Last week brought another mixed bag of news from Seattle biotech.

—Tysabri. The most effective drug on the market for multiple sclerosis isn’t sold by a Seattle biotech company, but it has its origins in a lab here at the Fred Hutchinson Cancer Research Center.

—ZymoGenetics had yet another good news/bad news week. The Seattle biotech company said its pegylated interferon lambda drug for hepatitis C was able to kill the virus in a trial of 18 patients, without any of the flu-like symptoms associated with standard interferons. But the next day, it said it sold just $1.8 million worth of recombinant thrombin, its only marketed product, in the third quarter.

—We occasionally like to take a close-up look at clusters within the Seattle region, and this week I did a census of the local ultrasound industry. About 5,000 people are now employed at 15 companies in the area we counted. If you know of more, please drop us a line at editors@xconomy.com

—MediQuest Therapeutics passed along some bad news Friday afternoon when it said its drug for Raynaud’s disease was rejected by the FDA. The privately-held Bothell, WA-based company didn’t say what the FDA’s questions were about the Vascana application, but it plans to meet with the agency to determine its next steps.

—Did you know poor people can legally get prescription drugs in this country for half-price? I didn’t know about it until the folks at Portland, OR-based Wellpartner, a mail-order pharmacy, explained how they’ve found a way to help clinics that serve poor people to handle the bureaucratic red tape to get this deal. This is one reason why Wellpartner has tripled in size over the past year, and attracted investments from Seattle-based Integra Ventures and Buerk Dale Victor.

—Northstar Neuroscience announced to investors this week that it doesn’t plan to just curl up and die. The Seattle-based medical device maker, which was under pressure from an activist shareholder this summer to sell itself, says it expects to have $66 million in cash left at the end of the year, and that it will still have $53 million left in reserves at the end of 2009. The company is developing its electrical stimulation device for severe depression, after an earlier trial failed in stroke patients.

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MediQuest Therapeutics, a Bothell, WA-based developer of a drug for Raynaud’s disease, said the FDA has turned down its application to market the product in the U.S.

The FDA said the company’s application to market Vascana, a squeeze-on gel to improve blood circulation in the hands and feet, “could not be approved in its present form,” according to an e-mailed statement from the company. The FDA identified issues that the company needs to address before it can receive clearance for marketing, and Mediquest said it plans to discuss the issues with the agency.

“There is not a lot to say except that we need to speak with the FDA to get clarity on the outstanding issues and see what we need to do to resolve them,” said Fred Dechow, Mediquest’s CEO, in an e-mail.

The FDA gave MediQuest an expedited six-month review of the product, which it sometimes provides for unmet medical needs. As I wrote in a profile of the privately-held company in July, Raynaud’s is a condition of limited blood circulation that causes numbness in the fingers and toes in cold temperatures. Usually, it means people with the condition have to avoid the ice cream aisle at the grocery store, or wear a pair of gloves. An estimated 2.1 million people, mostly women, have sought medical treatment for the condition, Dechow said.

The Vascana gel, which is squeezed on the fingers with a spongy material the size of a quarter, showed improvement in a patient-reported scoring system that measured the number of Raynaud’s flare-ups, how long they lasted, and the severity of pain, numbness, and tingling, said Jeffrey Gregory, the company’s chief medical officer, in an interview in July. The drug application was based on two primary clinical trials. One showed Vascana was 13 percent better than the placebo, and the other showed a 24 percent improvement with the drug, he said.

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Punch “Raynaud’s disease” into a simple Google search, and the first site you get is one from the Mayo Clinic that says it’s a condition of limited blood circulation that causes numbness in the fingers and toes in cold temperatures. “For most people, Raynaud’s disease is more a nuisance than a disability,” according to the site. Usually, it means people with the condition have to avoid the ice cream aisle at the grocery store, or wear a pair of gloves.

To the people at MediQuest Therapeutics, a privately-held biotech company in Bothell, WA, it represents a lot more. Like the chance to become an enterprise with products to sell for the first time, potentially reach as much as $400 million a year in sales, and relieve the pain of millions of people who have basically been told to suck it up and live with it.

“All too often, the physicians don’t take it as seriously as the patients. If it’s your fingers that are hurting, it’s more than a nuisance,” says MediQuest CEO Fred Dechow, during a visit to the company’s offices.

MediQuest’s pursuit of Raynaud’s is one of those rare stories in biotech, of a company that limped along for years, reinvented itself, and then got its act together. Founded as Oridigm with angel investment in 1994, the company originally developed anti-cancer compounds that didn’t work, because they couldn’t penetrate cell membranes. In 2002, Dechow was brought in from PrimeCyte, and decided to shift gears to develop the anti-cancer drugs as topical formulations that could treat skin conditions, without needing to be absorbed in the bloodstream like most drugs.

Six years later, with just $31 million of venture capital (including cash from Seattle-based Integra Ventures) and a staff of just 29 employees, MediQuest is approaching the mother of all milestones for a fledgling biotech company. The FDA is giving the company an expedited six-month review of its product, with an official deadline of October 25 to say yes or no to MQX-503, the company’s squeeze-on gel for patients with Raynaud’s. It could be the day MediQuest gets clearance to sell its first product in the U.S., and the first-ever treatment specifically for Raynaud’s. An estimated 2.1 million people, mostly women, have a severe enough case of the disease that they have sought medical treatment, Dechow says.

The opportunity is too big for a small company like MediQuest to handle, so it is negotiating with potential partners who could deploy a sales force of about 400 representatives across the country to get the word out about the new drug. Dechow says they will aim the pitch at rheumatologists as a specialty, primary care physicians who see most patients, and possibly help put together a direct-to-consumer TV ad campaign designed to raise the profile of Raynaud’s. Somewhat like Restless Leg Syndrome, a once-obscure disease with limited treatment options, MediQuest wants to transform Raynaud’s into a new pharmaceutical market worth hundreds of millions to companies like London-based GlaxoSmithKline (NYSE: GSK), the world’s number-two drugmaker

“We want a partner willing to address the market with the right sales force, the right resources, and let people know there is finally something available for Raynaud’s,” Dechow says.

First, though, is the matter of persuading the FDA to give the green light. MediQuest filed its application with the agency based on two pivotal clinical trials that showed its product was better than a placebo. The gel, which is squeezed on the fingers with a spongy material the size of a quarter, showed improvement in a patient-reported scoring system that measured the number of Raynaud’s flare-ups, how long they lasted, and the severity of pain, numbness, and tingling, said Jeffrey Gregory, the company’s chief medical officer. The drug was 13 percent better than the placebo in one trial and showed 24 percent improvement in the other, he says.

The product works by delivering nitroglycerin, a high-blood pressure medicine, through the skin to open up blood vessels and bring back blood flow to the extremities when encountering cold weather. The product is given as a daily pill to some patients with Raynaud’s, but only a small fraction stick with it because it causes headaches, Dechow says. However, the headache rate for patients on the MediQuest drug was about the same as those on a placebo, he says.

“We will need to let people know that you can finally treat this disease. There’s a patient education program, and a physician education program that will be necessary,” Dechow says. “The feedback we get is that patients really like the idea of a local solution to a local problem.”

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The FDA gave MediQuest Therapeutics a boost today. MediQuest, the developer of a treatment for Raynaud’s disease, a painful condition of the hands and feet, said the FDA has agreed to give its drug application an expedited 6-month review since it can treat an unmet medical need. The agency usually takes 10 months to consider an application, particularly if it’s the fourth or fifth in a class of well-known drugs, like statins for lowering cholesterol.

MediQuest, a privately-held company in Bothell, WA, turned in its application to U.S. drug regulators in April. That means the firm may learn as soon as October whether it can make the leap from being solely a developer of new drugs to being a company that also has a product to sell. If approved, the drug would also be the first product specifically for Raynaud’s.

The drug (formerly dubbed Vascana in company statements, now being called MQX-503), is a topical formulation that patients can rub on their hands or feet to prevent or treat the symptoms of a painful Raynaud’s flare-up. About 2.1 million people are estimated to have sought medical treatment for the disease, and about 90 percent are women, MediQuest has said. How many of them may seek out MediQuest’s therapy is the burning question.

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