This Week in Biotech: NW Bio Soars While Geron Goes Geronimo

Two early-stage study results, a rare hospital exemption approval in Germany, and a devastating full clinical hold for one biotech are among this week's top biotech stories.

Mar 15, 2014 at 3:15PM

With the SPDR S&P Biotech Index up 59% over the trailing-12-month period, it's evident that investment dollars are willingly flowing into the biotech sector. Keeping that in mind, let's have a look at some of the rulings, studies, and companies that made waves in the sector last week.

To put it mildly, it was a busy week with a cornucopia of data, collaborations, acquisitions, and regulatory actions. Let's start off with some of the clinical studies that made waves this week.

You have to start somewhere
It may be early stage data, but Achillion Pharmaceuticals (NASDAQ:ACHN) and Rexahn Pharmaceuticals (NYSEMKT:RNN) got off the right foot this week.

On Friday Achillion reported positive clinical activity for ACH-3102 in combination with sovaprevir in treating genotype 1b hepatitis-C patients. According to the oral presentation given at the Asian Pacific Association for the Study of the Liver conference in Australia, 100% of the eight patient cohort experience a sustained virologic response (i.e., an elimination of detected level of the disease) at the 12-week mark when ACH-3102 was combined with sovaprevir and a twice-daily ribavirin. As Achillion's press release noted, it remained a perfect eight-for-eight even though some patients presented with the Y93 mutation. While certainly encouraging, I'd caution investors that Achillion has fallen way behind its oral hepatitis-C peers, Gilead Sciences and AbbVie, and its opportunity to make a dent in the HCV market is dwindling by the day.

It was also an encouraging week for clinical-stage biopharmaceutical company Rexahn Pharmaceuticals which announced positive initial results from its ongoing phase 1 dose-escalation study of supinoxin (formerly RX-5902) as a therapy for solid tumor cancers. Thus far the main conclusion is that the therapy is safe with three dosing cycles completed and no drug-related adverse events. Similar to Achillion, I would encourage investors to understand that this is very early stage data and Rexahn hasn't even discovered the maximum tolerated dose as of yet. Until we have more concrete efficacy data to go on, such as a phase 2 interim analysis, I would suggest sticking to the sidelines.

Going shopping
OK, so we didn't have any major blockbuster mergers and acquisitions this week, but mid-cap KYTHERA Biopharmaceuticals did acquire all rights to experimental submental fat-reduction drug ATX-101 outside of the United States and Canada from partner Bayer. Under the terms of the agreement, Bayer will receive $33 million in KYTHERA's common stock as well as a $51 million note due in 2024. The move makes sense on KYTHERA's part as long as it believes ATX-101, which helps fight unwanted fat under a patient's chin, will sell well in Europe and the Asia-Pacific region. I will say this, aesthetic therapies that improve self-confidence are often very resilient to a weak economy, but at two times potential peak sales of the drug, and having to divvy out a good chunk of revenue for ATX-101 in the U.S. and Canada, all of that optimism is likely baked into KYTHERA's share price.

In addition to KYTHERA's purchase, clinical-stage biopharmaceutical company Tesaro (NASDAQ:TSRO) announced a collaboration with privately held AnaptysBio on Thursday to get ahold of its immunotherapy platform targeting PD-1, TIM-3, and LAG-3. As part of the agreement, Tesaro will pay AnaptysBio a $17 million upfront licensing fee, and could owe an additional $18 million in milestone and development payments for each program, as well as $90 million based on U.S. and ex-U.S. submission and approvals per program. For Tesaro, though, it gives the company early stage exposure to immunotherapeutic drugs which are currently all the rage, and it allows Tesaro to control the clinical development process, manufacturing and marketing once a drug clears preclinical trials. I'm definitely intrigued by the deal, but Tesaro's valuation just seems a bit frothy if you ask me considering how young AnaptysBio's immunotherapy platform is at the moment.

German daily double
Perhaps the most exciting move this week if you're a bull comes from Northwest Biotherapeutics (NASDAQ:NWBO), or NW Bio, which gained 27% after receiving a duo of temporary approvals in Germany for DCVax-L as a treatment for all glioma brain cancers. According to its press release, the German equivalent of the FDA is granting NW Bio's immunotherapy DCVax-L a hospital exemption allowing it to be used on glioma cancer patients and giving NW Bio the opportunity to charge full price for the treatment. This exemption has an approved term of five years.

Separately, DCVax-L was also cleared as eligible for reimbursement through German sickness funds (i.e., insurance companies), which prompted six hospitals to apply for reimbursement eligibility. This represents a solid first step in validating DCVax-L and should help generate revenue to offset some of its ongoing losses, but its phase 3 study of DCVax-L in the U.S. for glioblastoma multiforme, the most lethal form of brain cancer, should remain the focus of shareholders in the meantime.

Finally, clinical-stage cancer-focused biopharmaceutical company Geron (NASDAQ:GERN) jumped off the proverbial cliff on Wednesday after it announced that it had received a full verbal clinical hold request for imetelstat from the FDA after meeting with the regulatory agency the day prior. The hold relates to the occurrence of low-grade liver function tests in its polycythemia vera, or PV, trial and the need to study whether or not this condition is reversible. It also suspends the remaining patients being tested in its PV and multiple myeloma study.  

We got our first hint of possible problems in late January, when an investigator-sponsored trial by the Mayo Clinic for myelofibrosis saw 20 of 79 patients drop out, which seemed inordinately high at the time. Without imetelstat Geron is pretty much a sitting duck with no other ongoing studies. The translation for shareholders here is to stay far, far away until we have word from the FDA on what's next for imetelstat! Shares ended the week down 60%.

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Sean Williams has no material interest in any companies mentioned in this article. You can follow him on CAPS under the screen name TMFUltraLong, track every pick he makes under the screen name TrackUltraLong, and check him out on Twitter, where he goes by the handle @TMFUltraLong.

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4 in 5 Americans Are Ignoring Buffett's Warning

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Jun 12, 2015 at 5:01PM

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David Hanson owns shares of Berkshire Hathaway and American Express. The Motley Fool recommends and owns shares of Berkshire Hathaway, Google, and Coca-Cola.We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

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