The Cross-Border Biotech Blog

Biotechnology, Health and Business in Canada, the United States and Worldwide

Monthly Archives: May 2013

Friday Science Review: May 31, 2013

During development several proteins guide the mapping of blood vessels throughout our body, providing different cues to direct them where they should go and, equally as important, not go. New research published in Nature from the lab of Dr. Sabine Cordes at Mt. Sinai Hospital in Toronto describes the role of a protein called gumby in the formation of the microvasculature. Mice lacking gumby displayed normal patterning of the major vasculature, but patterning of the smaller vascular networks in the head and trunk of the mice was greatly disrupted. Genetic mapping allowed the authors to determine that mutations in the Fam105b gene were underlying the defects observed in the “gumby mice”, and identified the gumby protein as a deubiquitinase. This means that gumby can counteract ubiquitination, a process in which proteins are tagged for a certain fate; this fate may be degradation, movement within a cell, or initiation of cellular processes. The authors also found that gumby interacts with a ubiquitinating complex called LUBAC, and that together these proteins can modulate the Wnt pathway, a pathway important in the development of the vasculature. Because LUBAC and gumby serve opposing functions, the interaction of these two proteins effectively creates a signaling axis that allows for flexibility in the management of the Wnt pathway, and ultimately the development of the vasculature. Identification of these pathways and the genes underlying them creates new possible targets for the management of disorders of vasculature mapping, as well as disorders in other systems that require significant mapping, such as the nervous system.

Monday Deal Review: May 27, 2013

Welcome to your Monday Biotech Deal Review for May 27, 2013! After what was hopefully a peaceful and relaxing Victoria Day, we can get back to business with two week’s worth of news.  To start, Bioniche is looking to sell its animal health business, having engaged an advisory firm to advise on a transaction. In adidtion, TheraVitae is entering into a transaction with Technical Ventures RX Corp, ultimately creating the publicly-traded biotech Hemostemix. TheraVitae currently works in the area of blood-derived autologous adult stem cell therapies.

Also noteworthy is Aeterna Zentaris’s at market issuance of up to US$4.6 million worth of shares on the NADAQ. Finally, iCo Therepeutics closed its own marketed offering, with proceeds of $3,379,519.90.

Theres still more to see from the last two weeks, so hit the break and get up to speed on the all the major biotech news.
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Friday Science Review: May 17, 2013

Parkinson’s disease, a neurodegenerative disease characterized by motor and cognitive deficits, may be caused by mutations in the Parkin gene. The Parkin gene transcribes the Parkin protein, an enzyme which has been implicated in cellular processes including autophagy, or “cell housekeeping,” and cell survival. Recent work from the Montreal Neurological Institute and McGill University’s Department of Biochemistry published in Science magazine demonstrates the crystal structure of the Parkin protein. The crystal structure of a protein offers an excellent idea of the natural conformation a protein adopts; determining the structure of Parkin protein, surely an immense amount of work, will allow for advanced studies of how the protein normally functions, and will increase understanding of how mutations in the Parkin protein lead to the deficits seen in Parkinson’s disease.

Parkin protein normally has low basal activity. Following determination of the structure of Parkin, the authors found that it can maintain this low baseline by inhibiting itself. Additionally, by testing a number of mutations in the Parkin protein, they found that most mutations greatly reduce or abolish its already low basal activity. However, mutations directed at eliminating auto-inhibition of Parkin were able to increase activity of the protein, indicating that it is possible to bidirectionally change its activity. These experiments demonstrate the utility of knowing the crystal structure of the Parkin protein, as future studies will be able to better evaluate how the activity of the protein can be managed, which may prove very important in the treatment of Parkinson’s disease.

Monday Deal Review: May 13, 2013

Welcome to your Monday Biotech Deal Review for May 13, 2013! This week saw MethylGene make waves with its announcement that it will move its business to the State of Delaware, and will be held by specially made Mirati Therepeutics.  Mirati will then seek listing on the NASDAQ. It is unclear how long the company will be trading on both the TSX and the NASDAQ together. In other news, iCo has priced an overnight marketing of units for proceeds of about $3.2 million, while Sirona has rasied another $1 milllion, beinging their 2013 total to a healthy $2.4 million.  Click on through to get the rest of the past week’s major biotech news!     Read more of this post

Friday Science Review: May 10, 2013

Stroke is the leading cause of disability in North America, but no good treatment exists for stroke beyond a few hours of its occurrence. The damaging effects of stroke occur because nerve cells in the brain require oxygen to survive; once blood-flow to the brain is disrupted and oxygen delivery to nerve cells stops, the cells enter a state called excitotoxicity and begin to die. The best way to improve stroke outcome is to limit the amount of nerve cell death that occurs. Much pharmacological treatment has been directed at inhibiting a specific neurotransmitter receptor central to excitotoxicity, but this approach can have broad effects within the brain. New research from Dr. Yu Tian Wang’s lab at the University of British Columbia published in the Journal of Neuroscience offers a potential new target to limit nerve cell death following stroke. The researchers found that PTEN, a protein that promotes cell death once it enters the nucleus of a cell, becomes targeted to nerve cell nuclei after excitotoxicity starts; additionally, they found that a specific portion of PTEN is critical for its entry in to the nucleus. In nerve cells that were pharmacologically treated to become excitotoxic, ones that had this portion of PTEN mutated were less likely to die. Furthermore, mice injected with a peptide that inhibits the entry of PTEN in to the cell nucleus experienced less extensive physical brain damage, increased nerve cell protection, and more rapid and complete motor skill recovery following an induced stroke; these effects were seen if the peptide was delivered to mice up to 6 hours after the stroke was induced. These results indicate that limiting nerve cell death through inhibition of a downstream protein involved in excitotoxicity may be a viable new approach for stroke treatment, one which may also extend the treatment window following the occurrence of a stroke.

Valuation and other biotech mysteries – Part 26: Some Final Thoughts

[Ed. This is the twenty-fourth part in Wayne’s series. You can access the whole thing by clicking here
As with all commentary on this blog, these comments do not consider the investment objectives, financial situation or particular needs of any particular person, and investors should obtain professional advice based on their own individual circumstances before making any investment decision.]

Wayne Schnarr - seriousIt has now been 35 years since I earned my Ph.D. in chemistry and started wondering how I would make a living and what my career path would be. I sent out over 50 letters to the pharma companies in Canada in 1977 – I got one reply, from Eli Lilly I think – to fill out a form. After 30 years in the pharma/biotech and financial industries, I have had the opportunity over the last few years to sit back and observe those industries, as well as having drinks and chats with many friends who are still working in those industries. Here are a few final thoughts for your consideration.

  • The only constant is change – whether it is disease treatments, the pharmaceutical industry, capital markets or your career paths.
  • The pharma industry is alive and well. Annual global sales of prescription and non-prescription drugs are over $1 trillion and still growing at a higher rate than GDP growth. The U.S. will remain the single largest market at over 30% and Canada will remain at about 2% of the global market.
  • In 2005, the industry spent almost as much on share buybacks plus dividends as it did on R&D.
  • The pharmaceutical industry has historically and will continue to adapt to dramatic scientific, medical, economic and political changes. Just consider a few things which have shaped the industry we see today.
    • Antibiotics from fungal sources
    • Vaccines for polio and smallpox in the 1950s
    • Thalidomide, increased government regulation and the focus on safety in the 1960s
    • Rational drug design
    • The blockbuster era starting about 1980 with the first billion dollar drug Tagamet
    • The U.S. Drug Price Competition and Patent Term Restoration Act of 1984, usually referred to as the Hatch-Waxman Act, and the emergence of generics
    • Biotech equivalents of natural human proteins, including HGH, insulin, G-CSF and EPO
    • The emergence of monoclonal antibodies
    • The biotech boom of 1999-2001
    • Annual drug costs approaching $500,000 annually for certain orphan diseases
    • Restrictive formularies and comparative efficacy analysis by governments and other payers
    • The blockbuster patent cliff
    • ?????
  • M&A is not a new growth strategy for pharma – just look at the list of companies bought by Pfizer over the last 30 years.
  • In the 1980s, the big pharma companies sold off everything that did not look like a blockbuster. Now they are buying back those assets for steady revenue and growth.
  • We could not predict the timing of past biotech booms and we probably cannot predict when the next biotech boom will occur. In my opinion, the biggest boom was just luck – proteomics and genomics came along just as a huge capital pool was exiting the tech boom and looking for an alternative high return investment. Other smaller booms have risen and fallen along with the broader capital markets.
  • The biotech industry had dreams of being different and perhaps better than pharma in terms of development success rates and clinical impact of the products. Its tools were initially different and some independent biotech companies thrived. However, there is really only a single industry with some company differentiation based on therapeutic focus and types of products.
  • The fate of most biotech companies is to fail. Most junior mining companies doing exploration over the last few years have failed to make discoveries which justify building a new mine. It is just a fact of life in these industries.
  • Successful biotech companies will most likely face the ‘acquire or be acquired’ situation. The fate of most successful biotech companies is to be acquired. Investors usually prefer the premium share price that goes with being an acquisition target. Management would naturally prefer to be the acquirer and keep their jobs.
  • Is there an alternative to acquire or be acquired? Is it possible to give 10% of the revenue stream from a licensed drug to the management and let them try to repeat their success, while 90% of the revenue stream is distributed to shareholders?
  • Nobody in pharma or biotech or among their investors can consistently pick winners. Some are more selective in their initial investments and others may exit their losers more quickly.
  • One of the hardest lessons to learn in biotech investing was ‘good companies are not always buys’.

I hope this blog series has been at least interesting and perhaps even useful to its readers by pointing out the many questions which you need to ask.

Friday Science Review: May 3, 2013

The use of oncolytic viruses is becoming an increasingly attractive avenue for the treatment of cancer, because these viruses are able to destroy tumor cells and also generate immune-responses directed at those same tumor cells. Using human viruses for this type of treatment may be inefficacious, because immunity may exist or quickly develop toward the virus that is being used. The use of animal viruses similar to human viruses may prove to be an effective way to avoid these potential immunity problems.

A proportion of cells within a tumor are cancer stem cells, which are often enriched in what is called a “side population” of tumor cells. These cells can self-renew, produce new cells derived from multiple cell lineages, and may increase the growth rate of tumors. Previous research from Dr. Karen Mossman’s lab at the McMaster University Immunology Research Centre demonstrated that bovine herpesvirus type 1 targets transformed human cells but not normal human cells, and new research from her lab published in Cancer Gene Therapy now demonstrates that this virus can infect and kill cancer stem cells within the tumor side population.

The researchers found that exposing a number of different breast cancer cell lines to the bovine herpesvirus 1 led to a decrease in tumor cell viability and an increase in tumor cell death. The virus also killed human breast cancer stem cells, and limited the self-renewal and cellular differentiation capabilities of these cells. Additionally, mice injected with breast cancer stem cells that had been exposed to bovine herpesvirus 1 formed much smaller tumors than mice that were injected with breast cancer stem cells that were untreated. These results offer hope that bovine herpesvirus 1 or similar viruses may be particularly useful in treating cancers, because, in addition to not targeting normal cells, they are effective in killing the particularly harmful cancer stem cell population, and their use could also limit immunity issues that may reduce treatment efficacy.

Valuation and other biotech mysteries – Part 25: Undervalued compared to its peers?

[Ed. This is the twenty-fourth part in Wayne’s series. You can access the whole thing by clicking here
As with all commentary on this blog, these comments do not consider the investment objectives, financial situation or particular needs of any particular person, and investors should obtain professional advice based on their own individual circumstances before making any investment decision.]

Wayne Schnarr - seriousAnalyst reports will usually verbally describe a stock as fairly valued, under-valued or over-valued. For profitable companies, this verbal description is usually based on a comparative numerical analysis where the company valuation based on share price is compared to an analysis such as NPV. Analysts do make assumptions in this analysis but they usually start from a solid financial history and also have management’s guidance.

The situation is substantially different for a company at the clinical development stage for a new drug product. The only financial history is the cash burn and any NPV analyses have so many assumptions that the analyses are of questionable absolute value. If there is no useful NPV-based comparator, analysts and CEOs sometimes turn to the valuations of their peers for comparisons.

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