disability of MS patients—which the FDA has sometimes asked for from other drugmakers with novel drugs.

What the FDA says about the proper trial design will have a big influence on Allozyne’s next financing and strategic moves, Chhabra says. If the FDA agrees to Allozyne’s slimmed-down Phase III trial plan, it will be a “bombastic win” for the company, and raises the possibility that the company could finance the trial by itself and see results as soon as early-to-mid 2014, she says. If the FDA responds with a more difficult trial plan that includes something like 1,200 patients, the company will probably look to corporate partners or other ways of finding more financing, Chhabra says.

The multiple sclerosis market is a lucrative one, with more than 400,000 patients in the U.S. who suffer from a chronic disease that slowly robs people of their ability to walk, their ability to see, and manual dexterity to do things like get dressed or brush teeth. The disease is caused by an overactive immune system which attacks the fatty coating around nerve fibers, and it is controlled by drugs that suppress this overactive immunity.

Biogen Idec, Teva Pharmaceutical, Merck KGaA, and Bayer are dominant players in this $10 billion dollar market, and a new generation of the first oral pills has started to arrive, with one now on the market from Novartis. Patients with MS often complain about “injection fatigue” because they usually have to inject themselves more than once a week for a period of many years. So companies like Biogen Idec, Allozyne, Ambrx, and others have sought to engineer these injectable protein drugs to last longer in the bloodstream, and therefore control the disease with fewer injections.

Allozyne spent much of the fall outlining this pitch to investors on Wall Street, and Chhabra says it was “very well-received.” It’s impossible to verify that for certain through looking at Poniard’s stock price from this past fall, because investors who agreed to hear Allozyne’s story had to agree not to invest speculatively in Poniard shares until after the merger was supposed to be completed, Chhabra says.

When I remarked that she and the team must be disappointed to have spent so much time on an IPO plan that didn’t work out, the ever-upbeat Chhabra dismissed that notion. She said it was a “wonderful opportunity” to tell the Allozyne story to so many savvy, deep-pocketed public investors.

“No one here is in fact at all disappointed. We are very much looking forward to 2012. We are invigorated about the challenge ahead,” she says.

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