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Flo:
My votes are yes, yes and yes.
Doesn't that brain belong to Abbey something?
BP:
I watched the 'video feed' of the meeting and the malaria
comment came near the end of the meeting, not too long before
the votes. In my view, he was adding a bit to the argument in favor of 'transgenic production' of proteins, but he did not suggest that the malaria program was 'active'. With Gates Foundation funding perhaps it will become active but I don't expect anything on that front near-term.
I'm with Jesse Livermore in thinking--and hoping I admit--that with FDA approval of Atyrn we might see a meaningful FOB partnership.
I still expect Ovation to initiate a trial of Atryn in CABG
sometime after FDA approval. Jesse is skeptical about that opportunity as I recall but even if plasma is cheap, it's arguably less safe is it not?
Flo:
We have added a bit. We haven't yet filed our 13F (a quarterly update) but we hold about 9% more shares than when we filed the 13G.
Our reasons for owning this remain the same--unique products, much lower mfg. costs, scalable--but with the Ovation agreement the risk, while still significant regarding financing, continues to go down.
Considering Atryn "the swiss army knife :>) " by itself may prove to be a multi-billion dollar drug the current $50 million market cap. is, shall we say a bit on the low side in our view, so we will continue to be patient.
Thanks for the post 'go seek', I had not seen this before.
While not a large study this one really strikes me as interesting and reinforces the argument that, over time, Atryn is pregnant with potential. :>) (sorry, I couldn't resist)
The benefits to the baby from prolonging the pregnancy are significant and the cost of caring for 'preemies' is quite high so I expect the cost/benefit of Atryn here could be compelling. Also, this condition happens enough that this would be a large market. No adverse events is consistent with other Atryn studies but obviously a key finding as well. All in all, kind of a 'wow' in my book.
Roger that MTB. The reasons we have for owning this stock have not changed, indeed with the Ovation agreement the picture has brightened.
For those whose hands are 'wrung out' over the price action I like to remind people of a Warren Buffett line which is, more or less, ..."I only care about the market price of a security in case someone is willing to do something I think is stupid".
Having said the above, we sure don't like the way this company is being valued but we aren't going to react to negative market behavior. Our focus is on where we expect this company will be a few years out.
JesseL:
Do you recall the Canadian company which was trying to manufacture spider silk transgenically? They had a license from GTC and I believe that that is the license now held by Pharmathene. There are all sorts of potential industrial applications but the problem, I'm told, was they could not get the spider silk to spin.
My 'dumb idea' remains with CABG and a label expansion for Atryn. I'm hoping that Ovation will be able to move quickly, like they did in partnering with GTC, and a clinical trial design for heparin resistance in CABG can be completed this year and the trial started in the first part of 2009 and completed in 2009. In case anyone is wondering I haven't even been in a Dutch 'coffee house' today. Yet.
Keitern:
I only have time for a brief reply at the moment.
With the Ovation agreement we quit holding our breath. While
I was confident an agreement would happen, until it's in hand,
some doubt always remains.
We remain most encouraged about where the business of GTC is going and the valuation--about $60 million for the equity today--is absurdly cheap in our view. GTC's stock price behavior is understandable given the cash concern, but in my opinion the 'business risk' for GTC, keeps going down and
with that the valuation should be going up, not down.
I'll save my 'patience jokes' for another time.....
Also, I remain enthusiastic about the CABG indication for Atyrn as I think it offers the quickest and likely, easiest
way for GTC to become 'self-financing' and the quickest path for Ovation to get returns from their investment. As others have said, having Ovation jump onto the transgenics train is a good endorsement as they look like a highly competent organization. By the way, just my guess, but I don't think Ovation was the original partnering candidate talked about earlier.
go seek:
FWIW, my scientific 'WAG' was that Eisai-North America--who seems to operate with some autonomy from Japan--is a possible partnering candidate which would later lead to Japan.
Eisai has a development effort in sepsis. Also, the Japanese parent recently acquired MGI Pharma which aligns with possible 'corporate developments' which might slow down a U.S. partnering process.
I haven't looked at Dew's poll of candidates--done some time ago--but there are several other likely candidates as well. I just thought a Japanese partnership might happen this way.
MTB and Dew:
Regarding CABG, the statement I got was, more or less,...
"we use Thrombate if we can get it, otherwise we use fresh frozen plasma"...
From which I concluded there was a desire to avoid plasma if possible. However, given the intent, at least on Leo's part,
to maintain premium pricing for the DIC indication, that leads me to think the pricing decision for the CABG indication is a sensitive one. As Dew pointed out, it may well be that if plasma is sufficiently less costly then the decision may well be to use plasma.
I'm speculating for fun but if you can make large volumes of Atryn cheaply enough, why not go for higher volume and somewhat lower price in North America? While it's not always easy to do, you can always raise the price down the road if the DIC indications prove compelling.
Cabbage anyone? (Not cribbage--CABG)
The CABG (coronary artery bypass grafting) indication for Atryn hasn't been discussed much lately but GTC specifically mentioned this area when talking about their partnering discussions. I put below ( as best as I am able) a small section from a book on Cardiac Anesthesia. (ACT=activated clotting time)
"4. Heparin resistance is present when a heparin dose of 5 mg/kg fails to raise the
ACT to an adequate level (>400 seconds). This is an unpredictable occurrence
but is more commonly noted in patients on preoperative heparin, IV nitroglycerin,
an IABP, and in patients with infective endocarditis. It is usually related to
antithrombin III deficiency. If additional heparin does not elevate the ACT,
antithrombin III must be given, either in fresh frozen plasma or in a commercially
available pooled product (Thrombate III), which provides 500 units per vial.
Bojar_CH04.qxd 18/10/2004 10:18 AM Page 153
154 Cardiac Anesthesia"
I have been told that this is routinely done for CABG procedures and in my view this really lowers the risk for a partner. If Atryn is approved for HD, then perhaps only one study might be sufficient to request a label expansion from the FDA. If the market for CABG is $100 million+ then this may well define the low end--and high probability--market for a partner. Interesting opportunity...on the low end you've got a good chance at some revenues while the high end could be a multi-billion dollar product.
Also, in my view, this area represents the quickest way for GTC to get to profitably or a self-financing status. After all, who would use plasma when you've got a safe recombinant product? Isn't that right MTB?
FWIW, a university oncologist I know has served on some advisory panels. While he was speaking casually to me, he did say that many people, him included, did it to add to his professional credentials. In my view, the main reason for a panel is to get a broader range of opinion
when weighing the trade-offs between a drug's benefts and adverse side effects. (Not all side effects are adverse--Viagra being the best example :>) ...
In the case of Atyrn there are no significant side effects and clear evidence of efficacy so I bet you can guess how I voted.
Scale up challenges for Genzyme.
I meant to add this to my prior post. Another key advantage of GTC's technology is that it is scalable. Genzyme--a tiny bit ironic I suppose--has been having problems for a while trying to scale up Myozyme (their product for Pompe's disease) from 160 liter cell culture batches to 2000 liter batches. While my knowledge in this area is quite limited, I do know that the issue of whether a cell culture produced product will 'scale' is often a serious concern.
http://www.genzyme.com/corp/investors/GENZ%20PR-042108.asp
I still like $1000 per milligram for Factor VII...something around $28,400,000 per ounce. I expect GTC/LFB could have very nice profit margins at 1/10 the price... :>) .
Thanks for the buying notice Dew.
I remain hopeful that there are several potential Atryn partners who are now competing for the Atryn opportunity. After all, since the hereditary deficiency and CABG indications are likely, Atyrn is a low risk chance at what could be a multi-billion dollar product in sepsis, burns, and other acquired deficiencies. Throw in ischemia and strokes just for fun (Thank you for the reference JesseL as I certainly noticed) and IMHO it gets positively compelling if you are a 'pipeline challenged' pharma company.
I second Dew's opinion that the problems associated with excessive leverage in the financial community will have little
bearing on decisions by GTC's potential partners.
I'm one of the owners of Sonora and our firm has a significant position in GTC. I post here occasionally but I try to read most of the posts because there are often insightful comments here, sometimes some real humor (thanks Flo), along with all of the useful reference links Dew provides.
Our reasons for owning this stock will likely sound familiar to many of you. We prefer to invest in companies which have significant competitive advantages which are 'durable'. GTC has two: 1) they can make some proteins which no one else can produce (e.g. Atryn, alpha-fetoprotein for Merrimack, alpha-1 antitrypsin) and 2) they can make many other proteins less expensively and in a scalable platform--scalability is also major advantage in my opinion.
FWIW, we have not sold any shares and we have added some since Dec. 31. While the financing remains a real question we continue to believe GTC holds enough good cards to navigate through this.
Quantumdot:
Sorry for the late reply, I check in when I can. My guess is that in both cases the decision makers at JNJ and Abbott went with the industry standard 'cell culture' because they wanted to avoid the additional risks of using a novel manufacturing method. (Even though it would have required much less capital and been scalable with transgenic production :>) ...but why worry about significantly lower capital costs when one is mainly concerned with just getting a drug on the market?)
In addition, it's possible that these programs were started as an insurance policy in case the companies could not produce those products in volume in cell culture, kind of like where Merrimack and Pharmathene find themselves. The only reason I mentioned the JNJ and Abbot history was to point out that GTC already has a fair amount of experience with monoclonals which should be helpful regarding future 'biosimilars'.
It is worth noting that many moons ago GTC had programs with Centocor (now JNJ) and Abbott to make Remicade and Humira respectivly, both of which progressed to having animals which successfully produced the drugs.
Roger that. Nice job GTC, consistent results.
Dew got me again--x2 LOL.
Got me again--x2 LOL. Thanks.
Roger that Jesse. Even though the company said 'the end of January', the exact timing is still not entirely up to them. A few days longer is not a concern for me.....I just want to see consistent results with the European study.
What--Xigris didn't make the listing--! Unthinkable!
That's my guess.
Thanks as always Dew.
JesseL:
This is just from memory but I believe this agreement provides a potential 'second source' for final purification, lyophilization, fill and finish. Cambrex is doing that job now for Atyrn but perhaps GTC is planning for higher future higher volume requirements for Atryn (:>) ..as well as the ability to handle other products. Also, GTC did have to write off some inventory at the end of Q2 due to some manufacturing problem at their fill and finish contractor so
having a 'second source' seems only prudent.
Flo-you got me...I'm still laughing out loud.
Thanks for the post on the European patent app. I haven't read anything about Atyrn and anti-angiogenesis in quite a while. Yet another potentially large application ...
Finally, a personal salute to Dr. Folkman, the kind of guy who really strives to make this world a better place.
Also, I noticed from the Vienna study that ...."...low dose low molecular weight heparin was given...with similar dosing in both groups..."
While it states the heparin given was 'low dose', I believe the Leo trial precludes the use heparin because it interacts with antithrombin. I don't have any insight about how much heparin required to impair the antithrombin but even a small amount might well affect the result.
Go seek:
I guess it's my day to do some posting. The Company's goal is to have 'top line' data by year-end 2007 and they have stuck with this. It's possible it may take a little longer as GTC has no control over the timing of when a patient in the trial actually has a medical procedure done and the patient population for this study is small.
Roger that Dew, although I would most be happy with nearly all that you listed. :>) Talecris is an interesting choice which I had not considered but why not 'join em' rather than see the big antithrombin opportunity go to someone else. Baxter is another name I had not thought of as a candidate but they may well have had an internal understanding of the opportunity antithrombin offers.
Cro man:
Since the 'market makers' in any stock make their living off the bid/ask spread I am not surprised that your effort to narrow the gap was was not executed immediately. From my end, I don't really care about about 'no stinkin market makers', I am only interested in seeing that the upcoming clinical trial results are consistent with prior European data and will support a U.S. filing. Then we should get a partnering agreement for North America and perhaps Japan.
To that end, in addition to the companies listed in Dew's quiz (message # 5727) I figure there are one or perhaps two Japanese companies who are interested in North America and Japan as well. Both Takeda and Eisai have invested in phase 3 studies for sepsis drugs. But both drugs will only work with infections caused by gram-negative bugs which account for only about half the sepsis infections and the use of those drugs, if approved, would not preclude the use of Atryn. If one is going after sepsis, why not have two tools in your bag instead of just one? Also, if a company is interested in Atryn for Japan why not go after North America as well?
Sorry--I misspelled 'antitrypsin'.
A reference on alpha-1 antitripsin for those who are interested.
http://www.labcorp.com/pdf/Alpha_1_Antitrypsin_Patient_Brochure.pdf
A few observations and a question regarding sepsis for the board:
I recently read an article which suggested that Genzyme was having some trouble scaling up their product for Pompe's disease
from a smaller batch process to a larger one. I don't know whether this story is true for Genzyme and Myozyme, but I do know that product consistency when scaling up cell culture volume sometimes is a real challenge. Which leads me to note that this is another advantage of this technology over cell culture. Also, from a potential partners point of view, I think Ayryn would be most attractive considering the size of the potential markets coupled with the fact that a partner will not have to build a factory nor will they have to answer the question--will it scale?
Regarding sepsis. there are lots of clinical studies at clinicaltrials.gov but I only noticed two, besides Atryn, which look like they might be a potential treatment for DIC and sepsis. Both drug candidates are in phase 3, both by Japanese companies, Takeda, and Eisai. and they both 'down regulate' something called 'toll-like receptor 4'. Toll-like receptors activate the immune system and TLR-4 is is engaged by 'gram-negative bacteria'. While Takeda and Eisai were willing to go to 2000+ patient phase 3 trials it looks to me as though the TLR4 antagonists will only be potentially useful in about 1/2 the sepsis cases as only about 1/2 are caused by gram-negative bugs. The only half are caused by gram-positive bacteria and thus it would seem that dialing down TLR-4 would not be helpful in the gram-positive cases. My knowledge of this subject is superficial so can anyone on the board clarify this?
My second question is that it also would seem that the use of a TLR-4 antagonist and antothrombim may be mutually beneficial as on one end you are down regulating an overheated immune response and on the other end you are supplementing a depleted antithrombin condition.
Finally, since sepsis is due to an rapidly progressing infection, I wonder if 'down-regulating' the immune system will cause other problems. Antibiotics may deal with the infection if the patient survives but I guess that's one of the reasons for a phase-3.
With a company like GTC where the marketplace is not yet interested I'm always reminded of a Warren Buffett comment--which likely came from Ben Graham--that in the short run a stock's price behavior is a popularity contest while in the longer run it's more of a weighing exercise, meaning the marketplace weighs how the business performs.
While those of us who are 'in' would like to see the stock price react favorably to news like a product launch we can at least be reassured that the process of developing the business is well underway. Indeed while it would be helpful to see more of the biotech world 'lining up' to use this technology the main issue for me, for now, is that GTC can can do something no one else can do, and that is produce plasma proteins in volume at attractive costs. [Atryn, alhpa-1., Factor 7 (likely), alphafeto. (Merrimack),butyrlcho. (Pharmathene)] Further, I believe LFB has a list of other potential products which may be added to the list.
This capability, all by itself, I believe will prove to be most significant and the fact that the investment community doesn't yet appreciate what GTC has unlocked will be cured in time. While being patient isn't a lot of fun, I am patiently anticipating some fun down the road and in the meantime I continue to take advantage of what I consider to be a bargain valuation.
Thanks biotechguy. I've heard and read some of the the same things. I'm not close to what's been going on in the cell culture world, but I remain skeptical that cell culture capabilites have closed the gap that much. Cell culture plants still require a fair number of trained people, a building, and lots of disposable inputs. While there have been many incremental improvements in cell culture I haven't read about exponential gains in output or cost reduction. There is a trend to go to 'disposable' manufacturing to reduce cycle times and sterilization but it is early in that process. Some things go the other way as I have read that the desired transition to non-bovine based serum will cause a decrease in productivity.
I could well be wrong but I remain convinced that the gap, while smaller, is still large. The scalability advantage remains as well. Of course, no one is paying me to make manufacturing decisions....
The analogy may not be spot on, but 25 years ago if you asked someone at IBM about PC's and IBM's future, they would have laughed. It was a 'mainframe' world then. I'm not suggesting that transgenic production will displace cell culture processing but it's easy to stick with the status quo--until a competitor starts to race ahead of the field.
Roger that Jesse. Keiturn, looking forward, anyone who is interested in making a protein, lets say it might be a 'bio-similar' to a current product whose patent expires in a few years, would surely be interested in a manufacturing process which provides a much lower capital cost for the factory (goats vrs. a cell-culture plant) and a lower cost of production, perhaps in the range of 1/3 to 1/10 that of cell culture. Also, the capital requirement for a 'goat based factory' is scalable, meaning you can expand your capacity in small increments, compared to a cell culture based factory.
Regarding their own products, there are many plasma proteins which do not express well in culture and are available only from donated blood and often in limited amounts, if at all. GTC has several opportunities in this space alone. Monoclonal antibodies which require high volumes are another example where this 'platform' offers a real advantage. Indeed, I think one of the challenges for the company is to be careful in deciding what to pursue as they can't do everything at once. Hence the the recent hires which I regard as reassuring in this regard and a significant statement about how this technology is now perceived in the industry.
Interesting point Mr. 'Keiturn' and I think it fits the GTC situation fairly well. I--and I think many at the company--expected this technology to get into commercial use well before now.
I have come to believe that decision makers in the 'pharma world' do become highly risk-adverse and seek to minimize
their risks at every turn because the drug development process is so risky. I imagine in the past there were internal discussions where someone at a lower level might extol the potential cost and scalability advantages of transgenic production only to be overruled by an older, higher authority who says "we can't use it until it is a proven and well accepted commercial technology." That is the only explanation I can find as to why some companies have not lined up to use this technology. I think cheaper--by a lot-- and scalability are key advantages which the industry will embrace more eagerly as more transgenically produced products come to market.
In the meantime, making products, like blood related proteins, which don't express well in cell culture seems like a great arena to stay busy in for quite some time.
Off topic but my recall is that the early relational database
efforts were tied to handicapping horse racing. Is that story correct? And, here's to racing goats.
For those who are new to GTC a little history on this topic might be of interest in connection with 'biosimilars'. Several years ago there were formal programs sponsored by Abbott and JNJ (among others) to develop transgenic goats to produce Humira (Abbott) and Remicade (JNJ). Both programs advanced to the level where there were multiple animals and good expression levels, a fair amount of purification work was done, and early discussions about 'bridging' studies were held with the FDA. In the end, though, GTC learned that partners were not willing to be the 'lead dog' and break the trail to regulatory approval using a new manufacturing technology. It became clear then that GTC had to be the one to go first which they happily have now done in Europe and are doing for the U.S. with Atryn. I'm sure GTC's experience with some of these products like Humira and Remicade is reassuring to potential biosimilar partners.
"velly interesting" to quote (rather dated I admit) Arte Johnson from Laugh-In. Sorry if I'm stating the obvious but the fact that rBChE is found in plasma--albeit in very small amounts--offers the possibility that recominant butyrl... will be less likely to produce extreme toxicity or other 'adverse events' compared to novel phamacuetical candidates.
The potential to make it in volume with a low capital outlay doesn't hurt either....
Thanks for posting the press release.
Rats are a good start! :>)
"...All indexes were significantly improved in the AT-III group..." Just kidding, but no heparin for these rats shows the The KyberSept results must be well known in some circles.
I noted a March 2007 publication date so I thank you, Dew, for finding and sharing such current stuff.
Thanks Dew for making me laugh out loud as I gleefully wait for the 'paradigm shift' (sorry for the tired phrase) in the
world of fractionated blood products.
The Maxygen news was interesting as well.
Pharming....
Since Pharming (Netherlands based) is the closest peer to GTCB I sometimes like compare how they are progressing and their
valuation relative to GTCB.
The share count for Pharming is 88.75 million shares outstanding and the market price is 3.40 (Euros) so the current valuation is about 300 million (in Euros) and just under $400 million dollars, about 4 times the market cap. of GTCB. At December 31, 2006 Pharming's financial picture is similar to GTCB with cash of 31 million Euros (about 40 million in dollars) and their cash consumption in 2006 was 22.7 million Euros (including 3.1 million in capital expenditures), in the same ballpark as GTCB.
The much higher valuation applied to Pharming is an 'anomaly' from my perspective. I think Dr. Cox and Company are doing the right things as they push ahead in using the advantages of transgenic manufacturing to make things which aren't easily done in cell culture (Atryn, alpha-1 antitrypsin) or do it less expensively (Factor 7). The fact that Pharming is currently valued more highly may be a source of frustration to some but I see it as encouraging as I expect GTC to get similar treatment eventually....... :)
Unlike GTC, Pharming does not yet have an approved product but their lead product, for hereditary angioedema, may be perceived as a larger market opportunity, as least at at the outset, compared to antithrombin, which may explain the higher valuation of Pharming. On the other hand, there may well be competition in hereditary angioedema from Dyax. Pharming uses rabbits to make their product by the way. FWIW, Pharming expects to receive approval in Europe in the second half of 2007 for their product to treat hereditary angioedema and they expect to finish US clinical trials in 2007, with a filing in 2008.
In general, Pharming doesn't seem to be as focused on using the advantages of transgenics to build the business as they acquired a company called DNage last year which is working on DNA damage and repair. While this may fit strategically, at first glance this looks like a completely different arena from manufacturing proteins. In addition, they do not have the large scale 'farm' like GTC has nor have they done much 'demonstration of concept' by building animals for others which produce products like Remicade or Humira. Also, LFB partnered with GTC, not Pharming, which I think is says quite a lot about GTC's capability to manufacture.
Gymbo:
That's a likely yes as GTC licensed the CD137 program from the Mayo Clinic. FWIW, I believe they said at the time that
this antibody might be used in large volumes and that requirement favors producing it transgenically.