Roche Wastes No Time, Acquires Intermune for $8.3 Billion Dollars

Just a few days ago on Sunday August 24, 2014 Roche (RHHBY) had agreed to buy an biotechnology company known as Intermune (ITMN) for $74 per share, which comes with an $8.3 billion dollar share price. The price was a good deal for shareholders because it was a 38% premium to the last closing price on August 22, 2014. Intermune is a company that if focused on treating a rare lung disease where patients have limited treatment options. We feel that this recent acquisition may spur other biotech merger deals in that big pharmaceutical companies will be looking for the next best drug that could potentially make billions of dollars on the market.

The drug that Intermune has created is known as perfenidone which is already marketed in Canada under the name Esbriet. Esbriet treats a rare lung disease known as idiopathic pulmonary fibrosis which is a disease characterized by damaged lung pocket that form severe scars. These scars hinder the lungs by making them harder, because typically these lung sacs are thin. With these thickened lung sacs the lungs have a hard time expanding properly and exchanging oxygen at a normal rate. The drug compound from Intermune is an oral drug compound that is made up of a molecule known as TGF-beta which plays a major role in many fibrotic diseases.

Some are skeptical about the deal because the current drug Esbriet brings in $1 billion dollars so why would Roche pay $8.3 billion dollars? We can hypothesize that it is probably for the many other rare fibrotic disorders that are targeted in Intermunes remaining pipeline. Therefore we believe Roche is looking out into the future on how much they could potentially make many years from now. With this deal though many other biotechnology stocks that are potential takeover targets have also seen a huge influx of investors interest in the last few days.

Other potential take over stocks seeing a huge rise in volume would be Arrowhead Research Corp. (ARWR) and Achillion Pharamcueitcals (ACHN). That is because they both have what big pharmaceutical companies are looking for to fill their pipeline with a hepatitis B and hepatitis C drug candidate respectively. Both of these companies target large markets, and so many analysts on Wall Street along with many enthusiastic investors believe that these will be next on the list as a buyout candidate by big pharma. I have written about a possible buyout by a big pharma for Achillion Pharmaceuticals seen here “Achillion Pharmaceuticals Is Primed For An Eventual Buyout“. A more detailed analysis on Arrowhead Research Corp can be seen in this article here ” Arrowhead Starts It’s Engine For Phase 2a Trial For Chronic Hepatitis B Infection “.

We think that there are many biotechnology companies that have the potential to unlock a lot of value. We believe that Roche took this opportunity because other than Hepatitis C and Hepatitis B drug candidates, the next best thing is drugs that target fibrotic disorders. This is because there are many patients suffering from some type of fibrotic disease and it gives these companies the potential to make billions of dollars off of therapies for this disease area. Ultimately liver fibrosis is another huge market that could potentially be unlocked over time, and one company we have mentioned on many occasions before that has a strategic interest to target liver fibrosis is Rxi pharmaceuticals (RXII) which makes perfect sense since the company’s lead drug candidate targets anti scarring of hypertrophic scars and keloids. Rxi is set to report phase 2a results in the coming weeks so good results there will automatically validate its target compound RXI-109 and its sd-rxRNA self delivering platform for Liver fibrosis as well. Be on the lookout for the next possible biotech merger deal because we are pretty sure this acquisition by Roche recently won’t be the last one.


Achillion Pharmaceuticals Is Primed For An Eventual Buyout

Shares of Achillion Pharmaceuticals (ACHN) had gained about 10% for reporting positive results in a mid-stage trial of its hepatitis C drug ACH-3102 in combination with Gilead Sciences (GILD) drug Sovaldi — also known as sofosbuvir. The trial enrolled 12 patients to test the combination of ACH-3102 together with Sovaldi to determine the efficacy of this combination of drug compounds. The results were outstanding because the combination of  ACH-3102 together with Sovaldi was able to achieve a 100% cure rate of the hepatitis C virus. All 12 patients had undetectable HCV — Hepatitis C virus RNA levels for 4 weeks after completing the cycle of therapy. Hepatitis C virus RNA levels are the measure of how much of the virus is still left circulating in the blood of the patient.

There are two key components for why this combination study was important for Achillion Pharmaceuticals. For starters standard of care treatment for hepatitis C patients is adding a toxic chemical known as Ribavirin for clearing the virus from the body. Even then the cure rate for Ribavirin alone in hepatitis C isn’t all that great, and leads to many unbearable side effects for the patients. The second thing to note is that this proves that ACH-3102 is able to be combined with a nucleotide NS5B Polymerase inhibitor– which is what Sovaldi is.  ACH-3102 is an NS5A  inhibitor, and is a different compound from Sovaldi. The good news now though is that Achillion is also working on a similar drug compound for the hepatitis C virus known as ACH-3422 which is also a nucleotide NS5B Polymerase inhibitor.

This is good news for Achillion because now moving forward it can combine both ACH-3102 together with ACH-3422 into one drug compound. This could then potentially prove in later trials a 100% cure rate in the hepatitis C virus and be able to compete in the market against Sovaldi. We don’t know yet because all is dependent on how well the two chemical drug compounds from Achillion go together, plus also it depends on how long the drug combination takes to cure the virus — how many weeks of treatment. While that remains to be seen this initial positive result of combining ACH-3102 together with Gilead’s Drug Sovaldi shows the potential for a combination of combining an NS5A inhibitor together wtih an NS5B inhibitor.

The hepatitis C market is huge, and Achillion may have a chance to be a part of this huge market if its ACH-3422 drug  proves to clear the hepatitis C virus by 100%. Sovaldi is selling well matter in fact the drug compound made$3.48 billion dollars in second quarter sales in 2014. Eventually Achillion may have an opportunity to capitalize on this market in the mean time shares of the company have surged as much as 184% year to date. We think that the continuation of successful results with the company’s hepatitis C pipeline will bring in other big pharmaceutical players to attempt a buyout of the company. Many big pharmaceutical companies are looking to fill their pipelines with a hepatitis C drug compound. Buying Achillion Pharmaceuticals may be that way for these big pharmaceutical companies to get their foot in the door on this growing hepatitis c space. Therefore we believe that Achillion Pharmaceuticals will eventually be bought out for billions of dollars.


Opko Health Posts Positive Phase 3 Results for Its Rayaldee Drug

On August 11, 2014 OPKO Health (OPK) had released its results for a phase 3 trial utilizing a drug known as Rayaldee to treat patients with chronic kidney disease that are insufficient in Vitamin D (Vitamin D insufficiency). Vitamin D insufficiency means that the person’s body is not able to easily convert the Vitamin D mineral to the body which results in a loss of vital nutrients. Vitamin D in the body is essential for renal health, immune system health, and cardiovascular health. Vitamin D insufficiency is even worse in patients with chronic kidney disease, because the disease makes it a lot more difficult for the patients to be able to convert Vitamin D into their bodies properly.

Opko Health posted positive phase 3 results for its Rayaldee drug compound by improving Vitamin D levels in patients with secondary hyperparathyroidism — SHPT —  which stems from stage 3 and stage 4 chronic kidney disease. The results can be summed up by the Vice President of Research and Development Joel Z Milnick of Opko’s renal health division:

Top-line data from this study demonstrate that Rayaldee effectively controls secondary hyperparathyroidism in patients with stage 3 or 4 chronic kidney disease by correcting vitamin D insufficiency”

The phase 3 results were able to help patients achieve the ability to properly elevate the patients’ vitamin D levels to appropriate measures. The phase 3 trial had enrolled 219 patients which were all lacking Vitamin D . Some patients were given Ryaldee and other patients were given a placebo compound. By the end of the trial 97% of the patients had corrected their Vitamin D insufficiency by taking Rayaldee, which shows the market potential for the drug when it makes it to market. The Rayaldee compound was able to achieve great safety measures and also achieve the primary endpoint of the study. The primary endpoint of the study was something known as “responder analysis”. This means that at least 30% of the patients needed to exhibit a decrease of the plasma parathyroid hormone — effect of chronic kidney disease. Two positives came from the primary endpoint of the study. For starters the response rate of the primary endpoint achieved clinical efficacy of p < 0.001 . This p value is a measure of clinical success, and anything under p < .01 means that the trial achieved its primary endpoint.

The success of this treatment is great because current treatment options have their own problems. Vitamin D offered over the counter are ineffective in helping these chronic kidney disease patients with their hyperparathyroidism at all. Vitamin D Hormones actually do more harm than good because they offer Vitamin D at extremely abundant levels. That means they bring the Vitamin D level to a higher level than is needed in the body — basically way too much Vitamin D .  Investors though will still be happy to know that there are further catalysts coming for Opko’s Rayaldee drug before the end of 2014. First the company expects to announce additional data from a similar phase 3 trial using Rayaldee for the same indication of Vitamin D insufficiency in Chronic Kidney disease. These additional phase 3 results are due out sometime in September 2014. Another catalyst is that Opko expects t file an NDA for Rayldee to the FDA before the end of 2014 — this means that the company is seeking approval for Rayaldee.

We believe that Opko Health is a great long term play because it has a nice pipeline of drug compounds that can create future value for shareholders. We also like the fact that the CEO is a man known as Dr. Phillip Frost who is famous for acquiring biotechnology stocks that come in value in the future. Dr. Phillip Frost knows true value when he sees it, and we feel Opko will do well in the long term. Dr. Phillip Frost had even invested in a biotechnology company known as Rxi Pharmaceuticals (RXII) when it was trading back on the OTC. Rxi Pharmaceuticals now trades on the NASDAQ and is expected to release phase 2 results of a trial in a few weeks, using RXI-109  to target hypertrophic scars — raised scars that are difficult to treat and grow back instantly. Dr. Frost had made a private placement deal buying $16.4 million dollars worth of shares during the deal with Rxi’s CEO Dr. Geert Cauwenbergh back in 2013. We believe that Opko will continue to rise as investors realize the true value of the company.



Two Biotech Stocks To Consider For Ebola Virus

Lately everyday when people wake up they hear news about a new Ebola case in various parts of the world, and that the spread of the virus is continuing everywhere around the globe. Ebola is a virus that starts off with flu-like symptoms so patients brush it off believing that it just might be the flu virus. On top of the flu-like symptoms patients then start to experience other symptoms associated with the Ebola virus like severe vomiting, diarrhea, and abdominal pain. As of August 1, 2014 there have been 1,605 suspected cases of the Ebola virus in the countries of Guinea, Sierra Leone, Nigeria, and Liberia. Of those 1,605 cases there has been about 887 confirmed deaths from the Ebola Virus.

The Ebola Virus itself has a 90% death rate when a patient is infected with the Ebola Virus. There are some experimental vaccines that may prove to combat against the Ebola virus, and these vaccines are being tested on patients that have come back to the U.S. with this Ebola Virus. One misconception about the Ebola Virus is that it is spread airborne through contact with other people, and that’s false. If that were the case then  the spread of this virus would be huge because it would be harder to contain. This Ebola virus is spread through the means of  blood, saliva, sweat, and other bodily fluids which eliminates the possibility of an airborne infection. Even still this virus should not be passed off as an  irrelevant bug because once a person is infected with it then it causes a huge death rate at 90% as mentioned above.

With this Ebola Virus outbreak news there is one biotech company that has already risen a lot on these cases, and that biotech is known as Tekmira Pharmaceuticals (TKMR). Another biotech that may potentially rise in share price based off of these new Ebola cases is Sarepta Therapeutics (SRPT). Both of these biotechnology companies are utilizing some type of oligonulceotide technology. Oligonucleotides are short single stranded nucleic acid molecules that can be placed together with other types of technology to create new molecules to combat against these types of diseases, even the Ebola Virus.

Tekmira Pharmaceuticals makes use of oligonucleotides using a new type of science known as RNAi or RNA interference. What RNA interference was created for was the ability to down regulate the amount of genes a disease produces. The idea is that by knocking down the genes of the disease in question it would either slow down the progression of the disease or cure the disease completely. Tekmira’s Ebola Virus program is known as TKM-Ebola and has only begun to dose patients in a phase 1 clinical trial with the Ebola Virus. The downside is that the FDA placed a clinical hold on the TKM-Ebola trial for reasons about safety concerns. We believe that these safety concerns are about the safety of Tekmira’s RNAi technology, but it should be easily addressed in the coming months. The FDA should work quickly because Tekmira’s Ebola drug showed 100% protection of the Ebola Virus in non-human primates (monkeys). Despite the clinical hold  on on the Ebola clinical trial Tekmira’s share price has risen substantially over the last month gaining about 20% in share price. One thing that investors should note is that this Ebola Virus news may drive the share price in the short term but should be cautious on a sell off when the Ebola hype dies down. Regardless investors should be in the name based off of Tekmira’s RNAi technology for other indications, because the rise in share price of the Ebola Virus program is just a bonus.

Sarepta Therapeutics makes use of a different science which has been around a long time known as RNA oligonucleotides. RNA works differently then RNAi mentioned above, because RNA is the building blocks for DNA. The goal of RNA is to change the DNA  structure of the proteins in question. This means that RNA builds off of the ability to  be able to direct the cells machinery to increase or decrease production of a protein for a particular disease. Sarepta has also been working on an Ebola drug AVI-7537 and has seen the ability to show survival rates of the Ebola virus by 60% to 80% in animal testing. This compares with 0% survival rate in animals in the Ebola virus where the animals receive no treatments. Sarepta’s CEO says the company stands ready to help give their drug out to patients if needed but the FDA would have to approve a certain measure to allow this to happen. Also the funding came from a government entity so Sarepta would have to get permission from them as well if they want to get their Ebola drug out to these patients that need a treatment. The difference though between Tekmira’s Ebola drug and Sarepta Therapeutics is that Sarepta has yet to receive a clinical hold on its Ebola trial.

In conclusion both biotech stocks are great to consider for both traders and long term investors. Long term investors should be focused on the technology of both companies where one utilizes RNAi and the other utilizes RNA. Traders though can capitalize on this great short term opportunity to make money off of the recent and upcoming Ebola news. Future news from Ebola outbreaks may move the share prices of both companies slightly n the coming months. Despite short term movements in share price long-term investors should stay focused on the longer term picture about the science of each company. We think that there is a great opportunity to be invested in both of these stocks for both short term and long term prospects. Both of these biotech stocks have the ability to completely change the way we treat many of today’s deadly diseases.


Galectin Therapeutics Gets Punished For Phase 1 Trial, But Wall Street Is Missing The Point

Shares of Galectin Therapeutics (GALT) were punished on Tuesday July 29th after reporting the phase 1 results of its NASH trial with patients in the 2nd cohort. The stock tanked as much as 60%  on the news, but the sell off could have been given a bigger push down by many bearish articles from various writers on Wall Street. For starters the company was targeting a fatty liver disease known as NASH (nonalcoholic steatohepatitis) , which is becoming a huge epidemic. This indication is now being pursued by many small cap biotechnology stocks since of the huge target market, because there are about 9 and 15 million people in the U.S. alone that have NASH.

The results of the study were phase 1 and the only primary endpoint being tested was “safety” of the drug compound GR-MD-02. That was the only thing being tested because the cohort 1 study was performed with 2 mg/kg and the cohort study 2 phase 1 that just reported results used 4 mg/kg. So I’m not understanding these bearish articles claiming that the GR-MD-02 drug performed no better than the placebo drug. Of course it didn’t this study wasn’t focused on efficacy it was focused upon evaluating a higher safer dosage level.

Going forward investors should not write this study off completely because there are three reasons why the study can still be advanced and become successful. First of all investors are wondering why did the pre-clinical trial in animals obtain good efficacy in NASH and not cohort 1 and cohort 2? With that I can answer because in the pre-clinical trial for NASH Galectin used 8 mg/kg but this phase 1 study reported Tuesday used 4 mg/kg and the previous cohort used 2 mg/kg. So we can’t infer from these bearish articles that the phase 1 trial of GR-MD-02 is a flop. That’s because the phase 2 trial which is going to run the dosage from the pre-clinical trials 8 mg/kg will determine whether the drug has efficacy or not. We are baffled why investors punished the stock so much today for a phase 1 trial whose primary endpoint was establishing safety.

Secondly all biotechnology stocks in testing have to declare an Independent Data Safety Monitoring Board (DSMB) because the company would be bias so they look to this board to confirm if an additional cohort should be initiated. Since there were no safety problems of significance the DSMB has concluded Galectin should continue to its cohort 3 trial using 8 mg/kg. Nobody is a psychic and we don’t know if doubling the dose will increase efficacy of NASH over placebo by a huge margin but the company won’t know until the trial is ran. So for these bearish articles to claim it as a failure already when the maximum dose hasn’t been tested yet doesn’t make any sense.

Finally the company will be enrolling 20 patients in the 3rd and final cohort, and this time they will wait till phase 2 to run the liver biopsy of each patient in the study. Also this will allow the company to adjust the blood biomarker analysis to four different times in the study to account for varying blood levels. Whether investors want to dip in now to attempt to either trade Galectin short-term or an attempt to go long is their option, but we feel that Galectin was way oversold for a phase 1 trial. Typically as many biotech analysts know phase 1 trials are known for testing safety primarily, efficacy can be seen sometimes in phase 1 but it is not an end all priority. That is because phase 2 trials are meant to test the efficacy of the compound, and in this case GR-MD-02 will be tested in a phase 2 trial. Now if Galectin fails efficacy in the phase 2 trial with the highest dose possible at 8 mg/kg then we can declare it a failure. As of now these bearish articles are just speculating, and have no hindsight on whether the drug compound is efficacious or not.

Investors can now pick up Galectin at a huge discount trading at around $5.70 per share and if your risk tolerance in biotech is there it may not be a bad idea to dip your toes into the stock. NASH is a terrible disease and it has only added to many damaged livers in the U.S. and abroad. Despite today’s declining share price we don’t think the company should be passed off in NASH as a failure until the cohort 3 is completed and we can then see if efficacy has improved or not. Only then can we declare it is a failure if it doesn’t achieve efficacy with the highest dose of 8 mg/kg. Investors won’t have to wait long because patient enrollment has begun already for cohort 3 and results are expected as early as November 2014. All biotechnology stocks are not perfect the first time around, sometimes doses need to be increased to achieve better efficacy. In this case it may be plausible that doubling dosage of GR-MD-02 from 4 mg/kg to 8 mg/kg may yield better efficacy. We will just have to wait till cohort 3 is completed to find out!


Inovio Pharmaceuticals Posts Positive Phase 2 Cervical Dysplasia Data, Platform Now Validated

If you have been following me since September 9, 2013 when I first posted an article about the partnership with Inovio Pharmaceuticals (INO) and Roche (RHHBY) seen here ” Inovio Inks Deal With Roche, The Sky Is The Limit ” then you will be very happy today. As with all biotechnology stocks there are many risks where trials fail, but in this case the results are very good with a platform that deals with immunotherapy. Immunotherapy is long become the favored form of treatment for cancers because chemotherapy is toxic. This also follow along with other drugs that have severe side effects that make the patient’s quality of life less appealing. Immunotherapy, especially Inovio’s CELLECTRA electroporation device along with synthetic DNA vaccine codes is a lot safer for patients as it utilizes the patient’s own immune system (T -cells) to attack and kill these pre-cancerous and cancerous cells.

Inovio had gone up to a high of $14.20 per share in the morning , and the volume seems to be high after posting positive phase 2 results in patients with Cervical Dysplasia. So how do the results stack up in terms of validation? Patients had CIN 2/3 associated with HPV 16 and 18, and patients were either given VGX-3100 or a placebo drug counterpart. The results were good because VGX-3100 was able to achieve the ability to take CIN 2/3 down to CIN or actual clearance of the HPV in the study. The amount of patients that had their CIN 2/3 brought to CIN 1 or less was 53 out of 100 patients which brings the percentage to 49.5% this compares to placebo only coming in with a percentage of 30.6% or 11 of 36 patients.

Many bearish articles will come out to make false claims. They will find many items to spin to cause panic, but the bottomline is that they won’t mention one thing in their articles. They will not mention that Inovio had met its p-value of statistical significance compared to placebo. You will never see these bearish articles post that Inovio met its primary endpoint, in which case it did. Not only did Inovio meets its primary endpoint but it also achieved its secondary endpoint of virological response within the patients’ bodies compared to placebo. Around 40.2% or 43 out of 107 patients saw virological disappearance compared to placebo that only saw 5 out of 35 patients  or 14% with virological disappearance. There is no disputing the facts and that is that VGX-3100 met both its primary endpoint and secondary endpoint and will now move on to a phase 3 clinical trial.

We can also look to evidence above where Roche made a deal with Inovio. Keep in mind that the deal that was made was by Roche just observing only pre-clinical results of Inovio’s Syncon DNA vaccine and electroporation technology. For Roche to put so much faith in a small-cap biotechnology stock just by observing only pre-clinical results is amazing in itself. So we have validation that already occurred by a big pharma company — Roche — investing, and now we have validation of Inovio’s platform in its phase 2 results. Investors are missing the big picture here, because these results don’t just validate VGX-3100 but the entire pipeline has now been de-risked greatly. The CEO is currently expected to present the data today, and could allow the share price to rise slightly higher. The bottom line is that long term investors should be happy, because there is plenty of more good news to come regardless of short term trading. We think that Inovio is a strong buy and can create significant upside for investors over the next few years!


Sarepta Tumbles On New Drug Data But Presents A Big Buying Opportunity

Shares of Sarepta Therapeutics (SRPT) tumbled as much as 28% after it had updated its phase 2b data from its Eteplirsen study through 144 weeks. The stock stumbled down but not for the right reasons, and so we reiterate that Sarepta is still a strong buy for those long-term investors that have patience. Sarepta’s drug known as Eteplirsen is being developed for boys with a disease known as DMD -Duchenne Muscular Dystrophy. DMD is a disease characterized by muscle weakness and inability to walk due to reduced dystrophin levels. The disease occurs when a male child is born with an x-chromosome, but it is random in nature. Meaning not all boys born with the x-chromosome will have DMD, but it still is a huge possibility.

The breakdown of the results are important in understanding what the results mean for boys suffering from DMD. In order for Sarepta to test these patients walking ability they used a test known as the 6MWT or 6 minute walk test. This test is used to measure the amount of muscle strength the patient has to walk for a certain amount of distance before they are unable to do so anymore. The patients that took the 30 mg/kg and 50 mg/kg eteplirsen cohorts saw an average decline of only 33.2 meters from the normal baseline walking ability. The most important portion of the results is that patients taking the Eteplirsen drug saw an overall benefit of 75.1 meters or p less than or equal to .0004 which was way above the placebo group.

So with these good results on hand what has caused the stock to decline so much? Well for starters the CEO for Sarepta Chris Garabedian has stated that with this data the company can file an NDA to the FDA by the end of this year. The problem though comes from other media sources, and analysts that are now stating that Sarepta may have to delay their NDA. By this they mean that Sarepta may be forced to run a phase 3 trial to confirm that the data results can be taken as fact. All this doubt probably stems from another drug company known as Prosensa Holdings N.V. (RNA) which had failed a phase 3 trial on patients with DMD. All this doubt can be understood but what investors need to realize is that these two companies have different methods for delivering RNA oligonucleotides. The only similarity is that they both use RNA technology, but each company has a different method of action formulating their RNA technology.

Going forward though we think that the eventual approval for Eteplirsen will be possible. While we can’t predict what the FDA will want – meaning Sarepta may have to run an additional phase 3 trial as more proof of concept for DMD patients — the FDA is looking for a treatment to help these boys that suffer form DMD with no available treatment options. Sarepta’s Eteplirsen drug is safe, and has the ability to significantly increase the amount of walking distance compared to a placebo that hardly does anything to help these patients with DMD. We should note though that investors might see some short term volatility, but for the long term we tend to be more optimistic that the FDA will want to finally approve a treatment for DMD patients. Especially all the parents of the boys that are pushing hard on the FDA to finally approve a treatment for these boys to improve their quality of life. Sarepta currently trades at $21.36 per share which is close to its 52-week low of $12.12 per share so investors have an opportunity to buy for the long term. With that said we believe that this Sarepta tumble has created a big buying opportunity for investors to capitalize on in the near future.


Why I’m Still Long Rxi Pharmaceuticals After Recent Developments

Rxi Pharmaceuticals (RXII) is set to announce the results for its phase 2a hypertrophic scar trial at anytime in the coming months. The company uses a science that is emerging fast in the biotechnology industry known as RNAi or RNA Interference. The phase 2a trial that is set to release preliminary results deals with patients that have hypertrophic scars. Hypertrophic scars are raised scars that tend to grow for about 2 years and then start to level off after a certain period of time.

Current therapy which includes scar revision surgery, and silicone gel only lower the scar slightly in appearance. This is because typically after scar revision surgery the hypertrophic scar tends to grow back with a vengeance despite any effort to revise it. In terms of using the silicone gel it can slightly change the appearance of the scar somewhat but doesn’t level it off closely to the neighboring skin. This is where RXI-109 comes in, because it is attempting to reduce the amount of CTGF — Connective Tissue Growth Factor — on the scar itself. Typically a wound will heal properly on its own without any complications, but sometimes the wound healing process takes a major turn. This occurs randomly because the body sends too much CTGF to close off the wound. When this happens the resulting CTGF tends to be built up at the site of the wound forcing a raised hypertrophic scar.

The importance of this upcoming phase 2 result is major because it will validate Rxi’s sd-rxRNA platform. This is because RXI-109 is intended to be used for a multitude of skin and eye diseases in patients. Therefore validation of the sd-rxRNA platform with positive phase 2 results in hypertrophic scars will showcase the ability of the platform to be utilized using any other gene target. For example if the sd-rxRNA platform utilizes RXI-109 properly in hypertrophic scars then it will work for PVR – eye detachment, which then causes scarring after surgery to repair retina, liver fibrosis – scarring/damager of the liver, and Macular degeneration. Upon Successful results with RXI-109 the company can continue to grow into a big pharmceutical company. Rxi has recently established patent protection for the sd-rxRNA technology platform until the year 2029. With successful results in the phase 2 hypertrophic scar study, the company will then increase in value substantially because it can target any other unmet medical need utilizing the sd-rxRNA platform.

Catalysts For RXI-109 In Anti-Scarring

  1. Phase 2 data results for hypertrohic scars before the end of 2014 (can come now or at anytime before end of 2014)
  2. Initiate 3rd phase 2 trial using RXI-109 for hypertrophic scars in other parts of the body before end of 2014/beginning of 2015
  3. Phase 2 data results for keloid scars beginning/middle of 2015

One thing to note is that we can’t hypothesize the future results but we can always look at hints as to how well the clinical studies are going. For example the 3rd phase 2 study for hypertrophic scars in breast reconstruction surgery was set to start Q3/Q4 of 2014 but will be pushed up slightly. The CEO Dr. Geert Cauwengberg mentioned in the Jefferies 2014 Global Healthcare presentation that they wanted to expand the study to not only target hypertrophic scars on breast reconstruction surgery but to also target hypertrophic scars on other parts of the patient’s body. That is one piece of evidence that RXI-109 is showing some substantial clinical efficacy. Another good note mentioned from the Jefferies Conference was that the CEO saw some early picture results from the phase 2 hypertrophic scar study and said that the company was impressed. Of course the results are double-blinded so they don’t know which is placebo or RXI-109 but there is a very small chance that a placebo drug (saline or other placebo) was able to dramatically reduce hypertrophic scars to that extent. That’s another key piece of evidence that RXI-109 is performing well in patients with hypertrophic scars.

Investors can also glance at recent developments with RXI-109 that also hint to a superior RNAi antisense oligonucleotide compound. For example Rxi recently announced  a positive pre-clinical dose range finding study in the eyes of monkeys. The study showed a reduction in mRNA — messenger RNA — in a dose dependent manner in the retina. That was not the amazing part of the RXI-109 compound though, because the company was testing the retina to begin with. The surprise came when the company noticed a reduction of mRNA in the cornea as well, when the company was only targeting the retina. That just shows some of the true power of the RXI-109 compound and the ability for the sd-rxRNA platform to deliver it through the tissue without a delivery vehicle.

So why was this mRNA reduction in Cornea a big find compared to the retina only? Well this is because the RXI-109 compound is soluble because of the way it has been formulated by the company. This means that Rxi can turn the RXI-109 compound into a topical cream form that can be used in cornea scarring which occurs in a bigger population than retinal scarring.

PVR – Proliferative Vitreoretinopathy

PVR  occurs when retinal reattachment surgery fails. This is because sometimes the membranes contract after reattachment causing the retina to detach itself, which causes more problems. Even in an attempt to reattach the retina it is difficult to do so because the surrounding skin is detached. This detachment/damage can possibly cause scarring which can lead to vision loss. The hope here is that RXI-109 can repair the scarring of the retinal eye tissue that will allow a more successful reattachment of the retina, and improved vision. PVR occurs in about 8% to 10% of patients that undergo retinal detachment surgery. This is a nice target for Rxi because it can be requested from the FDA as an Orphan drug status since it is an unmet medical need with a small population of patients.

Catalysts For PVR

  1. Complete GLP toxicity study for RXI-109 intraocular injection 2014
  2. File IND for PVR to the FDA before the end of 2014/beginning 2015
  3. Trigger milestone payment from LPC upon successful IND filing for PVR

If you look at the catalysts above you will notice that all is needed to file an IND for PVR is one more toxicity study. This is because all other pre-clinical testing for RXI-109 has already been done for the anti-scarring compound. Therefore to advance RXI-109 for the ocular programs is a smooth transition because all that is needed is ocular toxicity studies. In addition to that ocular toxicity test lies the ability for Rxi to trigger a milestone payment for filing the IND of the PVR compound. This deal comes into play back in April of 2014 when Lincoln Park Capital agreed  to buy $20 million dollars worth of Rxi stock over a 30 month period. The primary reason for the deal was to help Rxi fund a lot of the pre-clinical ophthalmology products in the pipeline. The main function of the deal was that Lincoln Park Capital had agreed to purchase $1 million worth of Rxi common stock at prevailing market prices every time an IND compound is filed from the ophthalmology pipeline.

Macular Degeneration

Macular degeneration  is a huge deal for a lot of biotech companies because of the potential revenue of a drug compound that can help patients regain vision in the eyes. Macular degeneration occurs with old age, and causes the tissues to thin or crumble into the macula of the eye. These deposits of tissues — known as drusen — lead to Dry-macular degeneration because they are deposited into the macular area of the eye. Dry-macular degeneration is known as non-neovascular because it doesn’t deal with leaky blood vessels. About 10% of the dry-AMD cases worsen and turn into a more advanced form of AMD known as wet-macular degeneration. This is where blood vessels form beneath the retina which leak damaging the retinal cells. The damaging of these retinal cells lead to extreme vision loss far worse than that seen with dry-macular degeneration. There are about  11 million people in the U.S. with some form of macular degeneration, and it is expected to double to 22 million people by the year 2050.

To get a good idea on the potential revenue for a macular degeneration drug compound we can take a look at Regeneron Pharmaceuticals(REGN). Although one key thing to note is that this revenue generated by the Eylea drug injection is only for Wet-macular degeneration which only accounts for 10% of the macular degeneration population. For instance net product sales  in the fourth quarter of 2013 for Regeneron ended at $406 million dollars, which is way above the previous year’s final fourth quarter net product sales at $286 million dollars. Surprisingly Regeneron’s eye drug Eylea accounted for $402 million dollars of net product sales. This just shows how much revenue can be generated with only 10% of the macular degeneration market, and doesn’t at all include dry-macular degeneration which is a bigger market. Regeneron expects 2014 sales for Elyea to come in at $1.7 billion dollars. If Rxi Pharmaceuticals is able to establish itself in dry-macular degeneration then it can reap in billions of dollars. There are many trials currently underway to treat dry-AMD, but no drug has yet been approved by the FDA for dry-AMD. Since there is no treatment yet approved by the FDA it is hard to estimate exactly the amount of revenue that can be generated. But many big pharmaceutical companies are estimating that treatments for dry-AMD can be in the multi-billions.

This is where Rxi comes into play with its macular degeneration drug. For starters Rxi has two macular degeneration drug compounds in pre-clinical testing. This allows for reduced risk because if one is unsuccessful then the company can fall back on the other compound. For example look at the graphic below with the compounds in the pipeline.

(click to enlarge)

source: www.rxipharma.com/pipeline /

If you look at the image above you can see one macular degeneration compound underneath the PVR drug compound. This was Rxi’s initial work of its own macular degeneration compound. Now if you look all the way to the bottom you can see “self delivering” adaptation to acquiredOpko (OPK) Estate. The reason for Rxi acquiring this was because Dr. Geert Cauwenberg met with Dr. Frost CEO of Opko Health and formulated a deal . For starters the macular degeneration drug acquired from Opko is known as Bevasirinib. Bevasirinib failed in the past in a phase 3 trial because the compound was and still is a naked siRNA molecule What this means is that the drug compound was not potent enough to be delivered locally into the eye to cause an efficacious effect. Frost knew that with this Bevasirinib RNAi patent and other RNAi patents there was nothing that could be done to deliver them to the patients properly. After Dr. Frost sat down with the CEO and noticed how Rxi had developed the sd-rxRNA delivery platform and could deliver any type of RNAi molecule without a delivery vehicle he felt compelled to create a deal with Rxi. Which is now the reason why Rxi is taking the Bevasirinib molecule and rearranging the guide strand and passenger strand to enable it into its own sd-rxRNA technology platform. The trick here is that by utilizing Rxi’s delivery platform it will allow the Bevasirinib compound to reach potency in the patient’s eye instantaneously and help patients with the macular degeneration disease.

Bevasirinib is a VEGF inhibitor which has been a genetic target for eye diseases for a long time. This is because when VEGF is over-expressed in a patient’s eye it causes vascular disease which leads to macular degeneration. Rxi can utilize Bevasirinib as a VEGF inhibitor, but it can also have a future advantage over other competitors because it can add one additional compound to the mix. For example the VEGF inhibitor can deal with the over expression of vascularization, but doesn’t do anything for the damaging of tissue itself. This is where Rxi can combine RXI-109 — anti scarring/tissue repair — along with the VEGF inhibitor and formulate it as one stand-alone compound. So this would knock out two birds with one stone, because it would help with two positive effects instead of one.

How powerful can Rxi’s Bevasirinib compound become? Well if it proves clinical efficacy in later stage trials it will revolutionize treatments for eye diseases. To get the proper support for bringing this program and other ophthalmologic programs forward Rxi had recently hired  Peter Campochiaro M.D. to the Scientific Advisory board just this week. If we look more into the new hire then we can view this as a major positive, because Peter serves on multiple scientific advisory boards for other pharmaceutical companies. Also this M.D. has extensive experience with VEGF compounds at the John Hopkins Wilmer Eye institute. Matter in fact he has more than 300 articles published in peer-reviewed medical journals, and was one of the scientists on early work with other VEGF compounds. As the Chief Development officer for Rxi Pamela Pavcostates :

We are honored to have Dr. Campochiaro join our Scientific Advisory Board. He Brings a Wealth of clinical research experience in ophthalmology to the Company that we will leverage to advance our ophthalmology program”

The quote above states how great of an asset Dr. Campochiaro will be to the success of Rxi in its Ophthalmology pipeline. It is a huge positive that such a well known name in the science industry is interested in joining a small-cap biotech stock with big potential for the VEGF inhibitor.

Catalysts for Macular Degeneration

  1. Perform additional ocular toxicity studies with both VEGF together with RXI-109
  2. Faster pre-clinical results can be produced possibly by at least 2015 because RXI-109 ocular toxicity study is done. Also Bevasirinib has already been through clinical studies up to phase 3 before so limited testing will be needed to file an IND
  3. Eventual IND filing of Bevasirnib and other macular degeneration compounds can lead to another milestone payment from LPC


Retinoblastoma  is eye cancer that occurs in children under the age of 15. One thing to note about Retinoblastoma is that it is a rare disease which hardly has any treatment options. For instance current treatment of the retina includes chemotherapy and radiation treatment. Both of which is unpleasant for patients of many types of cancer, especially for children under the age of 15. If the tumor is small it can be treated with chemotherapy, but complications can arise. Such complications include blindness, and the necessity to remove the eye if current treatment fails. This is another part of the ophthalmology pipeline so another milestone payment will be triggered upon the successful filing of this IND as well. We should note though that this disease will treat an unmet medical need in children so much so that Rxi has received an NIH/NCI SBIR Grant for its Retinoblastoma compound. The funding from NIH — National Institute of Health — comes into play because the NIH is addressing to fund companies to lessen the burden of cancer with safer forms of treatment. Once again Rxi can also apply to the FDA for Orphan drug status for this compound as well.

Retinoblastoma occurs because of a gene known as the RB1 gene that is overexpressed in the patient’s retina. Initial testing to date has shown dose dependent silencing of mRNA in Retinoblastoma cell lines just 48 hours post administration of the compound. Rxi used a gene known as MDM2 — Murine Double Minute Gene 2 — because it acts as a negative regulator of the p53 pathway which is responsible for cell proliferation — cell growth and cell division. The goal for Rxi is to down regulate this gene using mRNA, thereby suppressing the tumor indefinitely. Company has seen remarkable results in the RB176 and RB177 cell lines. This is because sd-rxRNA platform was able to show mRNA reduction of Retinoblastoma cell lines even 14 days after a single intravitreal injection into a mouse. The Retinoblastoma compound is the company’s first target against cancer, so there is also a huge precedence if the sd-rxRNA platform proves to reduce cancerous tumors.

Catalysts for Retinoblastoma

  1. Pre-clinical results for cell proliferation in vitro in 2014/2015
  2. Pre-clinical results of MDM2 gene utilizing sd-rxRNA platform in human Retinoblastoma cells in a xenograft model 2015
  3. Another milestone payment when an IND is filed possibly sometime in 2015

Opko Estate RNAi Patents And Beyond

Besides Bevasirinib the deal with Opko allowed Rxi to expand upon its patent portfolio even more. Eventually Rxi can apply its sd-rxRNA technology to ICAM-1, Angiopoietin-2, and most importantly HIF-1a which is expressed in a lot of cancerous tumors. Rxi is continuing to build itself into a strong biotechnology company, because it knows the potential value of all these compounds that it is working on. Matter in fact just last week Rxi announced  that it will be moving into an even bigger office location necessary for expansion. That should be another hint that RXI-109 is doing well with RXI-109 sales in Europe as a “Specials provision “, and that the phase 2 double-blinded data looks encouraging in the pictures as mentioned above.

If all this data wasn’t enough to impress well lets just say that there have been no insider sales recently, and the CEO of Rxi continues to purchase RXII shares continuously on the open market. The CEO has been buying since August 22, 2013 all the way up until recently July 2, 2014. The CEO currently holds about 28,600 shares of Rxi Pharmaceuticals according to the SEC-Form 4 filing . We think it is bullish that the CEO continues to buy Rxi shares on the open market and has not sold a single share to date.

Financials To Last For Awhile

A lot of investors are typically worried about dilution with small-cap biotechnology stocks. The good news is that Rxi Pharmaceuticals doesn’t have to worry about dilution for a very long time. As mentioned above the Lincoln Park Capital deal above will help Rxi to fund its Ophthalmology pipeline. Even with the anti scarring RXI-109 compound thrown into the mix the company has enough cash to run the company until Q2 of 2017. It was great that Rxi established the LPC deal, because without that deal the cash runway would have only lasted until Q2 of 2015. Now the company is set to operate freely with no cash worries until 2017.

Partnering Opportunities

Although upon successful phase 2 hypertrophic scar results the company will be able to partner out the other compounds in the pipeline, like its liver fibrosis compound which is becoming a huge buzz in the biotechnology industry. A compound that is able to heal liver fibrosis could generate potential billions of dollars. Therefore Rxi would have no trouble partnering out the compound upon confirmation of its sd-rxRNA technology platform. Besides partnering out compounds some pharmaceutical companies may even want to utilize Rxi’s sd-rxRNA technology so they can deliver their own RNAi oligonucleotides with no delivery vehicles required. The possibilities of this platform could be endless and this company could generate a lot of buzz on wall street in the coming months.


Rxi Pharmaceuticals has seen a 52-week high at $6.84 per share, and has since declined to its current share price of $2.68 per share. It is slightly above its 52-week low of $2.55 per share so it is a good opportunity for investors to get in around this area and potentially profit off of the nearing phase 2 hypertrophic scar result catalyst. We should state though that investors should be aware of the risk that the data is still double-blinded, and there is no guarantee of success. Investors should invest on the notion that a trial failure can result in a complete loss of their money. Therefore people should invest in Rxi based on their risk tolerance level. We believe that Rxi Pharmaceuticals has done something that has never been done before in RNAi space, and that is to create a self delivering RNAi compound without the use of a delivery vehicle. We feel that investors should do their due diligence, and consider some type of position in Rxi before the catalyst comes that will change the future of the company forever.


FDA Approves Mannkind’s Afrezza, A Better Case for Patients With Diabetes

Many investors were made happy on Friday, June 27th  when the FDA had decided to approve Mannkind’s (MNKD) Afrezza for patients with both type 1 and type 2 diabetes. The news of this approval on Friday would be considered excellent except for the fact that the stock tanked by 10% or more on concerns of the FDA label. The label puts a lot of limitations of use for Afrezza , and so there are skeptics who think that Mannkind won’t achieve great sales, or will have a very tough time finding a partner to market the inhaled-insulin drug. Today the stock has gained 10% or more after investors have had time to digest the news that this could be a revolutionary treatment for patients with diabetes.

Current therapy for patients with diabetes deals with regular insulin injections, but these injections can be very uncomfortable for the patients. The currently approved Afrezza from Mannkind is inhaled insulin which is far better than patients having to stick needles into themselves. Think of this change as a new quality form of life where patients have an easier time treating their diabetes. Another added benefit is that patients that inject their insulin will have to wait an hour or more before the effect kicks in for proper insulin levels in the body. On the other hand Afrezza can help a patient with diabetes achieve their proper insulin level around 13 minutes after treatment.

There are approximately 29.1 million people in the United states that either have type 1 or type 2 diabetes according to the American Diabetes Association. There is quite a bit of differences between patients with type 1 and type 2 diabetes but they both deal with some problem the body has with insulin. For instance with type 1 diabetes patients are unable to produce insulin that the body needs – so lack of insulin production is a big problem for the body. Patients with type 2 diabetes generate insulin in the body but their bodies lack the ability to efficiently use the insulin that is produced. There are many symptoms associated with diabetes but some of the main ones deal with frequent urination, feeling very thirsty all the time, and feeling hungry even after eating. Some people may even have diabetes and not know it because patients with type 2 diabetes have mild symptoms that people pass off as nothing worth exploring.

Mannkind has a great victory with this approval especially since it has gone up many times seeking FDA approval for Afrezza. The problem was that the FDA continually wanted more tests to be done to prove that inhaling insulin could help patients control their diabetes. As with any drug compound there are some downsides that may or may not affect the future of Afrezza on the market. One problem is that Afrezza will not completely replace long acting insulin, but on the plus side it could be used throughout the day before meals as a less invasive alternative. Another problem is that the FDA put a label stating that Afrezza can’t be used in patients with lung diseases such as asthma so this will limit some of the potential market for Afrezza.

We believe that despite these label additions Afrezza will still target a huge market for patients with diabetes. The stock currently trades at around $11 per share but there is still plenty of room for share appreciation. Share price appreciation can come because of a possible partnership or future revenue. There will have to be some kind of partner out there for Mannkind that wants to reap the benefit of generating billions of dollars with the amount of patients with diabetes. More about Mannkind’s press release for FDA approval of Afrezza can be found here. We think that long term investors should do just fine holding onto a position that will rise in the years to come, and we think Mannkind is a long term buy.


Vertex Pharmaceuticals Creates Combo Magic And Achieves Positive Results for Cystic Fibrosis Patients

Today Vertex Pharmaceuticals (VRTX) , a biotechnology company focused on creating cures for rare diseases, announced positive results from two crucial phase 3 trials for a combination of drugs being used to treat patients with Cystic Fibrosis. This was a huge event for Vertex Pharmaceuticals, because a miss with this study would have send the stock tanking by a huge margin. Good thing for investors though is that the results were extremely positive and the stock surged as high as 40% during the trading day.  One key thing to note is that Vertex combined two if its drug compounds lumacaftor and ivacaftor respectively to combat patients with cystic fibrosis with two copies of  the F508del mutation in the CFTR gene.

The first drug from Vertex Pharmaceuticals Kalydeco treats cystic fibrosis with many types of genetic mutations except the F508del mutation listed above. So the maximum population that can be treated with Kalydeco are approximately 2,000 patients. The reason for the stock surging as high as it has today is because the new targeted mutation will be able to treat approximately 20,000 patients. This increases the value significantly because in the long run it will mean more revenue for Vertex. Currently Kalydeco costs $200,000 for treatment which is a substantial amount, but the new drug combination has yet to be priced by the company. The company will definitely take into account many factors when determining price, especially since there are no other treatment options for these patients.

The results were positive because the combination of drugs from Vertex was able to meet the primary endpoint which was improvement function of the lungs. The problem with Cystic Fibrosis is that patients that have these abnormal mutations of these genes generate an overabundance of thick mucus in the lungs. The body needs watery mucus to keep infections away, but in Cystic Fibrosis patients develop sticky/thick mucus which causes the airways of the lungs to be blocked. This also allows infections to develop which is a big reason why these patients have to go to the hospital quite often. The way these results were measured was by using ppFEV which means the percentage predicted forced expiratory volume in one second. In other words it was a measure of lung improvement percentage wise over placebo. The ppFEV achieved was between 2.6% and 4% from the baseline compared to placebo. This means that the p-value was statistically significant since p was less than or equal to 0.0004.

On top of meeting the primary endpoint the combination of drugs from Vertex also reduced the rates of pulmonary exacerbations which will help a lot more with patients staying out of the hospital due to an infection or inflammation. This drug once out on the market will mean a lot for Vertex so they will try to push it along quickly through the regulation process to get it approved to distribute on the market. The company is wasting no time because they expect to file an NDA In the U.S. and MAA in Europe in the 4th quarter of 2014. One key thing to note though is that this treatment is only set to be approved for patients that are age 12 or older because more testing may be needed for safety concerns. The CEO doesn’t want to get this drug out there to children with Cystic Fibrosis that are under age 12 until every kink has been worked out. Which we think is a good gesture, because the company is not looking out just for profit but for the well being of these patients that are actually suffering from such a terrible disease.

Even though the stock surged as much as 40% today closing at around $93.65 per share, we believe that the share price can rise steadily higher in the future. Remember that this is dependent upon how the new combo drug will be priced on the open market but if anything it will probably be at or above the current price of Kalydeco which is $200,000 dollars per treatment. So we believe that their is still plenty of time for the share price to rise higher in the coming years. Vertex still has a pipeline full of other rare disease compounds it is working on so there is still plenty of room to grow revenue besides the Cystic Fibrosis drugs. These patients with the F508del mutation  of Cystic Fibrosis lose about 2% of their lung function each year. This drug is remarkable because it can actually reverse the process and save these patients from losing percentages of their lung functions each year. More info about today’s results can be found here. We think that Vertex Pharmaceuticals is a great long term buy, and investors should take a look at the company’s future prospects.