OncoSec Medical CEO Punit Dhillon tells me the startup he helped establish in San Diego last March is beginning mid-stage safety and efficacy trials of its proprietary technology for enhancing drug delivery in treatments of several types of skin cancer.

The technology, which OncoSec acquired from Blue Bell, PA-based Inovio Pharmaceuticals (AMEX: INO) almost a year ago, transmits intense electrical pulses into skin tumors through six electrode needles that are pushed into the skin. The electricity causes the tumor cells to become permeable with each jolt, and makes it easier for anti-cancer drugs injected into the region to pass through the tumor cells’ tough outer membrane. Known as electroporation, the process increases the concentration of an anti-cancer drug within the tumor.

“What we’re doing is a much more elegant and targeted approach,” says Dhillon, who estimates the technique increases the uptake of anti-cancer drugs by 4,000 to 10,000 times. As a result, doctors can reduce the dosage of anti-cancer drugs used with electroporation technology.

Dhillon, who previously served as Inovio’s vice president of finance and operations, says Inovio has been an electroporation pioneer. The Pennsylvania company decided last year, however, to sell technology that was unrelated to its strategic focus on developing DNA vaccines for cervical dysplasia, leukemia, and hepatitis C virus therapies.

The deal to acquire Inovio’s assets didn’t happen by chance. Inovio chairman and former CEO Avtar Dhillon is Punit Dhillon’s uncle, and their family and friends raised the initial $1.1 million that funded OncoSec after the company sprang to life through a reverse merger with a dormant public company. The San Diego startup raised another $3 million last June from two New York health funds, Hudson Bay Capital and Heights Capital. That should be enough cash for OncoSec to complete three mid-stage trials the company plans to begin before the end of March.

The three studies will use OncoSec’s electroporation technology to deliver the company’s lead drug candidate, called Interleukin-12 (IL-12) cytokine, to three groups of patients with different lethal skin cancers—metastatic melanoma, Merkel cell carcinoma, and cutaneous T-cell lymphoma. The experimental drug is intended to both trigger and boost a strong immune response to each type of cancer. The combined treatment, known as electroimmunotherapy, represents a potential new anti-cancer treatment with broad applicability, although Punit Dhillon says the company must pursue separate regulatory approvals to treat each type of cancer (as a combination drug-and-device product) on an application-by-application basis.

OncoSec says its technology also can be used in the same way in electrochemotherapy, which uses an established anti-cancer drug like bleomycin while a tumor is being electroporated. The use of electroporation in chemotherapy has been studied more throroughly, and Punit Dhillon says he wants to advance OncoSec’s approach through a partnership with a bigger pharmaceutical company.

“2011 was a great year for us,” he says, “and we’ve got some exciting milestones to look forward to in 2012.” Once the latest studies have been completed, OncoSec’s Dhillon says he looks forward to licensing opportunities and other commercial prospects, and he adds, “We also still have the chemotherapy program in the wings.”

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Applied Proteomics hasn’t exactly been operating in stealth mode since it was founded five years ago. Co-founders David Agus, a cancer specialist at USC, and Danny Hillis, the MIT-trained computer scientist, gave TedMed talks about the startup’s technology, which provides a 40-gigabyte snapshot of all the proteins circulating in a drop of blood. By pure coincidence, I watched John Stewart’s Feb. 2 interview with Agus last night on “The Daily Show.”

“Danny and David had the foresight to build the tool before trying to use the tool,” says John Blume, a molecular biologist who joined API in 2008 as chief scientific officer. “Although the company wasn’t in stealth mode, the first several years were spent in taking the time to make it right, and then to use it and avoid some of the stumbling blocks.”

Now Applied Proteomics is raising the curtain on several steps that mark its progress beyond a seed-stage startup that was incubating at Applied Minds, an industrial think tank that Hillis founded in Glendale, CA, with a colleague from Disney Imagineering. After moving the headquarters to San Diego late last year, Applied Proteomics is today naming a new CEO—Peter Klemm, a veteran in molecular diagnostics and the former CEO of Lexington, MA-based Predictive Biosciences.

Danny Hillis

The company known as API says it also secured $22.5 million last June in Series B funding from Domain Associates (San Diego partner Jim Blair joined the board), Seattle’s Vulcan Capital, and returning angel investors. Klemm tells me the company raised $4 million from angel investors (who prefer to go unnamed) in what amounted to API’s Series A round in 2007.

David Agus

API’s goal, Klemm says, is nothing less than to “elevate molecular diagnostics to another level beyond the genome” by measuring the proteins made by genes—a long-sought technology that is expected to help doctors improve medical care for individual patients. Because proteins carry out most cellular functions, the company says a snapshot of all the proteins circulating in the body at a given moment represents “the most powerful source of information” in terms of understanding a patient’s health status.

Quantifying all the proteins in the body, Klemm says, can help doctors optimize the course of treatment for individual patients by making it easier to identify the specific drugs that would have the greatest effect on blocking specific proteins or signaling pathways, which can vary dramatically from person to person.

In a statement from the company, Hillis says, “For the first time, we can look at all the proteins in the body with remarkable specificity and sensitivity and use proteomic technology to create … Next Page »

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—San Diego’s Amylin Pharmaceuticals says Bydureon, its new once-a-week drug for treating Type 2 diabetes can hit the market as early as next month, after the FDA cleared Bydureon. The FDA rejected the Amylin’s drug twice before. An estimated 26 million people in the United States, or roughly 8 percent of the population, have type 2 diabetes.

—San Diego’s life sciences sector has expanded since 2009, with employment increasing by more than 5,550 jobs, or 15 percent, over the past two years, according to a new economic report from Biocom, the local industry group. The comprehensive study counted more than 1,700 life sciences companies with a total of 41,937 employees throughout San Diego County in 2011, and says those numbers are expected to grow over the next two years.

—The FDA gave its approval to Cambridge, MA-based Vertex Pharmaceuticals (NASDAQ: VRTX), which has substantial operations in San Diego, for a new drug called Ivacaftor (Kalydeco), developed to treat a rare form of cystic fibrosis. The twice-a-day pill targets about 4 percent of the 30,000 patients in the U.S. with cystic fibrosis.

—Johnson & Johnson’s reorganized R&D operation in San Diego, now known as Janssen Healthcare Innovation, is trying an experiment in innovation by creating an incentive prize challenge. Janssen is offering a total of $250,000 for technology that helps improve care for patients who have just been discharged from a hospital.

—The folks who produce the quarterly MoneyTree report on venture capital funding just released a deeper dive into the details of life sciences investments. The survey shows that VC funding for life sciences increased 21 percent nationwide in 2011, with a total of $7.5 billion going into 785 deals. San Diego ranked third among metropolitan regions in terms of capital invested in the fourth quarter. The top five are Bay Area ($498 million), Boston ($384 million), San Diego Metro ($193 million), NY Metro ($98 million), and Orange County ($97 million

—Optimer Pharmaceuticals (NASDAQ: OPTR) CEO Pedro Lichtinger outlined his plans for expanding the market for the company’s first product, the antibiotic fidaxomicin (Dificid), as a preventative therapy for hospital patients at risk for a nasty intestinal infection called C. difficile. San Diego-based Optimer is planning a clinical trial to prove the drug can help prevent severe diarrhea in patients undergoing bone-marrow transplants.

—A tweet from Bob More of Frazier Healthcare Ventures prompted Luke to delve into the importance of character among life sciences leaders in his BioBeat column. “Politics pretty similar to backing CEO’s,” More said. “Newt may be smart and a good debate guy. But Newt=Smug. Never back smug,”

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News of FDA drug approvals shone the spotlight on some New England biotechs this week.

—Waltham, MA-based Alkermes (NASDAQ: ALKS) and San Diego-based Amylin Pharmaceuticals(NASDAQ: AMLN) won FDA approval for their injectable diabetes drug exenatide once-weekly (Bydureon). This was their third time seeking clearance for the drug, which uses technology from Alkermes to last long enough in the bloodstream to turn it into a once-weekly injection

—Additionally, the FDA cleared a drug developed by Lexington, MA-based Curis and its partner Genentech as treatment for a common form of skin cancer called basal cell carcinoma. The drug, vismodegib (Erivedge), is the first approved product for Curis.

—They say good news comes in threes. Cambridge-based Vertex Pharmaceuticals also got a faster-than-expected FDA OK to start selling its drug ivacaftor (Kalydeco) as a treatment for a rare form of cystic fibrosis. That’s the second drug approval for Vertex (NASDAQ: VRTX), which also sells a treatment for hepatitis C. Bonnie Ramsey, one of the key people involved in developing the drug, talked to my colleague Luke about the implications of the approval.

—But there was some bad news, too: A week after reporting data that its pancreatic cancer treatment saridegib (IPI-926) showed some success in a small study, Infinity Pharmaceuticals (NASDAQ: INFI) halted a bigger, mid-stage clinical trial of the drug when it showed patients were living longer in the placebo group. The Cambridge, MA-based company’s shares fell more than 30 percent after the news last Friday.

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Employment in San Diego’s life sciences sector grew by 15 percent over the past two years, as biopharmas, medical device companies, and other employers added roughly 5,550 jobs here—raising employment in the sector to 41,937 in 2011, according to a report released today by Biocom. The report says overall employment in San Diego increased by 1.1 percent over the same period, gaining about 20,600 jobs to reach 1.83 million in 2011.

The 40-page economic study says San Diego’s life sciences cluster also is expected to outpace the nation in terms of job growth and economic impact over the next two years, as another 2,770 jobs are added by 2013. A broader snapshot that includes life sciences companies in neighboring Orange, Riverside, and Imperial Counties projects the region will add more than 6,000 workers over the next two years.

Despite a significant decline in venture capital funding, the report says the four-county region of Southern California will continue to retain its high standing and competitive advantage in the life sciences. By 2013, there will be 70 percent more jobs in the life sciences in these four counties than the national average.

While venture capital funding is a key indicator of entrepreneurial activity and business formation, the report says the sharp decline in Southern California VC investments, from $1.1 billion in 2007 to $553 million in 2010, reflects the severe economic downturn and other industry trends underway nationwide.

San Diego’s strength was especially apparent in federal funding for biomedical research. Of the top 10 research institutions receiving National Institutes of Health grants in 2011, nine are in San Diego. The $835 million in grants awarded last year to San Diego scientists accounted for more than 85 percent of the grants allocated in the four-county region.

The report says the four-county life sciences cluster comprises more than 3,500 companies and employs over 97,000 people. On average, salaries range between $54,141 and $116,462, well above the national and regional averages. Including direct, indirect, and induced employment, the report says this region supports a total of 248,800 jobs that pay over $17.7 billion in wages and generate $57 billion in economic activity.

San Diego County alone accounts for 1,700 companies that employ 41,937 people. Including direct, indirect, and induced job, San Diego’s industry supports more than 106,000 jobs that pay $7.5 billion in wages and generate roughly $22 billion in overall economic activity. A .pdf file of the full report can be downloaded here.

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Bonnie Ramsey said three years ago that a cystic fibrosis drug from Vertex Pharmaceuticals was a huge medical advance in the making, and would end up being an achievement on par with putting a man on the moon, at least for her patients.

Yesterday, she says, was the day it truly felt like she was part of a team that reached the moon-shot goal. The good news came when the FDA approved Vertex’s ivacaftor (Kalydeco) as the first drug of its kind to work by treating an underlying genetic defect for cystic fibrosis.

“It’s a really big day,” says Ramsey, a leading CF physician/scientist at Seattle Children’s Hospital and the University of Washington. “Even though it’s for a small subpopulation, the treatment paradigm has completely changed. It’s no longer about just treating the symptoms, it’s about treating the genetic defect. That’s a real game-changer.”

The drug from Cambridge, MA-based Vertex (NASDAQ: VRTX) is now FDA approved for patients age six and older who have what’s known as a Class 3 gene mutation called G551D. This mutation is found in about 4 percent of the 30,000 patients in the U.S. with cystic fibrosis. The disease, the result of various mutations to a gene called CFTR, causes the poor transfer of water and salt across cell membranes, which leads to the buildup of thick, sticky mucus in the lungs, and poor absorption of nutrients. It means patients have to endure hours a day of treatment their entire lives, and the median life expectancy is about 39 years. Doctors currently treat the symptoms of the disease, through things like inhalable antibiotics, but Vertex’s drug is the first FDA-approved therapy that works by altering an underlying disease-related protein.

Bonnie Ramsey of Seattle Children's Hospital

Ramsey has had an instrumental role in developing this drug since its infancy. As the executive director of the Cystic Fibrosis Foundation’s Therapeutic Development Network, back in 2000 she began collaborating with the drug’s original developer, San Diego-based Aurora Biosciences (later acquired by Vertex.)

Ramsey was the lead investigator of a pivotal study of 161 patients, known as Strive, which yielded results in February that laid the foundation for yesterday’s FDA approval. The study showed that patients age 12 and older on the twice-daily pill from Vertex had about a 10.6 percent absolute improvement in their ability to force out air from their lungs in one second—compared with a placebo. The effect held up over the full 48-week course of the study. Researchers also saw significant improvements in being able to gain weight, while also reducing cough, sputum production, and the incidence of pulmonary exacerbations. Side effects included headache, and upper respiratory tract infections, researchers said, although more patients dropped out of the placebo group than the drug group. A second study verified the effect in younger patients, age six and above.

What excites scientists is that the drug has a compelling foundation in biology. It is designed to … Next Page »

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This week’s deal news covered a breadth of sectors: biotech, medical devices, mobile applications, software, and robotics. Not to mention a major venture capital fund raise.

—Waltham, MA-based drugmaker Avila Therapeutics was bought by New Jersey-based Celgene (NASDAQ: CELG) for $350 million, with as much as another $575 million available in milestones. Avila is a maker of “covalent” drugs that are designed to shut down the activity of disease-causing proteins for a prolonged period of time.

—Verastem, a young Cambridge, MA-based biotech working on drugs targeting cancer stem cells, completed its initial public offering, led by UBS and Leerink Swann. The IPO (5.5 million shares sold at $10 apiece) represented a strong showing among investors, as Verastem originally indicated it planned to sell 4.5 million shares priced between $9 and $11 each. The underwriters have a 30-day option to buy another 825,000 shares.

—Burlington, MA-based ConforMIS, a maker of knee implant systems, raised $89 million in a Series E funding from private equity investors and government investment funds abroad. The company said it will put the money toward sales, manufacturing, and expansion of its technology.

—Co3 Systems, a maker of data loss management software, received new funding from Fairhaven Capital. The Cambridge, MA-based startup said it will put the money (whose sum was undisclosed) toward sales, marketing, and engineering.

—Malborough, MA-based medical device startup Navilyst Medical will be acquired by Albany, NY-based AngioDynamics (NASDAQ: ANGO) in a transaction valued at $372 million, based on the company’s $14.20 per share closing stock price Monday. Navilyst, which focuses on … Next Page »

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[Updated: 1:25 pm] Vertex Pharmaceuticals is now officially more than just a one-hit wonder.

The Cambridge, MA-based biotech company (NASDAQ: VRTX), best known for its hepatitis C drug, has won clearance from the FDA to start selling a new twice-daily pill called ivacaftor (Kalydeco) for a rare form of cystic fibrosis. The FDA said today the Vertex drug can now be used for patients age six and older who have a gene mutation called G551D. About 1,200 patients in the U.S., or roughly 4 percent of the total population of 30,000 cystic fibrosis patients, have the mutation.

The approval came faster than expected, as Vertex turned in its application in October, and the FDA had a deadline of April 18 to complete its review. The company plans to start shipping the drug to pharmacies this week, the company said.

“Kalydeco is an excellent example of the promise of personalized medicine—targeted drugs that treat patients with a specific genetic makeup,” said FDA Commissioner Margaret Hamburg, in a statement. “The unique and mutually beneficial partnership that led to the approval of Kalydeco serves as a great model for what companies and patient groups can achieve if they collaborate on drug development.”

The new cystic fibrosis drug has been highly anticipated for years, and the application to the FDA is based on clinical trial results that arrived in February. The study of 161 patients found that patients on the Vertex drug had about a 10 percent absolute improvement in their ability to force out air from their lungs in one second—a common measure of success in treating lung disease—compared with those on a placebo. The effect lasted over the entire 48-week course of the study. Researchers also saw significant improvements in reducing cough, sputum production, and the incidence of pulmonary exacerbations. Side effects included headache, upper respiratory tract infections, nasal congestion, rash, and dizziness, although more patients on the placebo group dropped out of the study early because of side effects, Vertex said.

While the 10 percent absolute improvement in breathing ability for people with a deadly lung disease might not sound like much, it is a big step forward for the disease. Cystic fibrosis, the result of mutations to a gene called CFTR, causes the poor transfer of water and salt across cell membranes, which leads to the buildup of thick, sticky mucus in the lungs. That effectively suffocates people over time, and often ends up killing people in their late 30s or early 40s. Doctors currently treat the symptoms of the disease, but Vertex’s drug is the first FDA-approved therapy that works by altering an underlying disease-related protein.

[Updated pricing information] Based on the small patient population that has the G551D mutation, and the significant benefit the drug provides to them, Vertex set the price at $294,000 per patient per year, Nancy Wysenski, Vertex’s chief commercial officer, told analysts today on a conference call. The company estimates that about 60 percent of eligible patients have private health insurance, while the rest are covered by government insurance, Wysenski says. As is common for companies selling high-priced medications, Vertex has established programs to help get the drug to patients who can’t afford it. Vertex said it will provide free medicine to uninsured families with household incomes of less than $150,000 a year, and it will provide assistance in making co-payments for those with insurance.

“We have a strong commitment to help patients 6 and older get Kalydeco,” Wysenski said on the conference call.

The drug was developed as part of a 13-year long collaboration with the Cystic Fibrosis Foundation, which put more than $70 million into the development program, along with Vertex, and the drug’s original developer that was acquired by Vertex-San Diego-based Aurora Biosciences. Because of its support, the Cystic Fibrosis Foundation will collect a royalty on Kalydeco sales that will start in the “high-single digit” percentage of sales, and escalate to “just below the teen level” as the drug reaches undisclosed sales milestones, according to Vertex finance chief Ian Smith.

Vertex has a number of plans ongoing to expand the use of Kalydeco beyond this initial small group of patients in the U.S. The company has applied for approval in the European Union, and hopes to receive clearance there to start selling in the third quarter. It is also running a trial of the drug in patients under the age of six; as a treatment for certain other gating mutations of the CFTR gene; and in combination with other medicines that seek to correct additional mutations.

Based on the price and number of patients in the U.S., Vertex can expect peak U.S. sales from the G551D patient population of about $550 million, said analyst Mark Schoenebaum of ISI Group, in a note to clients.

Vertex shares climbed 6 percent t0 $36.90 at 1:45 pm Eastern.

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Pfizer was where Pedro Lichtinger learned about pharmaceutical marketing from people who did some amazing things. For starters, New York-based Pfizer (NYSE: PFE) turned an old-school antifungal medicine into a $1.6 billion cash cow. Now as the CEO of San Diego-based Optimer Pharmaceuticals (NASDAQ: OPTR) Lichtinger is borrowing some ideas from that experience, looking to make the most of his company’s new antibiotic.

Optimer won FDA approval last May for its first marketed product, a twice-daily pill called fidaxomicin (Dificid). That drug is designed to fight a bug called C.difficile that causes diarrhea so severe it can kill patients, especially frail elderly people. It is a common problem in hospitals. The company got off to a respectable start, generating about $24 million in gross sales in its first six months. But the market for treating this pathogen, after it has been diagnosed in a hospital lab, isn’t huge. Optimer can expect to generate about $153 million in U.S. sales in 2015, according to analyst Eun Yang of Jefferies & Co.

So to get the biggest possible bang out of this new molecule, Optimer is thinking about not just treating “C.diff,” but preventing it. Like Pfizer did with fluconazole (Diflucan), Optimer sees a long-range future in which physicians will prescribe the product as part of a standard regimen as a preventive medicine for patients who are at high risk of getting C.diff and who are likely to face a lot of suffering and high-cost hospital interventions if they get the bug. The initial plan is to start with a clinical trial to prove the Optimer’s drug can help prevent that problematic result in patients undergoing bone-marrow transplants.

If this preventive strategy works, then Optimer’s new medicine could be used by up to 20,000 patients a year who undergo such transplants. Given that the drug is currently priced at $2,800 for a typical 10-day course, and it is likely to go up over time, so it could possibly add another $230 million to $380 million in annual sales by 2020, Lichtinger says.

“I came from Pfizer where this concept was applied to Diflucan, where years ago, it was the first major antifungal applied for prophylactic use,” Lichtinger says. “It’s still used today as a generic. I saw that drug go from a relatively small drug into a $1.6 billion drug as a result of this prophylactic approach.”

He was quick to add that he’s not forecasting Optimer’s drug will approach that rarefied sales figure, but he does add there is a wide variety of other patient groups that could benefit from getting preventive C.diff treatment, such as vulnerable patients undergoing heart or liver transplants, certain cancer patients, or those on ventilators in hospital intensive care units. “The opportunity is certainly even bigger than with the primary C.diff indication,” Lichtinger said during an interview earlier this month at the JP Morgan Healthcare Conference in San Francisco.

Bone marrow transplants seem like an obvious place … Next Page »

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Cell Therapeutics suffered an embarrassing defeat the last time it appeared in front of an FDA advisory panel and today the company made a move that will enable it to avoid another public shellacking, at least for a while.

The Seattle-based biotech company (NASDAQ: CTIC) said today it has withdrawn its application to start selling pixantrone (Pixuvri) as a new lymphoma drug in the U.S. after saying today it needed more time to prepare for a Feb. 9 meeting of the FDA’s cancer drug advisory panel. The company said it asked the FDA to allow it to present at the March meeting instead, but when the agency said no, Cell Therapeutics withdrew the application. That means the agency’s April 24 deadline to complete its review of the application has been voided, although Cell Therapeutics said today it plans to resubmit its application later in 2012.

The last time Cell Therapeutics appeared at the FDA’s Oncologic Drugs Advisory Committee (ODAC), in March 2010, the panel voted 9 to 0 against the company’s pixantrone application. The chair of the FDA panel at the time, Gail Eckhardt of the University of Colorado at Denver, said the Cell Therapeutics application was “disturbing,” partly because it only enrolled 140 of the 320 patients needed to generate a statistically valid result. The head of the FDA’s cancer drug office, Richard Pazdur, said at the time that the Cell Therapeutics application depended on “a single incomplete trial.” The initial application was turned down by the FDA in April 2010.

By withdrawing the application just before the next advisory panel, Cell Therapeutics contradicted one of its own statements from less than a month ago, when it said it believed it had addressed the concerns raised by the FDA.

“We are pleased the Office of Oncology Drug Products (OODP) chose to bring our pixantrone new drug application back to ODAC for review now that we have provided additional information and data recommended by the Office of New Drugs (OND) that we believe addresses the issues raised in the OODP Complete Response Letter of April 2010,” James Bianco, the company’s CEO, said in a Jan. 3 statement.

Shares of Cell Therapeutics fell 18 percent today to $1.09 in early trading.

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[Updated: 3:47 pm] Amylin Pharmaceuticals and Alkermes have gone to the FDA twice before to seek approval of their new diabetes drug, and been turned back, but now the persistence has paid off. The FDA has cleared their once-weekly injectable diabetes drug for sale in the U.S.

San Diego-based Amylin (NASDAQ: AMLN) and Dublin- and Waltham, MA-based Alkermes (NASDAQ: ALKS) today won clearance to start selling exenatide once-weekly (Bydureon) in the U.S., according to a letter posted on the FDA website. The approval came after the agency held up the application twice before—first in March 2010, and again in October 2010, saying it needed further assurance that the drug doesn’t cause an irregular heart rhythm known as QT prolongation. The companies expressed confidence back in July that the issue had been resolved, based on results of an additional clinical trial. The drug won approval in Europe back in June.

[Updated with added detail on Alkermes royalty] The long-awaited U.S. approval is vital to future of Amylin, as it started investing back in 2005 in a $500 million Ohio factory to mass-produce the new drug. Amylin’s fortunes have become even more tied to Bydureon since November, when longtime partner Eli Lilly bowed out of a collaboration to co-market the drug. Alkermes, which provided technology that made the drug last long enough in the bloodstream to turn it into a once-weekly injection, will pick up an 8 percent royalty on sales of the first 40 million units sold in a single year, and a 5.5 percent royalty once sales exceed 40 million units in a single calendar year. While there is competition from Novo Nordisk’s liraglutide (Victoza) as a once-daily injection for diabetes, and various other oral pills and injectable insulin, the new drug from Amylin and Alkermes is the first treatment that can be injected as little as once a week. Amylin has been marketing the original form of exenatide (Byetta) as a twice-daily injectable since 2005.

About 25 million people in the U.S. have the disease, and numbers are growing fast as the nation’s obesity rate continues to surge. The new Amylin drug could generate $1.25 billion in peak U.S. sales in 2018, said Cory Kasimov, an analyst with JP Morgan, in a note to clients on Nov. 11.

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Bad news out today from Infinity Pharmaceuticals. The Cambridge, MA-based biotech company said it is halting a mid-stage clinical trial of its drug for pancreatic cancer early after learning that patients were living longer in the placebo comparison group. Infinity (NASDAQ: INFI) shares fell more than 30 percent after the news.

The trial of 122 patients showed that when patients got Infinity’s saridegib (IPI-926) in addition to gemcitabine chemotherapy, they were living less than the six months they were expected to based on historical studies with the chemo drug alone. No unexpected side effects were seen among patients on the Infinity drug or in the control group, the company said.

This is a painful setback for Infinity. The company just last week released some more encouraging data from an early-phase study of the drug in 16 patients, which suggested it offered a benefit by shrinking tumors and helping them live a median time of about 10 months. The plan for this year was to wait for the results from the more rigorous study of 122 patients, to get a firm answer on whether it could help pancreatic cancer patients live more than the expected six months. Even though the drug failed in that study, Infinity said it still believes in the drug’s potential because it inhibits a pathway known as hedgehog that plays a role in multiple cancers. Infinity currently is testing the new compound in mid-stage trials against myelofibrosis and chondrosarcoma. Those studies are continuing, the company said.

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Prostate cancer was once a backwater for innovation, but suddenly it’s become one of the most competitive battlegrounds in all of biotech. And one of the darkhorses in this race, Bothell, WA and Vancouver, BC-based OncoGenex Pharmaceuticals, is getting ready to show next week whether it has another contender in the pipeline.

OncoGenex (NASDAQ: OGXI) is preparing to release interim results next week from a clinical trial that could offer a hint of effectiveness of a prostate cancer drug called OGX-427. If OncoGenex can show in this 72-patient study that its compound is slowing the spread of tumors, and lowering prostate-specific antigen (PSA) scores, then it could be in position to run a more meaningful trial that asks whether it can prolong lives, or work well in combination with other therapies. The preliminary data are expected Feb. 2 at the American Society of Clinical Oncology’s Genitourinary Cancers Symposium in San Francisco.

Results from this trial, and another study among patients with bladder cancer, mean a lot for OncoGenex during what has been a long period without much big news for investors and researchers to chew on. The company is now enrolling 800 patients into a pivotal study of its lead prostate cancer drug, custersin, but expects it will have to wait until the fourth quarter of 2013 to find out whether that treatment can extend lives of prostate cancer patients. While OncoGenex makes that long slog through development, it has seen companies like Dendreon, Johnson & Johnson, Medivation, Bayer, and Exelixis continue to jockey for position at various stages of therapy, each with distinct modes of treatment, for men with prostate cancer. The disease kills about 30,000 men in the U.S. each year.

“A lot of focus for us is on custersin, but while that’s going on, we continue to mature our OGX-427 data,” Michelle Burris, OncoGenex’s executive vice president of operations, said during a meeting at the JP Morgan Healthcare Conference earlier this month. While she notes the second OncoGenex drug has shown encouraging ability to work on its own in small studies, she acknowledged it will have to find a niche in a competitive landscape—and says that it can. “It plays nice with a number of different therapies,” she says.

Michelle Burris, OncoGenex's executive vice president of operations

The OncoGenex drug, given through an IV infusion, is designed to work by blocking a biological target known as heat-shock protein 27 (Hsp27). That protein is believed to play a role in helping cells survive under stressful conditions. It’s supposed to help stabilize proteins that keep cells from committing suicide. By inhibiting its activity, you could in theory allow cancer cells to naturally undergo the cell death (apoptosis) process. But there’s also another mechanism of hsp27 that researchers find interesting. It is thought to work as a “chaperone” molecule that helps shuttle in male hormones that fuel prostate tumors.

Researchers believe that could be useful because hormone deprivation therapies have long been standard treatment for prostate cancer, and patients end up developing resistance over time. Two new hormone-blocking therapies, Johnson & Johnson’s abiraterone (Zytiga) and Medivation’s MDV-3100, have both been shown in clinical trials to extend lives of men who resist conventional treatments by blocking male androgen receptors in a different way. OncoGenex’s bet is that even while those drugs are doing their thing, Hsp27 is operating as a chaperone that allows some residual androgens into the tumor, which help provide it with some sustenance.

This theory of cancer biology is being tested in a trial sponsored by the British Columbia Cancer Agency, and led by Kim Chi. The key study enrolled 72 patients with prostate cancer that … Next Page »

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It was a busy news week in the New England life sciences scene, with acquisitions, clinical data, and partnership deals.

—Thanks to a new co-promotion deal, Genzyme will begin marketing a diagnostic test for thyroid cancer developed by South San Francisco-based Veracyte. Genzyme, the Cambridge, MA-based unit of Sanofi (NYSE: SNY) makes a common drug for treating the disease.

—Cambridge-based Infinity Pharmaceuticals (NASDAQ: INFI) presented data from a 16-patient study indicating saridegib, its experimental once-daily pill, could potentially shrink tumors and help people live longer when combined with chemotherapy.

—Millennium, also of Cambridge, nabbed FDA clearance to begin selling a version of the multiple myeloma drug bortezomib (Velcade) that can be injected just under the skin, as well as intravenously. It’s significant because the under-the-skin drug seems to be more tolerable, reducing the drug’s side effect of nerve damage in the fingers and toes.

—Xconomy national biotech editor Luke Timmerman wrote about how Cambridge-based Vertex Pharmaceuticals (NASDAQ: VRTX) and its South San Francisco-based partner Alios Biopharma are positioning themselves to defend their share of the hot growing market for hepatitis C treatments.

—And my colleague Arlene wrote about the family-run business that is Woburn, MA-based Courtagen Life Sciences. Three brothers fill the roles of CEO, president, and chief scientific officer, while their dad chairs the board. Read about more about how it all came together.

—Bedford, MA-based Avila Therapeutics, a maker of so-called covalent drugs for treating cancer, was bought by New Jersey-based Celgene (NASDAQ: CELG) for $350 million upfront. Potentially $575 million more could come to Avila through milestones. The startup’s venture investors included Polaris Venture Partners, Atlas Venture, Abingworth Management, and Advent Venture Partners. Check out investors’ and friends’ reactions to the deal across the Web here.

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The unsolicited $5.7 billion offer that Roche made for Illumina will no doubt dominate San Diego’s biotech news for weeks to come. We have it and more.

—Switzerland’s Roche offered $5.7 billion, or $44.50 a share, for San Diego-based Illumina (NASDAQ: ILMN in a hostile bid disclosed yesterday. Roche’s bid to stake a claim in genetic diagnostics by acquiring the market-leading maker of DNA sequencing instruments would be the Swiss pharma giant’s biggest deal since its $46.8 billion buyout of Genentech almost two years ago. Roche is the world’s biggest maker of cancer drugs, which suggests its quest for Illumina represents a significant move to base cancer treatments on each patient’s genome.

—Venture capital investors sank $4.73 billion into 446 biotechs nationwide in 2011, according to the MoneyTree report from the National Venture Capital Association, PwC, and Thomson Reuters. But as Luke pointed out in his BioBeat column, there is an alarming drop in support for early stage life sciences startups. Only 153 biotech and medical device startups got their first round of financing in 2011, the lowest amount of seed investment activity in 15 years.

—At an Xconomy dinner discussion, former Amira Pharmaceuticals CEO Bob Baltera said insufficient access to capital is the biggest driver for decision-makers on both sides of biotech-pharma partnerships. So what are some other key factors? We asked some of San Diego’s life sciences leaders to explore the question in an “on the record” dinner discussion late last year.

—San Diego’s Sequenom (NASDAQ: SQNM) completed its secondary public offering, raising roughly $62 million in gross proceeds (before underwriting costs) in the sale of 14.95 million shares, including additional allotments granted to underwriters. Sequenom said it plans to use the net proceeds for … Next Page »

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Affymax shocked the world when an FDA advisory committee recommended last month that its anemia drug was good enough to earn a spot on the U.S. market. Now the Palo Alto, CA-based company (NASDAQ: AFFY) is making all sorts of moves behind the scenes that will determine how big a bite it will take out of Thousand Oaks, CA-based Amgen’s multi-billion dollar anemia drug monopoly.

Decisions about the product’s price, who to hire to sell it, and how to negotiate with Medicare and dialysis clinics are all high on the list of tasks facing the Affymax executive team. It’s part of the process of getting ready for March 27, the deadline the FDA has to complete its review of peginesatide, the experimental anemia drug from Affymax and its partner, Takeda Pharmaceuticals. If Affymax can get the green light from the FDA, it will be allowed to sell its product to about 400,000 patients in the U.S. on dialysis treatment, and tap into a market that generated $2.5 billion in sales last year for Amgen’s epoetin alfa (Epogen.)

Medicare has spent tens of billions of dollars on Amgen anemia products over the years, and members of Congress at various points have been critical of how much taxpayer money goes to one company making one drug.

“I don’t want to say there’s pent-up demand, but there’s a lot of interest in the renal community,” in the new product, says Affymax CEO John Orwin. Without disclosing the price, he suggested that Affymax plans to offer a lower-cost alternative. “Healthcare providers are under a lot of pressure to find overall cost-lowering solutions. So we think we’re coming into a favorable environment.”

Given the FDA advisory panel’s lopsided 15-1 vote in favor of its drug, the odds are Affymax will soon be in position to start selling the first alternative to Amgen’s epoetin alfa (Epogen), which has had a monopoly since it was first cleared for sale in 1989. The FDA previously approved a rival from Roche called epoetin beta (Mircera) in 2007, but that drug has been blocked from the U.S. market, at least until mid-2014, because of an intellectual property dispute that Amgen won. Affymax is able to sidestep that minefield because its drug helps stimulate production of oxygen-carrying red blood cells, like Amgen’s, but it is a peptide that is chemically distinct, and works through a different biological mechanism.

Even though Affymax will likely be in position to sell its product soon, it is a classic underdog in this story. Amgen (NASDAQ: AMGN), the world’s biggest biotech company, has contracts in place to provide its anemia drug to Fresenius Medical Care and DaVita, which together control about 70 percent of the dialysis market, analyst Christopher Raymond of Robert W. Baird said in a December 28 note to clients.

Raymond rates Affymax a “buy” with a price target of $13, but he sees many obstacles ahead. Small biotechs often … Next Page »

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Vertex Pharmaceuticals went from king of the hill in the treatment of hepatitis C to yesterday’s news in about six wild months. But while many on Wall Street say Vertex’s big drug will soon become obsolete, Vertex and its small partner in South San Francisco have quietly put themselves in position to defend a big share of this future multi-billion dollar market.

Cambridge, MA-based Vertex (NASDAQ: VRTX), which has significant operations in San Diego, is running a series of small clinical trials this year that will mix and match combinations of antiviral medicines against hepatitis C. These trials will help determine whether Vertex and its partner, South San Francisco-based Alios Biopharma, have hit upon a combination of drugs that can raise the cure rate, and reduce side effects, for millions of patients with this liver-damaging virus.

While Vertex’s new drug has been a huge step forward in the past year, the ultimate way to fight the fast-mutating virus, many scientists believe, will be by putting together a cocktail of antivirals that attack hepatitis C from multiple angles like with HIV.

“There isn’t one magic pill that will solve the problem,” says Vertex CEO-to-be Jeff Leiden. “It’s clear the HCV space will evolve into different combination treatments for different patients. It’s not yet clear what the best combination is going to be. What you want is to have the component parts in your company so you can put them together.”

Vertex's Jeff Leiden

The hepatitis C world saw dramatic upheaval in the past year as researchers learned more about antivirals in development. Vertex won FDA approval in May for its new protease inhibitor, telaprevir (Incivek), which doubled the cure rate to about 80 percent for new patients when given in tandem with standard pegylated interferon alpha and ribavirin. About 25,000 people rushed in to get treated with the new combo regimen in its first seven months on the market, generating hundreds of millions in cash flow per quarter for Vertex, and pushing it into the black.

Exciting as it all was for physicians, patients, and Vertex shareholders, the company was soon upstaged. Researchers have long been looking for a way to get rid of the injectable interferon part of the regimen, which causes nasty flu-like symptoms that people must endure for months. To go beyond combo therapies (like the one from Vertex and another from Merck that include injectable interferon), the next step is to hit the hepatitis C virus with not just protease inhibitors, but also drugs from other classes—nucleotide polymerase inhibitors, and non-nucleotide polymerase inhibitors.

Princeton, NJ-based Pharmasset (NASDAQ: VRUS) stole the show last November at the American Association for the Study of Liver Disease when it said its nucleotide polymerase inhibitor cured all 40 patients with certain hepatitis C genotypes in a small study—a result that led to its $11 billion acquisition by Foster City, CA-based Gilead Sciences (NASDAQ: GILD). A few weeks later, another maker of drugs in that class, Alpharetta, GA-based Inhibitex (NASDAQ: INHX), got bought by Bristol-Myers Squibb for $2.5 billion. Separately, Bristol-Myers Squibb released some more promising clinical results from its own pipeline just last week.

Those developments got everyone talking about a new paradigm in hepatitis C, which many on Wall Street believe will leave Vertex in the dust. Jason Kantor, an analyst with RBC Capital Markets in San Francisco, said in a Dec. 19 note to clients that “the consensus view is that Vertex’s HCV franchise will essentially go to zero beyond 2015.” Vertex stock has dropped almost 40 percent in the past year, down from its 52-week high of $58.87 to $35.86 at yesterday’s close.

While Leiden has spent much time talking with investors about Vertex’s other drugs in development—particularly one expected to hit the market this year for cystic fibrosis—he says the company isn’t about to surrender in the hepatitis C market. He has a plan intended to allow Vertex to compete beyond 2015, when the first all-oral, interferon-free regimens are expected to could come along and replace today’s standard of care.

Sometime before the end of March, Vertex expects to see results from an early-stage study of an all-oral combo regimen of telaprevir (a non-nucleotide polymerase inhibitor called VX-222 that it acquired from a Canadian company in 2009) and the usual ribavirin. If Vertex can cure about 75 percent to 80 percent of patients with this cocktail, and reduce side effects by eliminating interferon, Leiden says the company would be ready to go to pivotal clinical trials this year with its own all-oral combination.

“If we can do that, it will be a very exciting result. If you take that regimen into pivotal trials, now we’re talking about 2014 to finish those trials,” Leiden says.

And that isn’t the only combo Vertex has in mind. Within weeks … Next Page »

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Novo Nordisk, the world’s largest maker of diabetes treatments, is increasing its bet on Seattle’s biomedical research community.

Denmark-based Novo said today it is establishing a new center with 20 scientists in Seattle who will conduct research into type 1 diabetes. This new group will be housed in South Lake Union alongside Novo’s team of autoimmune/inflammatory disease researchers. Matthias von Herrath, the director of the Type 1 diabetes research group at the La Jolla Institute for Allergy and Immunology, will lead the new Novo research center, which is expected to open this summer, the company said in a statement.

“My dream has always been to see some of the treatments that my and other research teams have tested in animal models translated into better treatments for type 1 diabetes,” von Herrath said in a company statement. “As head of the research center, I hope to pursue this dream, while also forging new public-private collaborations within this field.”

Novo Nordisk has a long history in Seattle, partly through its past ownership of ZymoGenetics, and more recently through its own autoimmune and inflammatory disease research team. Novo announced its intent in the summer of 2008 to build an 80-person research team dedicated to the study of diseases in which the immune system goes haywire and starts attacking healthy tissue. Type 1 diabetes is thought to be one of these disorders, in which the immune system attacks the pancreas, making it unable to produce enough insulin to control people’s blood sugar. Type 1 is a different condition than the more common form of diabetes, type 2, in which people—typically once they become overweight—gradually lose the ability to use insulin properly.

For more on Novo’s plans to tap into Seattle’s immunology talent pool, see this feature story from January 2009, and another post from its Seattle research center’s grand opening in September 2009.

Novo tends to keep a pretty low profile in the pharma industry, but it generated controversial headlines earlier this month when it was revealed that celebrity chef Paula Deen, famous for cooking high-fat foods, has developed diabetes and become a spokesperson for Novo. The relationship rankled critics, because poor diets have led to a rapid increase in incidence of type 2 diabetes. About 25 million people in the U.S. are thought to have type 2 diabetes, and the total cost to the U.S. health system is estimated at about $3.4 trillion in the 10 years through 2020, according to UnitedHealth, the nation’s largest health insurer.

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Millennium is the house that Velcade built, and today it’s gotten the green light to start marketing what it considers to be a new and improved version of the hit drug for multiple myeloma.

The Cambridge, MA-based cancer drug developer, part of Japan-based Takeda Pharmaceuticals, said today it has gotten clearance from the FDA to start marketing a version of bortezomib (Velcade) that can be injected just under the skin, in addition to the usual form given intravenously. Today’s approval means the subcutaneous form of Velcade can be used in every setting where the existing drug is prescribed, for patients with multiple myeloma and mantle cell lymphoma.

While this would ordinarily be considered an incremental advance by providing patients and physicians with a more convenient option, the new Velcade approval could be more meaningful. That’s because the new subcutaneous form of the drug appears to be more tolerable, causing fewer cases of nerve damage in the fingers and toes, which is the most common severe side effect of the existing product. One of the key trials Millennium submitted to the FDA showed it could reduce the rate of moderate to severe peripheral neuropathy from 16 percent to 6 percent by putting patients on the new subcutaneous form. By offering a version that’s equally effective, yet more convenient and tolerable, Millennium is hoping to neutralize one of the advantages that South San Francisco-based Onyx Pharmaceuticals (NASDAQ: ONXX) is playing up for its competing proteosome inhibitor, carfilzomib, that’s being reviewed by the FDA.

“Considering this new subcutaneous route of administration for Velcade is important for our patients, including those with poor vein access and those with pre-existing peripheral neuropathy or a high risk of developing peripheral neuropathy,” said Noopur Raje, director of the Center for Multiple Myeloma at Massachusetts General Hospital Cancer Center, in a Millennium statement. “It’s important to have a range of treatment options to provide the best possible care to each individual patient.”

The Millennium drug was approved by the FDA in 2003. It generated $1.4 billion in worldwide sales in 2009, and is on pace to eclipse $3 billion by 2015, according to BCC Research. About 20,000 people are diagnosed with myeloma each year in the U.S., and 10,000 die from it annually, according to the American Cancer Society. For more background on how the new version of Velcade could change the multiple myeloma landscape, see the FDA approval preview story I ran here last Friday.

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Infinity Pharmaceuticals released some preliminary data last June that suggested it may be onto something for pancreatic cancer, and now it has gathered a bit more evidence to support its case.

The Cambridge, MA-based biotech company (NASDAQ: INFI) is announcing results today from a small study of 16 patients that suggest its experimental once-a-day pill, saridegib (IPI-926), may be able to shrink tumors and help people live longer when given in combination with chemotherapy.

The data is still from a small sample, so it will need to be confirmed in more patients before it be considered convincing. As reported back in June, five of the 16 patients (31 percent) had significant tumor shrinkage. Now with more follow-up time, researchers are reporting that the tumors were kept from spreading for a median of 7.6 months, and the patients lived a median time of 10.2 months, according to data being presented at the American Society of Clinical Oncology’s Gastrointestinal Cancers Symposium in San Francisco. There was no way to compare how good this performance was since there was no control group in the trial, but historical studies have shown patients with this diagnosis can expect to live about six months.

Infinity is betting big that it can confirm the results from this small study, in an ongoing trial of 120 patients, which will randomly assign patients to the new drug or a control group, and measure how long each group of patients lives. Once enough patients have died to get a good statistical comparison between the two groups, Infinity will unblind the data and release it. That eagerly awaited result is expected in the second half of 2012.

Infinity Pharmaceuticals CEO Adelene Perkins and R&D head Julian Adams

“We’re definitely in the game,” said Julian Adams, Infinity’s president of R&D, in an interview last week at the JP Morgan Healthcare Conference in San Francisco. “If the next trial performs like this one, we will have very significantly changed the landscape for pancreatic cancer.”

Many biotech companies have tried, and failed, to make much difference for pancreatic cancer, which often isn’t diagnosed until it has already spread through the body. About 36,800 people in the U.S. die each year from pancreatic cancer, according to the American Cancer Society.

The trial of this drug (pronounced “suh-RID-uh-gib”) will carry a lot of meaning for both physicians and cancer biologists. That’s because the compound is designed to inhibit a biological target known as Smoothened, a component of the Hedgehog pathway that is thought to help tumors grow and thrive when it’s turned into a mutated form. Infinity scientists showed, in a paper published in Science in 2009, that the drug disrupted the dense tissue matrix that encases tumors, Adams says. By altering the tumor’s microenvironment, the Infinity drug is thought to break down the tumor’s “cement-like fibrotic shell” and allow chemotherapy to get inside where it can kill cancer cells.

The drug’s mechanism means that it wouldn’t be used as single treatment on its own, but rather in combination with chemotherapy, Adams says.

Side effects of the drug appeared to be pretty typical for cancer trials. Of the 16 patients in this study, seven got the highest dose, 160 milligrams, which was selected for the ongoing trial of 120 patients. At that dose, two of the seven patients had moderate to severe depletion of their infection-fighting white blood cells, one had moderate to severe anemia, and another case was reported of elevated liver enzymes, which can be a sign of liver damage. No patient deaths were attributed to the Infinity drug or the chemo agent, researchers said.

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