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  • francolaval francolaval Jun 5, 2008 9:50 AM Flag

    Bullish on Epix

    Huge -- solid momentum. A buy rating should be issued. $3.00. is very close.

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    • Emerging Drug Developer: Epix Pharmaceuticals
      April 14, 2008
      By John Carroll

      For most investors, the sweet spot in any biotech play is right around proof-of-concept data on a new therapy for a disease that afflicts a large population of patients. That’s the point when a big pharma company can size up the commercial opportunities along with late-stage development costs and step in and make an offer to partner up.

      It’s also the reason why emerging drug developers like Epix focus on diseases like Alzheimer’s and obesity, where current therapies often don’t work very well and the unmet medical need and market potential is greatest.

      But two years ago the Cystic Fibrosis Foundation made Kauffman an offer that made him disregard the traditional business model and move into a disease category that otherwise wouldn’t have made much economic sense. The foundation put up $12 million to fund a program at Epix that put the biotech’s technology to work exploring a new therapy for cystic fibrosis. Rather than look for a market payoff, the foundation’s primary objective is to advance the research far enough along that the commercial opportunity comes within reach -- and the biotech can advance on its own to commercial development.

      Last week, after Epix hit its fourth milestone in that development pact, the foundation came back and added a very big carrot in the form of an additional $37 million in fresh research funds.

      “This funding goes through Phase IIa, early stage clinical proof-of-concept,” says Epix CEO Michael Kauffman, M.D., Ph.D. “If we see an effect in the clinic by then, I would stand by this. We would be very excited about this mechanism.” The foundation, he adds, “wants to see this disease treated. They want to take it to a point of top priority. There’s a different late-stage focus for the foundations and nonprofits.”

      Epix’s success in the field comes from its expertise in developing computer models of the 3-D structures of drug targets – in this case the cystic fibrosis transmembrane conductance regulator, or CFTR. The most common mutation of the CFTR gene is the Delta F508 mutation, which is responsible for key symptoms of CF in about 70 percent of the patients who suffer from the disease. The body eliminates the abnormal protein made from the mutated gene, and the reduced levels of CFTR protein spur the creation of a sticky mucous material that causes lung infections and disrupts digestion in people who suffer from the disease.

      “What happens is that the Delta F508 protein is made just fine,” says Kauffman. But the correct 3-dimensional folding process that normally follows goes awry. The body in turn detects the misfolded CFTR proteins and discards them as it normally does to protect the body from abnormal proteins. “The problem is that less than five percent of the Delta F508 ever makes it to the surface, so people with CF have a level of CFTR maybe 20- to 50-fold lower than normal, which is why you get the disease. The little bit that gets to the surface also doesn’t function as well as the normal protein.”

      Any new therapy doesn’t have to be 100 percent effective, he adds. Even a 20 percent to 25 percent increase in CFTR would probably trigger a considerable improvement in patients.

      Understanding the structure of CFTR gives Epix an inside track in developing a therapy that can make the protein work properly, eliminating those symptoms.

      “We create our own computer-derived model we think is right,” says Kauffman. “Essentially, we’re trying to replace X-ray crystallography.”

      To illustrate what he’s talking about, Kauffman frequently uses an analogy of examining a lock – the drug target -- to come up with a key – the drug. “If you know the structure inside the lock, it’s far easier to make a key.” That’s a far different approach than high-throughput screening technology, where you try a few hundred thousand keys to see which ones best fit the lock.

      • 1 Reply to frankfrazzano
      • Epix developed the technology around G protein-coupled (GPCR) receptors that play a role in some ‘big’ diseases like Alzheimer’s. And the company has developed partnerships with the likes of GlaxoSmithKline and Amgen to advance new therapies into mid-stage clinical development.

        The Cystic Fibrosis Foundation “came to us and said, Can you modify your technology so you can come up with a 3D structure of what this ion channel protein looks like and use this structure to come up with new drugs to treat cystic fibrosis?” recalls Kauffman. “Ion channels have a different structure than GPCRs, but both traverse the cell membrane, which makes them very difficult to crystallize. But they do have certain properties in common.”

        Over the past 10 years, the Foundation has pumped $300 million into research programs.

        And it isn’t hard to find other examples of non-profits stepping in to help fund early-stage research work. The Boston Globe recently concluded that the disease foundations provided $75 million to drug developers last year, up from only $7 million in 2000.

        Aside from the CF program, Epix has a number of irons in the fire as it pursues a total of five clinical development programs.

        Kauffman just killed off a mid-stage development program in depression after failing to come up with the kind of compelling data needed to justify continued clinical work. That program is up on the auction block. And while Kauffman points to its added potential in pain and memory loss on top of depression, he also is realistic about its potential following a mid-stage trial failure.

        But Kauffman believes the company can easily overshadow that setback with a new review of its crucial Vasovist Phase III program, an imaging agent already approved in 33 countries but long stymied at the FDA. Essentially, says Kauffman, the FDA handed the company a “non-decision” in an approvable letter. It took some time, but Epix got the clarification it needed to provide specific data to the FDA and Kauffman says its amended NDA for the FDA could come mid-year with a decision by the agency at the end of this year.

        Epix already has a profit-sharing deal on Vasovist. But Kauffman says the company “will likely monetize the asset. We won’t wait for a profit share to pay off; near term cash is more important.”

2.65+0.05(+1.92%)Aug 29 4:00 PMEDT