The Cross-Border Biotech Blog

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

Monday Deal Review: September 9, 2013

Welcome to your Monday Biotech Deal Review for September 9, 2013! This week saw Medicago recieve the shareholder approval it needed in order to continue its arrangement with MTPC.  Cash consideration of $1.16 will be given for each share of Medicago.

For more detail on this deal, as well as the rest of the major recent biotech stories, hit the break!

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Monday Deal Review: August 26, 2013

Welcome to your Monday Biotech Deal Review for August 26, 2013! This week’s big story was the closing of Sophiris Bio’s IPO, which raised $65 million in gross proceeds.  Antibe also closed its own IPO, rasing $3 million in aggregate proceeds.  Finally, Stellar, Biologix Hair, Zecotec Photonics and Nightinggale Informatix have either closed or announced their intent to close private placements of their own.

I’d also like to take this oppurtunity to thank Jennifer Ng, an articling student with Norton Rose Fulbright Canada LLP, who will be assisting in bringing you the Monday Deal Review each week from now on. Thanks Jennifer!

Now hit the break to see the whole story on these major deals and for the rest of the past weeks’ stories!

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Monday Deal Review: August 19, 2013

Welcome to your Monday Biotech Deal Review for August 19, 2013! As August comes to a close, activity is beginning to pick up.  Bellus and Valeant have closed their acquisitions of Thallion and Bausch + Lomb, respectively.  On the financing side of things, Sophiris and Covalon are pursuing offerings, with Sophiris looking at rasing $65 million.  Finally, Transition, Vivione and Quest PharmaTech have executed deals for licensing or development.

Hit the break to see the whole story on these major deals and for the rest of the past weeks’ stories!

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Friday Science Review: August 9, 2013

Cognitive decline, memory impairment, and anxiety are all typical parts of normal aging. New research published in the Journal of Neuroscience from the lab of Dr. Remi Quirion at McGill University sheds light on cellular mechanisms in the brain that may underlie this decline. Dynorphins, endogenous opioid-like proteins, appear to be increased in aged brains, and through activation of specific opioid receptors can decrease the function of synaptic connections releasing the amino acid neurotransmitter glutamate. Glutamate is the most common neurotransmitter in the brain and acts on several different receptor types, but the effect of dynorphin appears to arise through reduction in activity of a specific group of glutamate receptors, the metabotropic glutamate receptors (mGluRs). mGluRs can be important for different forms of synaptic plasticity, or the remodeling of neural connections, and appear to be important for decreasing the strength of certain synapses in order to properly shape neural circuits that underlie learning and memory formation. The hypothesis that Dr. Quirion’s group pursued was that increased dynorphin expression in aging brains leads to decreased mGluR activation which in turn limits the synaptic plasticity required for memory and other cognitive processes. To examine this, the group compared anatomical, physiological, and behavioral characteristics of wild-type mice and mice that had the dynorphin precursor, prodynorphin, knocked out. In general, young and middle-aged wild-type mice did not differ from young and middle-aged prodynorphin knockout mice. However, many differences were observed between old wild-type mice and old prodynorphin knockout mice. Old prodynorphin knockout mice had higher mGluR expression than old wild-type mice, and they exhibited mGluR-mediated plasticity at a level similar to young and middle-aged mice. Additionally, on behavioral tests of memory, learning, and anxiety, the prodynorphin knockout mice performed better than and displayed less anxiety behaviors than old wild-type mice. In fact, old prodynorphin knockout mice performed similarly to young and middle-aged mice on the behavioral tasks. To confirm that these changes were mediated by mGluRs and dynorphin receptors, the authors also performed behavioral tests in mice that had received pharmacological treatment. In old wild-type mice, pharmacologically increasing the activity of mGluRs or blocking the activity of dynorphin receptors resulted in greatly improved performance on the memory and learning tasks and in decreased anxiety behaviors. Conversely, in old prodynorphin knockout mice pharmacologically inhibiting the activity of mGluRs resulted in poorer performance on memory tasks and in increased anxiety behaviors. Together, these data clearly demonstrate that increases in dynorphin during normal mammalian aging can cause a reduction in mGluR-mediated synaptic changes that underlie learning, memory, and anxiety, and they identify a pathway that can be targeted to improve cognitive ability in the aging population.

Pulse of the Canadian healthcare sector (Part 3): improving the funding for early stage companies

Wayne Schnarr - seriousBased on personal discussions and CVCA financing data (see Part 2 of this blog series), I conclude there has been insufficient funding available for the quality early stage Canadian healthcare companies and technologies for several years. I am going to outline my perspectives on three groups of options for improving the funding.

  • Can some of the funding sources which have left the sector be enticed to come back?
  • Can the funding level from some of the current sources be increased?
  • Are there new sources or formats for funding?

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Monday Deal Review: July 22, 2013

Welcome to your Monday Biotech Deal Review for July 22, 2013! A busy week saw acquisitions of Medicago by Mitsubishi Tanabe Pharma Corporation and Allon’s acquisition by Paladin Labs.

Hit the break to see the whole story on these major deals and for the rest of the past weeks’ stories!

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Share Price Performance in Q2 2013 for the Canadian Healthcare Sector: Negative results for the smaller cap public companies (Part 2)

Wayne Schnarr - seriousFollowing on from Part 1 of my analysis of the share price performance in Q2 2013, this blog will focus on the Canadian public healthcare companies which started 2013 with share prices between $0.10 and $0.99 (53 companies).

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Monday Deal Review: July 8, 2013

Welcome to your Monday Biotech Deal Review for July 8, 2013! A busy two weeks has seen  lot of activity on the debt financing side of things. This includes Paladin and Bioniche’s complex debt financing and license arrangement.
Valeant’s ambitious financing push is also nering completion, with the public offering worth $2.3 billion closing and the nearly $3.3 billion in senior notes being priced.

Click through the break to see the full rundown of the past weeks’ stories!

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Friday Science Review: July 5, 2013

A few weeks ago I reviewed a paper that demonstrated that pluripotent stem cells could be induced by repressing muscleblind-like RNA binding (MBNL) proteins in differentiated cells. Continuing in this vein, new research published in Nature Cell Biology from the lab of Dr. Connie Eaves at the BC Cancer Agency identifies a pathway crucial for the maintenance of the self-renewal properties of hematopoietic stem cells (HSCs). Using array analysis and quantitative polymerase chain reaction, the authors found that the Lin28b gene is expressed much more highly in mouse fetal liver HSCs than in adult bone marrow HSCs, which have greatly reduced self-renewal capabilities compared to fetal liver HSCs. Adult bone marrow HSCs transfected with the Lin28 gene and subsequently transplanted in to mice of at least 10 weeks of age have increased self-renewal capabilities and also show decreased levels of let-7 microRNA, the production of which is inhibited by Lin28b. Additionally, flow cytometry experiments demonstrated that Hmga2, a protein that is known to be inhibited by let-7, was increased in adult bone marrow HSCs following Lin28 transfection. Directly increasing Hmga2 levels in adult bone marrow HSCs increased the self-renewing capabilities of these cells, whereas fetal liver cells lacking Hmga2 have greatly reduced self-renewing capability. Overall, this study demonstrates that the self-renewing capability of mouse hematopoietic stem cells is regulated by the Lin28 – let-7 – Hmga2 axis, which is down-regulated within a few weeks following birth. Thus, this pathway offers a potential target for the development of tissue-specific self-replicating cells, which promise to be very important for the treatment of a variety of diseases.

Share Price Performance in Q2 2013 for the Canadian Healthcare Sector: Relatively flat for the larger cap public companies (Part 1)

Wayne Schnarr - seriousIn order to assess share price performance among the Canadian public healthcare companies, I started with a portfolio of 118 companies for the 2013 assessment. The portfolio has been split into three parts according to the closing share price on December 31, 2012: $1.00 or more (38 companies); $0.10 to $0.99 (53 companies); and less than $0.10 (now only 25 companies; Victhom acquired and PharmaGap cease traded in Q2).

In this blog, I am going to comment on the Q2 and H1 performance of the first group of companies with share prices of $1.00 or more to start 2013 (a subsequent blog will comment on the other two groups of companies in the sector).

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Monday Deal Review: June 24, 2013

Welcome to your Monday Biotech Deal Review for June 24, 2013!

The past weeks’ big news is Antibe’s IPO, which resulted in approximately $2.1 million in proceeds. Antibe also concurrently made a private placement of shares with two private investors.

Valeant also made big news with the announcement of a public offering for proceeds of $1.75 billion, and a senior notes offering of about $3.2 billion.

Get the details on these major stories, and many more, by following the break.

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Friday Science Review: June 21, 2013

Arthritis is a highly prevalent disorder, affecting about 1 in 5 people in North America, and is characterized by joint inflammation, which results in pain and reduction in joint mobility. Underlying these symptoms is the release of a peptide called substance P, so called because of its role in signalling pain. New research published in the Journal of Neuroscience from the lab of Dr. Alfredo Ribeiro-da-Silva at McGill University indicates that joint pain associated with arthritis may be due in part to increased activation of substance P-releasing nerve cells caused by inappropriate sprouting of sympathetic nerve fibers. The authors induced arthritis, which was characterized by joint edema and increased pain responses, in the hind ankle joint of rats. Using immunohistochemistry, the authors found that sympathetic nerve fibers, which normally innervate blood vessels in the skin to regulate blood-flow, sprouted to innervate the synovial membrane surrounding the ankle joint and the upper dermis covering the ankle joint four weeks after the arthritic phenotype was induced. Interestingly, these newly sprouted sympathetic nerve fibers closely associated with peptidergic nerve cells, which release substance P and are associated with transmitting pain responses. This result suggests that sympathetic nerve sprouting can increase the activity of substance P-containing neurons, exaggerating pain responses and inflammation. Consistent with this, pharmacologically blocking sympathetic nerve responses in these rats shifted the pain threshold back near normal. The authors also found that the expression of mature nerve growth factor (NGF), which is necessary for sympathetic neuron growth and survival, was increased near the ankle joint in which arthritis had been induced. The authors suggest that activity of peptidergic nerve cells increases joint and skin inflammation which initiates an immune response leading to increased production of mature NGF. The increase in NGF leads to sympathetic nerve sprouting, a further increase in peptidergic nerve cell activity, and ultimately to hyperactive pain signaling. These findings suggest that decreasing the production of mature NGF near arthritic sites can decrease sympathetic nerve sprouting and reduce arthritis associated pain. Additionally, localized inhibition of sympathetic neurotransmission may be a way to provide short-term arthritis pain relief.

Friday Science Review: June 14, 2013

Embryonic stem cells are pluripotent, meaning they have the ability to differentiate into multiple cell types. Due to this, embryonic stem cells have the potential to be used in cell-based therapies to treat diseases in which specific cell types are lost, such as Alzheimer’s or diabetes, or to promote recovery following traumatic events, such as spinal cord injury or stroke. However, the use of embryonic stem cells is controversial for a number of ethical reasons, with specific concern surrounding how they are harvested. Induced pluripotent stem cells (iPSCs) offer an alternative to embryonic stem cells, because they can be derived from differentiated host tissue. Because changes in gene expression within embryonic stem cells lead to their differentiation and loss of pluripotency, iPSCs can be produced from differentiated cells by essentially reversing these changes. New work published in Nature from the lab of Dr. Benjamin Blencowe at the University of Toronto identifies muscleblind-like RNA binding proteins (MBNL1 and MBNL2) as regulators of specific gene splicing events that differ between embryonic stem cells and differentiated cells. Using high-throughput sequence profiling and quantitative polymerase chain reaction, the authors found that MBNL proteins are expressed less in embryonic stem cells and iPSCs than in differentiated cells. This led the authors to hypothesize that MBNL proteins repress expression of certain sequences of RNA that maintain the pluripotent state of embryonic stem cells. To examine if this was the case, the authors used small interfering RNA to decrease the amount of MBNL1 and 2 protein expressed in cultured mouse and human cells. In approximately half of these cells, decreasing the MBNL proteins altered the splicing of the FOXP1 gene, a gene important for triggering a switch between embryonic stem cells and differentiated cells, and returned the cells to an embryonic stem cell-like pattern of FOXP1 expression. It was also possible to do the opposite: over-expression of the MBNL1 and 2 proteins in mouse embryonic stem cells caused these cells to quickly adopt the FOXP1 splicing pattern seen in differentiated cells. Importantly, knockdown of MBNL proteins increased the level of several transcription factors that are critical for maintaining pluripotency of embryonic stem cells, and significantly increased the number of iPSC colonies. These results demonstrate that MBNL proteins 1 and 2 are directly involved in the control of embryonic stem cell pluripotency, and that reduction of their expression in differentiated cells can lead to induction of iPSCs. MBNL expression is therefore an attractive therapeutic target to create pluripotent cells for use in cell-based therapies, as the use of iPSCs eliminates many of the ethical concerns surrounding the use of embryonic stem cells for such therapies.

Pulse of the Canadian healthcare sector (Part 2): funding continued development of early stage companies

Wayne Schnarr - seriousThe second question posed in Part 1 of this blog series was how can the continued development of these early stage companies be financed?

Ten to fifteen years ago, funding of early stage companies came primarily from the following sources.

  • There were VC groups within the major Canadian banks, which no longer exist as the banks decided this was not an appropriate use of their capital.
  • A key player in many syndicates was MDS Capital Corp., which had both a classical VC fund and managed the labor-sponsored fund CMDF. Now Lumira Capital, it is focused on exiting from its many U.S. investments but looks at new investments in later stage Canadian companies, such as the $35 million financing by Thrasos Therapeutics in October 2012.
  • Large pension funds were limited partners in some VC funds but have now generally opted for direct, lower risk and income-generating healthcare investments.
  • Retail-based funds were created as a result of government tax incentives, including the LSVC or labor-sponsored venture capital funds. Poor performance resulted in many of these funds facing redemptions which have been substantially higher than new investments for several years. The situation was compounded by some provinces (e.g. Ontario) eliminating their portion of the tax credit and now the federal tax credit will be slowly withdrawn.
  • Some investment funds were mainly funded by provincial governments, primarily in Quebec.
  • U.S. VC funds were syndicate partners in some of the larger financings.

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Pulse of the Canadian healthcare sector (Part 1): the pipeline of new technologies and early stage companies

Wayne Schnarr - seriousI attended the two Canadian healthcare conferences organized by Bloom Burton on May 21st and 22nd, 2013. Other important conferences were also held in May, including BIO, CVCA (Canadian Venture Capital Association) and most recently ASCO. A report on the Canadian sector has been released recently by PwC Canada and Ernst & Young released their 27th annual biotechnology industry report. All of this activity and information has prompted me to review my perspective on the pulse of the Canadian healthcare sector.

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Monday Deal Review: June 3, 2013

Welcome to your Monday Biotech Deal Review for June 3, 2013! The past week’s major news was Valeant’s major acquisition of Bausch + Lomb for a combined debt and equity amount of $8.7 billion, bolstering its ophthalmology business heavily. Bausch + Lomb will retain its name and become a division of Valeant, withValeant’s existing ophthalmology businesses being integrated into the newdivision. The transaction creates a global eye health business with estimated pro forma 2013 net revenue of more than $3.5 billion. The acquisition is suggested to be a response to growing eye health trends driven by an aging patient population, an increased rate of diabetes and demand from emerging markets. 

Also on the M&Eh front, Resverlogix is continuing with their proposed spin out to Zenith, as covered last week. The shareholders of Resverlogix approved the special resolution required to conduct the spin out. 

Meanwhile, Angiotech is distributing the proceeds it received from the sale of its Interventional Products business to shareholders, and RepliCel signed an agreement with the cosmetic giant Shiseido for the development and licensing of hair regrowth technology pioneered by RepliCel.

Get the scoop on these deals and many more by hitting the break!

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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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Monday Deal Review: April 29, 2013

Welcome to your Monday Biotech Deal Review for April 29, 2013! This week saw Ergoresearch and Amorfix close their previously announced private offerings. Trimel, meanwhile, has raised $40 million from their public offering of 50,000,000 common shares. On the acquisition front, Valeant received approval from Uklraine’s anti-monopoly authority, after extending the deadline for their tender offer for Obagi, which has now closed.  Get the details on these key transactions, as well as the rest of the week’s major news, by clicking through!

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Friday Science Review: April 26, 2013

Inflammatory bowel diseases (IBD), such as Crohn’s disease and ulcerative colitis, are autoimmune disorders in which persistent bowel inflammation leads to physical damage of the intestinal tract. Research out of the Inflammation Research Network at the University of Calgary, and published in the Proceedings of the National Academy of Sciences, offers a cool novel target for the treatment of IBD. Just like we have receptors that signal heat, evident when we get a hot or burning sensation when eating a chili pepper, we also have receptors that signal cold, which can be activated by compounds such as menthol. The researchers found that a receptor that signals cold (TRPM8) is expressed more highly in colon samples from humans with Crohn’s disease than in samples from those that do not have IBD. This finding suggests that the TRPM8 receptor is up-regulated in inflamed tissue in an attempt to cool it, similar to how controlled cooling is used to treat sites of traumatic injury.

To investigate the potential of the TRPM8 receptor as a target for inflammation reduction, the researchers performed experiments in mice in which colitis had been induced. Mice with induced colitis expressed the TRPM8 receptor more highly in their colon than mice that did not have induced colitis. The mice with induced colitis also had high levels of cytokines, signalling molecules that can promote inflammation, in their colon; activating the TRPM8 receptor with a molecule called icilin reduced these cytokine levels to normal. Activation of the TRPM8 receptor in mice with induced colitis also decreased the release of a pro-inflammatory neuropeptide in the gut, and, most importantly, limited the amount of physical damage that occurred to the colon. These findings characterize the TRPM8 receptor as an anti-inflammatory receptor, and highlight its potential as a target for therapeutics directed at reducing inflammation in IBD and other chronic inflammatory diseases.

Valuation and other biotech mysteries – Part 24: Event-Based Trading

[Ed. This is the twenty-fourth part in Wayne's series. You can access the whole thing by clicking here. Please leave comments or questions on the blog and Wayne will address them in future posts in this series. 

As with all commentary on this blog, the opinions expressed herein are the author’s own and are not to be construed as investment advice. The author and his immediate family members may have long or short positions in the shares of some companies mentioned in or assessed during the preparation of this blog and may buy, sell or hold such securities at any time. Past share price performance may not be an indicator of future share price performance. This blog and its contents do not consider the investment objectives, financial situation or particular needs of any particular person. Investors should obtain professional advice based on their own individual circumstances before making an investment decision.]

Wayne Schnarr - seriousEvent-based trading is actually a very common investment strategy. For public companies in many industrial sectors, the key events are the quarterly and annual financial results. The timing of these announcements is regulated (no later than x days after period end) and, if the release date is not announced by the company, investors can approximate the short period within which the financial results will be released. Trading strategies are based on actual and anticipated shorter term share price movement and not necessarily on the longer term prospects for a product or company.

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Monday Deal Review: April 22, 2013

Welcome to your Monday Biotech Deal Review for April 22, 2013! Aeterna Zentaris has had a busy two weeks on the commercial front, signing agreements with Merck and Ergomed.  However, there was a lot more action as well.  Hit the break to catch up on the week’s major biotech news.   Read more of this post

Friday Science Review: April 19, 2013

Author’s note: I will be taking over writing duties from John Holyoake for the Friday Science Review. If you wish to know more about me, you can find my short bio on our contributors page – http://crossborderbiotech.ca/about/
 

Anxiety disorders are becoming increasingly prevalent in our society, and are highly detrimental to an individual’s well being, both physically and mentally. Children with autism spectrum disorder (ASD) are particularly susceptible to anxiety disorders, but their deficits in communication often make it difficult for them to express feelings of anxiousness. Being unable to express these feelings may lead to an exacerbated anxiety response in children with ASD, because they are often exceedingly aware of their surroundings and may become more socially withdrawn. A study published in PLoS One led by Dr. Azadeh Kushki at the Holland Bloorview Kids Rehabilitation Centre in Toronto sought to address this problem by determining a physiological marker that signals anxiety in children with ASD, which would allow for improvement in their care.

Children with ASD and typically developing children performed an anxiety-inducing task while activity of the autonomic nervous system, the part of our nervous system that unconsciously controls visceral functions, was evaluated using three different measures. The researchers found that two of these measures, heart rate and perspiration, were elevated even at rest in children with ASD, whereas the third measure, skin temperature, was comparable at rest between children with ASD and typically developing children. However, during the anxiety-inducing task the skin temperature of children with ASD increased, whereas the skin temperature of typically developing children decreased, the normal response during stress.

The results of this study offer three important findings. First, the observation that heart rate and perspiration are elevated at rest in children with ASD supports previous reports that these children have elevated generalized anxiety. Second, the difference in changes in skin temperature between children with ASD and typically developing children observed during the stressful task offer a potential non-invasive measure of anxiety in children with ASD. Finally, the generalized difference in visceral functions observed between children with ASD and typically developing children indicates that children with ASD experience inappropriate regulation of their autonomic nervous system, specifically over-activity in the division of the autonomic nervous system that controls stress responses. This final finding warrants further investigation in order to understand whether inappropriate regulation of the autonomic nervous system contributes to increased generalized anxiety in children with ASD, or if it simply accompanies general anxiety caused by other characteristics of the disorder.

Positive Share Price Performance in Q1 2013 for the Canadian Healthcare Sector (Part 2)

Wayne Schnarr - seriousIn this blog, I will focus on the Canadian public healthcare companies with share prices on December 31, 2012 between $0.10 and $0.99 (53 companies).

  • Advancers outnumbered decliners by 28 to 25
  • Average and median share price changes were 11% and 0%, respectively
  • No company had a share price decline of more than 40%
  • Eight companies had share price increases of 40% or more
    • Northstar Healthcare (258%) – the share price had been slowly increasing from a bottom reached in November 2012, but no single event could account for the Q1 increase. It was probably a combination of an equity financing, new executive appointments, new surgeons utilizing the surgery center and good Q4 financial results.
    • Stellar Biotechnologies (129%) – the Stellar share price steadily climbed from a November 2012 low. Stellar made preclinical and manufacturing progress with its immune-stimulating protein, KLH, and completed two private placements.
    • SQI Diagnostics (73%) – at the risk of repeating myself, this share price climbed steadily from a December 2012 low. The major product announcement in Q1 was the rapid development of a Multiplex Heparin Immunogenicity Assay with partner Alorithme Pharma. SQI also announced that it had established a special committee to review strategic alternatives.
    • Adherex Technologies (60%) – following its extraordinary Q4 share price performance, based on expectation and then release of preliminary Phase 2 eniluracil data, Adherex announced in Q1 that enrolment was complete and top line data would be released in either Q2 or Q3 2013.
    • CRH Medical (59%) – another company whose share price climbed steadily from a December 2012 low, based probably on expectation and then announcement of increased revenues and profitability.
    • ProMetic Life Sciences (47%) – the ProMetic share price climb started in early October 2012 with the announcement of agreements with Shenzhen Hepalink Pharmaceutical (China), including a substantial equity investment. This investment was completed early in Q1, followed by U.S. FDA approval of Octapharma’s Octaplas (a ProMetic resin is used in its manufacture).
    • Theralase Technologies (46%) – the Theralase share price bottomed in December 2012 and the Q1 increase has been volatile on low trading volume.
    • BioSyent (45%) – this share price has been climbing for almost two years now, probably on increasing sales and profitability.

The first 7 of these companies have moved up from share prices which were not only 2012 lows, but were all-time lows in 5 cases and 30-month lows in the other 2 cases. These companies come from all four of my product / service groupings: therapeutics, diagnostics & devices, services, and other healthcare products & services. The probable triggers for the share price movements include financial results, product data, partnerships and equity financings.

[The opinions expressed herein are the author’s own and are not to be construed as investment advice. The author and his immediate family members may have long or short positions in the shares of some companies mentioned in or assessed during the preparation of this blog and may buy, sell or hold such securities at any time. Past share price performance may not be an indicator of future share price performance. This blog and its contents do not consider the investment objectives, financial situation or particular needs of any particular person. Investors should obtain professional advice based on their own individual circumstances before making an investment decision.]

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