Ark Therapeutics - Leader in Gene Therapy
Ark therapeutics (AKT.L)
Marketcap: 143 million GBP ( 283 million US$ )
Cash : 65,1 million GBP ( 129 million US$ )
Price : 70p
Exciting times for Ark Therapeutics
Created:11 March 2008
Written by:Richard Hemming
The much anticipated data for Ark Therapeutics’ brain cancer drug, Cerepro, is due at the end of July and chief executive Nigel Parker knows what is at stake: “Once we get an approval of Cerepro the future of this company is assured.”
Nomura Code analyst Samir Devani puts the likelihood of success of the Phase III trial at 50 per cent. A failure would see a 50 per cent fall in the share price, but success is likely to see the share price north of 200p, he says.
Ark raised over £35.4m in a placing and open offer at 105p a share last November, and the company is building up a stronger early and late stage pipeline. But investors’ confidence will be increased by Dr Parker’s belief that the compelling results for Cerepro seen in Phase II - versus patients on standard treatment - will occur again in the bigger Phase III trials.
Elsewhere, Trinam, a treatment for blood vessel blockages in dialysis patients and Vitor, for cancer-related muscle wastage, are both entering Phase III trials this half.
Nomura Code expects a loss per share of 10.9p in 2008 and has a fair value of 130-140p on the shares.
HIGHLIGHTS
Cerepro(R) * Phase III study completes recruitment
* Two successful Data Safety and Monitoring Board ("DSMB")
meetings advise no major safety concerns and recommend
trial continuation
* Clearance from the EMEA of historically difficult
technical barriers represents major breakthrough for
Cerepro(R) and the new gene-based therapeutic area
overall
Trinam(R) * Special Protocol Assistance (SPA) opened for Phase III
trial
* US Recombinant DNA Advisory Committee (RAC) gives early
clearance for Phase III trial, expected to commence in
H1 2008
VitorTM * Successful pre-Phase III FDA and EMEA scientific advice
meetings. Pilot Phase III trial expected to commence
H1 2008
Pre-clinical * Three gene-based products being prepared for Phase
I/IIa trials
* Ark Therapeutics-led consortium awarded Euro2.5m European
Commission grant for baculoviral vectors research
* Scavidin(R) demonstrates pre-clinical effectiveness in
third cancer model
Wound care * Wound care portfolio strengthened with the addition of
Kerraped(R)
Corporate/ * Formal grant of key patent for stroke in Europe
Commercial * Placing and Open Offer completed in November, raising
£35.4m net of expenses
* Cash and money market investments of £65.1m at 31
December 2007 (£48.4m at 31 December 2006)
Post-period events * January 2008 DSMB meeting confirms timing of preliminary
results from Phase III Cerepro(R) trial due Q3 2008
* Acquisition of Lymphatix Oy strengthens gene research
technology and secures licences for VEGF C and VEGF
D genes
* Finnish manufacturing facility completes validation
review to USA standards
* Neuropad(R) in-licensed and launched in the UK
(see separate press release)
Pipeline Review
Pharmaceuticals
Cerepro(R)
Throughout 2007 we continued to manufacture commercial grade batches of Cerepro
(R) to the rigorous standards agreed with the EMEA. In the first half we
pioneered the process controls necessary for approval of adenoviral gene
medicines in Europe and we believe that the patents for these will, once
granted, help maintain our leading position for both Cerepro(R) and in this area
overall. At the end of 2006 the DSMB had reviewed the first 133 patients
recruited into the Cerepro(R) Phase III corroborative study and recommended the
study continue as planned. In early Q2 we completed recruitment of the full 250
patients and in July the DSMB again recommended continuation of the study. Also
in Q2, the EMEA concluded its first review of our application for conditional
marketing approval which we filed on the basis of the existing Phase II trials.
The EMEA concluded that whilst the critical chemistry and manufacturing controls
(CMC), pre-clinical and environmental sections appeared satisfactory and the
safety profile appeared acceptable, an approval based on efficacy from a limited
number of treated patients was insufficient for a new class of drug despite it
being an Orphan Drug. Additional proof of efficacy from the ongoing Phase III
corroborative study was requested by the EMEA as necessary for an approval.
Being cleared through the three key technical CMC, pre-clinical and
environmental sections of the marketing application is a major breakthrough for
Ark and for the biotech sector overall. It has effectively established that,
providing satisfactory clinical data exists, this type of gene medicine is an
approvable platform.
Consequently, since the conditional approval route was no longer the correct
process for an approval based on a full trials programme, the Company withdrew
its application and will apply for a full licence once the results of the
corroborative study are available. Following the January 2008 DSMB meeting,
these are scheduled for Q3 2008.
VitorTM
Following a successful pre-Phase III meeting with the EMEA and the FDA, the
Company applied for Special Protocol Assistance ("SPA") from the FDA. Once
granted, SPA allows the final Phase III programme to be designed with the US
regulators such that, if successful, a rapid review process takes place. Whilst
SPA can delay commencement of the Phase III programme, it usually achieves a
greater time-saving during the approval process and reduces the risk of a
programme design problem preventing an approval. The SPA process opened in Q2
and, following a number of consultation and review meetings with the FDA, the
Company decided to run a pilot Phase III to obtain extra data not available from
early studies, prior to concluding the SPA. Whilst this has delayed the start
of the Phase III programme by around a year, Ark believes this sensible and
cautious approach is correct to ensure the appropriate Phase III programme is
conducted. Recruitment of the first patient is expected H1 2008.
Trinam(R)
The end of Phase II meeting with the FDA in 2006 resulted in Ark being offered
SPA for the Phase III development. In the first half of the year we filed the
relevant applications to the US recombinant advisory committee ("RAC") and to
the FDA to open the SPA. We were encouraged that attitudes to gene medicine in
the US had also advanced when rapid clearance for the Trinam Phase III was given
by RAC mid year, without the need for an oral hearing. The SPA progressed
steadily during the rest of the year and we conducted a further pre-clinical
study, as requested by the FDA, to expand the number of operative procedures for
which Trinam(R) might be used. Whilst we had hoped to conclude the SPA in 2007,
the outbreak of foot and mouth disease in the UK stopped animal movements and
caused us a three month delay, but work was completed at the end of the year and
the SPA process is expected to conclude shortly.
Pre-clinical Research
Our pre-clinical programmes have shown considerable advancement in 2007 and we
have increasingly focused our efforts on the DNA-based areas of our research
where our skill base and resources are world-leading. In January 2007 we held
our first R&D day for analysts and investors at our Kuopio facility. The day
was well attended and gave us the opportunity to show the size and scope of our
new research and manufacturing facilities and to introduce the results of some
of our most promising research programmes. These are advancing the way DNA can
be used as highly selective medicines in conditions where existing treatments
and old pharmaceutical chemistry based approaches are inadequate. We were very
pleased with the positive response from attendees and the coverage which we
received.
In February we announced a Euro2.5m consortium grant to undertake pioneering work
in the use of insect-derived baculoviruses to further their use in the gene
medicine area. Further pre-clinical proof-of-principle results were obtained
mid year for our Scavidin(R) product which showed efficacy in a third cancer
model, giving us confidence to plan the final pre-clinical work and associated
GMP manufacturing to take the product into clinical development. In Q3 we
showed for the first time the extremely exciting results for our VEGF work in
the ischaemic myocardium using the same adenoviral delivery technology as in
Cerepro(R) and Trinam(R). In Q4 we also showed the market further pre-clinical
results for our DNA-based medicines in the areas of foetal growth restriction,
wound healing and coronary artery bypass graft. These are all serious areas of
unmet clinical need, in which our understanding of the disease at the molecular
biology level is enabling us to develop second generation gene medicine products
where the therapeutic gene can be optimised to the problem and be delivered via
our established adenoviral platform.
Late in the year we concluded negotiations with Lymphatix Oy, a Helsinki-based
private biotech company and acquired the business in an all-share transaction at
the start of 2008. This acquisition has given us access to certain scientific
technologies to speed up our pre-clinical programmes, as well as a licence to
the angiogenic and lymphangiogenic applications for VEGF-D and C.
We are also moving towards lead optimisation with our Neuropilin-1 antagonist
programme and our targeted vector and earlier gene science research continues to
advance. Our goal is to move three of our most promising pre-clinical products
through to the first human studies, to gain key first efficacy data in the
target disease.
The strength and quality of our pre-clinical science was reinforced this year by
the European Euro2.5m baculovirus grant, where our application achieved one of the
highest scores possible in review, and by the successful Q4 fundraising where
significant proceeds were raised to progress the pre-clinical gene-based
programmes.
Patent Portfolio Update
In 2007 Ark had 36 new patents granted including the important "ACE stroke"
patent for Europe. We filed 14 new applications and, in accordance with our
constant review policy, abandoned 12 which we felt had no clear commercial
value. At present Ark has 186 patents granted and 160 pending applications and
we continue to demonstrate success in overcoming the various objections and
oppositions in the prosecution process. In the latter part of 2007 we filed
applications covering manufacturing processes which, if granted, would give our
gene-based products protection until 2027.
Wound Care Business
Combined sales of our wound care products showed good growth in 2007. Overall,
our ex-warehouse sales averaged an increase of 66% over 2006. Whilst our wound
care business is still relatively small, we are pleased with the growth and we
believe we are seeing some signs that the NHS is beginning to move from a
containment mode towards an optimisation mode where Ark's new product range,
which stands up to the latest health economic scrutiny, should do well.
Late in the period we introduced Kerraped(R), a special medical shoe which
off-loads pressure from the areas of the foot most prone to diabetic ulcers.
This is the first product of this class to receive reimbursement in the UK.
Early signs are that the market has received the product enthusiastically and
first sales occurred at the very end of the year. Very recently, we have
introduced the Neuropad(R) diagnostic test, to detect peripheral autonomic
neuropathy in the feet of diabetic patients, to UK podiatrists and we will
continue to add further new products to the business to build scale in this
challenging UK healthcare environment.
Summary and Outlook
In 2007 we made substantial progress. The pioneering work on regulatory
standards for gene therapy, progressing our other leads towards Phase III and
the grant of the European stroke patent are some of the most important
achievements in the history of the Company. This success, together with our
pre-clinical progress, catalysed the Placing and Open Offer which has allowed us
to strengthen considerably our balance sheet, thus securing the next stage of
the Company's development and building on our leading position in the gene
therapy area.
During 2008 we expect to maintain this momentum. Our manufacturing facility
recently achieved US production validation standards. Trinam(R) and VitorTM are
expected to enter Phase III studies and we will report the results of the
Cerepro(R) Phase III study. We already have the sales and marketing plan for
launch in place and key managers identified. 2008 should also bring further
developments in the commercialisation of our stroke patent and we expect to
introduce further wound care products to market in the UK. With the Lymphatix
acquisition and strong cash reserves we also expect to make significant progress
with the late stage pre-clinical programmes, moving them towards Phase I/IIa
development in consultation with regulators. We are very excited by our
achievements in 2007 and, whilst there are still some major challenges ahead, we
look forward to translating these plans into reality with confidence.
