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As of mid-2009, this is what I thought:
<<Privately-held Galleon Pharma has licensed work done at the University of Virginia involving s-nitrosylating agents in the treatment of both RD and sleep apnea. They have an IV version of a currently marketed drug which they state showed benefit in a POC study, though no details have been made public. It is unclear whether they have succeeded in developing an oral version, and whether they are able to parse out the cardiovascular effects often seen with drugs operating via this mechanism.>>
Nothing much has changed. Since then they have continued to disclose almost nothing, and my information is that the drug they did the Phase IIa trial with would likely have some unacceptable cardiovascular side effects.
I'm not particularly concerned about Galleon. It's Biovail (at least for now) they'd in theory be challenging in RD. Neither this SA program nor BTG's have taken the high ground, so if Cortex's data is positive, they have just as good a shot as anyone.
NeuroInvestment
<<NCE for a chronic condition that is not life-threatening, a tough sell at the FDA these days>>
There's enough data on the comorbidity of SA with cardiovascular pathology that I think this is doable. One can make the same argument for the several anti-obesity drugs now seeking FDA approval, I know, but there one has the fen-phen legacy against which each of these programs has had to struggle.
It would, as I have said before, be a nice problem to have.
NeuroInvestment
That is a good point that tends to be overlooked, by me as well. This trial has taken forever, but the fact that they tried to eliminate the 'noise' from intrapatient, intersession variability may mean that this is the most rigorous trial of an oral SA med ever attempted, and the best shot at establishing whether CX1739 makes a difference in SA. I've been frustrated by the timelag, but if--IF--they show a signal of effect, and produce a signal that might have been obscured if they had operated with looser enrollment criteria for the sake of quicker enrollment---all of that will be rendered irrelevant.
BTW--your subsequent query about ADHD deal permutations/considerations: Several interesting questions, some of which have been previously addressed. But more than I have time to give thought to at present.
NeuroInvestment
There may come a time that what you are suggesting will be very apropos. But keep in mind that for many market observers, a reverse split is seen as a gimmick, a substitute for real performance. I've seen companies do a RS, and have their market caps decline.
So Cortex first has to show enough tangible achievement that whatever they do regarding a RS--it won't come across as a gimmick born of desperation.
NeuroInvestment
Regardless of how one maneuvers the number of shares out, they need to achieve something tangible--data and/or deals--to raise the overall value of the company enough that a financing would be nontoxic. I can imagine a point where a reverse split might make sense in terms of an AMEX or NASDAQ listing--but otherwise it's irrelevant right now. The value of the company needs to be enhanced in order to raise money at anything approaching a reasonable cost. And a reverse split does nothing to alter the fundamental value of the company.
NeuroInvestment
Frankly, in the nano-section of the biotech investing universe that pays close attention to Cortex Pharmaceuticals, those who attend to these details own as much, or more, Cortex stock as they want to. To expand that sphere of interest, something more tangible than study design changes and potential partners will have to be produced. I'm not even sure how much traction an approved IND will provide; entering Phase IIa is not a high standard to meet, other than perhaps in the eyes of those who have seen how much damage the FDA can do,and fear that they could do it again. Data and deals are the only ways that Cortex will re-expand its investor appeal.
Good data and/or deals could have a dramatic effect: I hope we'll have a chance to test that hypothesis in the next couple of months.
NeuroInvestment
You're right--the audio was essential--my thanks to the board member who sent me the audio file.
What I had not considered was the possibility of a third party having input on the ADHD trial design. When MV says the IND is essentially ready for submission, that's the hurdle I was thinking was essential--he makes clear there have been no problems observed with CX-1739.
So the delay in filing appears to reflect input from a potential 'strategic partner.' It's not Rodman & Renshaw, they don't know anything about trial design. I don't think it's Biovail, they are preoccupied with their merger and all the projects already licensed. ADHD could fit with their psych sales strategy, so it's possible--but it would surprise me.
There are a couple of ways this could be occurring:
1) A potential partner could say: We're interested, but we aren't going to commit yet--but if we did, we'd need to see a Phase IIa design that includes X Y or Z. Could be an additional clinical scale, I suppose someone might suggest an active comparator arm using Strattera or Intuniv.
2) It could be a geographic partner, EU or Japan, offering to pay a licensing fee that would offset most of the trial cost--but insisting on a change such as mentioned above.
3) More deals are being done on an option basis: A licensee pays a few million for an option they can exercise if they like the Phase IIa data, at a prespecified price.
Any of these would be net pluses for the ADHD program.
Regarding SA: So they will end up with their 20, 19 at worst. I am pleased that they are wrapping it up, and have a definite timeline for the topline data. The question remains--Has there been some anecdotal/blinded pattern of sleep apnea score change that has encouraged them to keep going this long, and to still put SA upfront and center in their corporate presentation? I hope so.
The audio information was, to my ears, much more positive than the slides taken in isolation.
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I didnt have the audio feed. Apparently they didnt update the slide--which should have been done. Since they continue to feature the ADHD plan so prominently, apparently it has not been derailed, so my assumption that something would have to be 'seriously wrong' is incorrect. What the final details being wrapped up may be is a mystery to me. It certainly is preferable to have them wrapped up before filing--than to have the FDA start resetting the clock ad infinitum as they examine the IND and identify flaws.
NeuroInvestment
Thanks, my audio didnt work, so I was relying on the slide.
NeuroInvestment
On slide 27, the estimated start date for the ADHD trial is 3Q:10. That would require that the IND already has been filed.
NeuroInvestment
From my perspective, filing the IND is not material.Most companies do not report that. The FDA response to it is material. Or optimally, the nonresponse within the thirty days following submission.
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Solid, realistic summary, Gfp. A couple of supplemental thoughts:
1) The absolute necessity is for the IND to have been filed. If it has not been, something has gone seriously wrong. I expect to hear that it has been filed, but this is one bottom-line must-have. I agree with you that the go-ahead for the IND (which is conveyed by an absence of response) will come in October, hopefully early in the month.
2) A non-Cortex source told me a few weeks ago that the SA trial had 18 completions. I hope to hear that the trial will be unblinded in the next 2-4 weeks, regardless of whether they end up adding an additional couple of patients. SA is a wild card whose value is not going to be significantly enhanced by adding another case or two. It's time to see if this enormous effort paid off--or not.
NeuroInvestment
OT: Biovail
Blade:
The only partner that can rest assured that their program is going to be sustained is Alexza. Not that all the others will be culled, but any one--or two--of them could be deleted. Pimavanserin, having had Phase III started, may be less at risk than earlier-stage programs. CX717 benefits by fitting into the hospital sales framework, but it is vulnerable due to its early clinical stage. It is not clear to me how the balance of power now stands within the merging company, which champions of which programs still wield clout. But I don't know the Valeant CEO, other than by the fact he chose to exit CNS entirely a year or two ago, so I don't know his thinking on this. I think the neuroprotection programs may be most at risk.
NeuroInvestment
No idea. I used to have a pretty good relationship with him, but once I started criticizing some of Cephalon's decisions, I very quickly became persona non grata. And with Cephalon having ended its CNS R&D, I havent had much reason to pay attention.
NeuroInvestment
Tran is going to a company developing Dov's compounds, Euthymics has no Ampakine interests that are evident in any way. So I do not think that there is any significant inside compound knowledge at stake here (if he had gone to a big pharma with an Ampakine program, that would have been different).
I am traveling on a 'college tour', so I won't be checking in often.
NeuroInvestment
As we all are. The positive aspect to the option approach is that is helps small companies get to the data inflection point--where the larger Pharma is willing to commit. The BP pays some now, in return for paying less in total if they exercise the option. I'd rather see Cortex not have to dilute at a poor price in order to get to Phase IIa data.
NeuroInvestment
You might want to read more carefully.
NeuroInvestment
The trend now is towards option deals, which reduces the risk profile for the licensee. Someone could buy an option on an ADHD/CX-1739 license for either worldwide rights or some chunk thereof. When Phase II data comes in, they could exercise the option at a pre-determined price. They could probably get $5-7 million as an option on worldwide rights--which would probably provide enough time. If exercised, perhaps another $20 million? AstraZeneca paid $2 million to Targacept for an option on TC-5619, with $40 million to be paid if exercised (that deal was subsequently revised). The more a company gets upfront, the backend is reduced, and more.
Other possibilities--if the PD animal testing were to show the kind of regenerative effects Lilly reported in the past, that could also produce an optionable deal.
Sleep apnea is the wild card.
NeuroInvestment
<<to end up here with all of the promise>>
Come on, David. It's August 17. No one is paying attention. It's like being stuck on the George Washington bridge in traffic and deciding that Manhattan is really a disappointment.
I'm waiting to see what is presented in September. All we are seeing now is Brownian motion.
NeuroInvestment
I don't think that Tran's departure has anything to do with ADHD/SA/CX-1739. If it did, the press release would have been phrased differently, they would not have said what they did if 'another shoe was about to drop' shortly.
If he was going to exit because of disenchantment, there were far gloomier times for him to have done so--in fact he could have left when they were almost out of money, and framed it as taking one for the team in order to conserve resources. He did not.
There may actually not be that much for him to do going forward, in that the ADHD trial protocol has been planned, and the CRO will run and monitor that trial. The SA trial is going to wrap up soon, one way or another.
The minimal notice suggests that there is something other than a new job involved. My guess is that in this case, Occam's Razor applies: 'Personal' means 'personal.'
NeuroInvestment
Just to echo Gfp's perspective here: That oft-cited price target dates from a time that Cortex had about 16 million shares out--and in fact in March 2000, reached 8.13 per share. Had it reached that target, the market cap would have been $192 million. Depending on what options/warrants would be in the money--we can only hope more of them eventually will be-- that would mean a contemporary share price of under $2.00 per share to achieve the same valuation for the company.
NeuroInvestment
OT: Euthymics
Here's what I find most interesting, what was not mentioned:
(from 2004)" DOV Pharmaceutical Inc. licensed worldwide rights of its triple uptake inhibitor compounds for psychiatric disorders to Merck & Co. Inc. in a deal worth $455 million, if all milestones are met. The news caused DOV's stock (NASDAQ: DOVP) to climb $2.68 Friday, or 21.1 percent, to close at $15.40. Merck gains exclusive responsibility for development, manufacturing and commercialization of DOV. 21,947 for all psychiatric indications, and of DOV 216,303 to treat depression, anxiety and addiction. Dosing of the products has been completed in a Phase Ib and a Phase II trial, respectively."
Merck was not so impressed with the Phase II data for 21,947--they returned the rights to Dov, who then struggled for years to find anyone who did like the data, and essentially went out of business.
Euthymics paid a rock-bottom price:: "The acquisition price for DOV is for up to $2.0 million in cash, payable in two installments, representing a total of approximately $0.015 per share of DOV common stock."
On the other hand, you have very competent VCs, like Novartis Venture Fund, who see the Euthymics/Dov platform as worth a $24 million investment.
My view is that it is premature--indeed incorrect-- to assume that the optimal crossbalancing of triple amine reuptake inhibition effects has yet been identified and validated.
There are a number of clinical-stage approaches to Treatment-Resistant Depression out there, this is not necessarily the most appealing.
NeuroInvestment
AZ-004 will be on the market by year-end, so I think it is likely to survive. The recently licensed istradefylline Parkinson's program might be the most likely cut.
The MJF grant allows the kind of animal testing that could lead to a pharma deal (not probable, but more possible than without any animal data).
NeuroInvestment
Just about every deal I can think of comes with redacted detail regarding the timing/conditions/precise amount of milestone payments-and royalty tiering, though the latter does not apply in this case. Partners don't want too much detail about what they have agreed to made public, so that other parties they are dealing with don't treat the details as a precedent to be continued.
NeuroInvestment
True. It does provide reassurance that the journey goes on, that Cortex does not need a defibrillator.
NeuroInvestment
This is a Rorschach administered on a group basis. Mark Varney's reply reiterated info regarding drug stability testing and SA that was previously discussed, and noted that grants/academic ties are being looked at. There wasn't actually anything in there about licensing/partnering.
We tend to project on to this ambiguous stimulus what we either hope or fear to see--depending on our cognitive set regarding Cortex (It's a ten-bagger vs. it'll be run into the ground).
There are, without a doubt, always some sorts of discussions about possible partnerings, mergers, IP rights, options, trials, lunches, etc....going on for Cortex. Every biopharm company has--but 99% of it never turns into anything. I'd bet that MV/RS had hundreds of conversations with various companies and funding sources over the past couple of years: Two--Samyang and Biovail--turned into something tangible. It's the way it works--for everyone. I spoke to a private European company yesterday that I've been following for a couple of years, and is virtually unknown in the US. Now they want to start talking with other companies, even though they have no wish or need to partner until 2012 or even beyond--just to be included in the flow of conversation, to be on the table if and when someone else decides they want to get serious--or if they do.
I'd be cautious about reading too much into that email--as RS's email indicated, they have to make quite sure they do not put anything new in there-as Enemem noted, there really wasn't anything. The fact that MV and RS take the time to respond personally, when most every company I know would have their PR firm have an intern send a boilerplate 'Thank you for your inquiry' email', is an underappreciated courtesy.
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It operates via the same general mechanism, but so far as I know, has different composition of matter, and by the time it could be commercialized for some indication, the relevant use patents will have expired. Cortex has copyrighted 'AMPAkine' I believe, but I don't think they see going after copyright infringement for the use of that word (which I've seen used by others a couple of times) as being worthwhile.
So they are not entitled to anything other than some implicit validation--that the more companies that have an interest in AMPA upregulation of the allosteric variety, that perhaps their portfolio of molecules has some value. But in this day and age, you generally have to prove it in the clinic, not via 'geneaology.' There have been examples, most recently large molecules, antibodies, where a partner could be attracted simply by virtue of the mechanism and some animal validation. Not so with small molecules.
NeuroInvestment
OT: AC Immune
This is text from the AC Immune page of PCNS 2010.
<<ACI-24/Alzheimer’s: AC Immune’s basic vaccine principle is to stimulate an immune system response to misfolded proteins by introducing a peptide antigen similar enough to the misfolded protein that, when recognized as ‘other’, both the antigen and the target protein will be reduced via an antibody response. The peptide antigens are attached to liposomes, eliminating the need for an adjuvant. ACI-24 went into Phase I in 2009. AC Immune is utilizing a Bayer Schering imaging technology, the AB plaque tracer florbetaben, as part of this development program.
MAb/Alzheimer’s: This antibody program is was partnered with Genentech in 2006, which put them under Genentech’s control and timeframe. The lead therapeutic antibody, MABT5102A, went into Phase Ib in August 2008.
ACI-91/Alzheimer’s: This is a small-molecule tactic aimed at an AB sheet-breaking effect via linking to the misfolded, AB aggregate. This premise presumes that a reinstated balance between aggregated beta-amyloid sheets and soluble AB is therapeutic. They believe that rendering AB soluble will be less prone to triggering inflammation than spurring macrophage removal. AB plaques have been reduced in animal models, and functional memory improvement appeared correlated. The lead compound is in Phase II, and is not expected to report data until 2012.
ACI-636/Alzheimer’s: This is the lead oligomer-disaggregation small molecule candidate from AC Immune, now in full preclinical testing.
ACI-518/Alzheimer’s: Inlicensed in January 2010 from the State University of Moscow (from the same inventor who came up with Dimebon), this is an AMPA receptor upmodulator, intended as a memory enhancer. It is preclinical.
Oncology/Vaccine: MDR1, which targets P-170, is an active vaccine approach to multi-drug resistance in cancer, being developed in collaboration with the University of Reims.
Partner: Genentech
This is a sophisticated scientific platform which has two AB disaggregation strategies, one passive vaccine, and a newly inlicensed AMPAkine. There is a fundamental question attached to disaggregation approaches: they assume that soluble beta-amyloid is either not harmful, or that it will be processed and eliminated. But this remains a principle yet to be proven.
AC Immune raised enough money in 2009 to take them to 2013, which means that they do not have to partner the AC-91 or ACI-24 programs. But given the enormous burden of taking them ahead alone, one would think they would be responsive to partnering inquiries.>>
NeuroInvestment
8529 is a mGluR2/3 'positive allosteric modulator', 8418 probably is too--mGluRs have been the glutamatergic target AZ has pursued for the past....fifteen years. So they are not AMPA receptor modulators.
NeuroInvestment
OT: CYPB
That's a good summary of the CC. The CC didnt mention the fact that the BioLine trial was done almost entirely in India and Romania, with just a handful of US patients, which would argue for a PhIIb with a more representative patient population.
The sales force question is open to debate: It's absolutely correct that CYPB emphasized their belief that a small sales force can in theory access the psychiatrists who do the bulk of antipsychotic prescribing, but keeping that sales force intact while trying to get BL-1020 through clinical testing without it being a drag on earnings is tough. They hope they can inlicense a marketed drug or copromote something, which is hardly a new idea--particularly the former. To get something good means spending down a considerable amount of their cash. I personally hope that they monetize the Savella stream, such as it is.
NeuroInvestment
I agree. My cynical take on it is that the 'Street' likes the deal because the earnings-per-share will be increased by cutting 4400 jobs, and eliminating some of the R&D from both sides. They view this as reducing risk, even though in the long run, it attenuates potential as well. The Street does not look more than a few quarters ahead, if that. In keeping with this, the Street punished Cypress Bioscience for choosing the re-enter R&D, and to de-emphasize a commercialization/marketing strategy that they now admit has failed. The Street sees this as adding risk--and thus CYPB is now trading well below cash value. Yet Cypress is putting itself back in the position of building something substantial for two to three years ahead, and to me that is the kind of risk-taking that the pharma industry must take on if they are to avoid becoming even more dinosaur-like than they are now.
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OT: CYPB/BL-1020
1) I have had my doubts about the compound, because BioLine would never discuss how the compound performed compared to risperdal on positive symptoms, they just focused on the cognition testing. I figured that this meant it had to have done worse than risperdal, and it turns out that there was a trend in that direction---but it may have been due to risperdal being dosed high, BL-1020 dosed a bit too low. The GABAergic approach to improving cognition is consistent with some work done at Johns Hopkins. In any event, it's an interesting project.
2) Just as importantly, Cypress--which has been overly passive in the past couple of years, has now decided that this is the time to get back into CNS, similar to Biovail, but pursuing larger indications. They will probably license more in the next several months. The timing is particularly good, since Biovail is not only going to be wrapped up in their merger, which I sure didn't see coming--but is even talking about the merged entity cutting some R&D. So--Cortex was indeed better off getting more cash up front, because all of these inlicensings are going to be reviewed again, backloaded money may or may not ever happen. And Valeant's CEO, who will be CEO of the merged entity, a couple years ago decided to quit CNS, and pursue....dermatology. So he is not as much of a fan of CNS.
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This is what I said recently:
<<I think the determining factor will be whether this tiny trial shows clear evidence of a clinically significant effect, and in what percentage of patients. If, for example, CX-1739 produced a halving of apnea event rate in all of the patients taking it (I'm just making that up as an extreme example), and without marked side effects, that would get a lot of attention, and you could start fantasizing about a bigger upfront payment. >>
In the latter situation, which is a best case scenario, SA might be worth more than ADHD. But I suspect that with such a small trial, it's unlikely to be that clearcut. In which case ADHD would continue to be the bigger prospect. The relative value will depend on the clarity and breadth of any SA benefit that is indicated by the data.
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I think I previously posted that I see the upfront potential to be less now. Rumors were of $30-50 million at that time, I'd cut that range in half--particularly with just Phase IIa data in hand. For the moment, rightly or wrongly, Strattera defines the expectable market for nonstimulant ADHD meds, and that would put it at the half billion per year potential level. The possibility of going higher exists, but a deal would probably account for that with milestones and royalties, not presuming it via higher upfronts. In other words, the eventual returns for Cortex have not changed, but they would be less front-loaded.
This is purely guesswork on my part.
NeuroInvestment
Depends on how clear the trend is. The alternative at present is CPAP for the most part, there are some oral drugs in testing, but even accessing a "subset of patients" could be worthwhile. SA would be somewhat easier than RD to partner--I believe. Remember that RD was also on the table when Cortex was in fiscal extremis, they are in better (relatively speaking) shape now.
I am not predicting a SA trial success, or partnership. But as I have written before, I can't shake the feeling that there has to be something that has led Cortex to persist with this almost-impossible-to-enroll trial for this long. Whether that anecdotal something will mean anything when the blind is broken-nobody knows yet.
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Absolutely. Other than Cortex signing up clinical sites for the ADHD trial, CX-1739 is not legally "taken" at all, and Cortex would be happy--as you say--to have the problem of contending with bids for SA.
In terms of forecasting SA partnering terms however, there aren't any precedents. The mean Phase IIa data partnership upfront payment for CNS is just over $27 million (over the past few years), but these deals tend to be in better-characterized areas (AD, sz, depression).
I think the determining factor will be whether this tiny trial shows clear evidence of a clinically significant effect, and in what percentage of patients. If, for example, CX-1739 produced a halving of apnea event rate in all of the patients taking it (I'm just making that up as an extreme example), and without marked side effects, that would get a lot of attention, and you could start fantasizing about a bigger upfront payment.
On the other hand, if it produces a modest dimunition of apnea events, in some subset of patients, the salience of the value added, and the size of the upfront that would be possible, would be smaller.
It is unlikely that the same partner would have an interest in both SA and ADHD; it's not impossible, but the current roster of companies in each area has no overlap that comes to mind at the moment.
NeuroInvestment
So long as they have a completed package, and that's the reason they have to wait for the drug stability testing to be finished--which is to some degree stability over time, so it takes time--that should not be a problem. CX-1739 has no tox legacy haunting it. Once the IND is filed, if the FDA does nothing in 30 days, it is automatically activated. In other words, and this is not irrelevant: They don't have to obtain FDA approval, so much as they have to avoid FDA disapproval.
NeuroInvestment
There is a big difference here: During the previous search for funding, the backstory was: We need money, or else we will die, and will never find out if the platform is worth something. Now, if they do go for funding, it will be: We need money to finish the trial that will show that the platform is worth something (this sets aside the SA possibilities for now).
The new model is of optionable agreements, and Cortex would be in a position where this would be very possible. It is increasingly employed when a company has a big event coming, but the outcome, and value of that event, remain to be seen. The larger partner pays a small upfront amount (a few million) in exchange for the option to license the program if the data is good, at a predetermined price. Thus, Company A could offer Cortex $5 million for the ADHD option. If they don't like the results, they walk away, Cortex keeps the $5 million. If the results are good, the predetermined upfront license price might be another $20 million, just picking numbers semi-randomly. Cortex gets the assurance of some money in the bank to see them through without dilution, the partner gets dibs on the ADHD program without risking a price increase during an auction of the rights post-trial.
BTW--I suspect that Biovail offered Cortex Plan A or Plan B: Plan A is what they did, Plan B could have been a licensing rather than an acquisition, but much less upfront. Royalties in 2017 are worth much less to Cortex at this point than receiving $10 million instead of $5 million (again, guessing at numbers).
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Typically, they are tiered: Say-- 10% on the first $100 million, 12% on 100-300 million, $15% on sales above $300 million, that sort of thing.
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Blade:
You're right.
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