BioMS Medical Corp (fka MS.TO)

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Edmonton biotech firm may be key to multiple sclerosis breakthrough
Kelly Riddell, Bloomberg
Published: Friday, December 26, 2008

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Robin Giese

Clifford Giese

Medical Technology

Science and Technology

University of Alberta

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WASHINGTON -- BioMS Medical Corp., a one-drug biotechnology company in Edmonton, Alberta, may hold a partial answer as to how Eli Lilly & Co. will replace US$9.9-billion in sales threatened by expiring patents.

Lilly signed a US$497-million licensing and development agreement for BioMS's dirucotide, potentially the first treatment for advanced forms of multiple sclerosis to come to market. The medicine, which entered final trials, has so far escaped side effects such as influenza-like symptoms, fatigue and skin cancer that were reported by Basel, Switzerland-based Novartis AG on fingolimod, another late-stage drug in testing for the disease.

A mid-level study of dirucotide, involving 218 subjects, had "very impressive features to it," according to Bill Chin, Lily's vice president of discovery and clinical investigation. The drug represents a chance for "a breakthrough," he said.

Multiple sclerosis affects about 2.5 million people worldwide. Most approved therapies treat early-stage MS and make up a US$6-billion market that may double by 2013, according to research firm Frost & Sullivan in New York. Dirucotide may generate sales of more than US$5-billion, said Douglas Loe, an analyst at Toronto-based Versant Partners Inc. who rates BioMS shares 'buy.'

Approval of the drug and a potential takeover of BioMS by Indianapolis-based Lilly may increase the $236-million (US$194-million) market value of the Canadian company's shares by fivefold to as much as 25-fold, according to Mr. Loe.

The shares, which have declined 36% this year, may reach $9.62 in 12 months, according to a Bloomberg survey of four analysts. They closed at $2.50 in Toronto on Dec. 24.

Lilly faces the possible loss of more than half of last year's revenue when patents on its top-selling drugs -- Zyprexa, Cymbalta, Gemzar and Humalog -- expire by 2013.

The drugmaker declined to comment on the possibility of an acquisition and "looks forward" to a continued partnership with BioMS, said Christine Van Marter, a spokeswoman.

BioMS's hurdle for dirucotide in clinical trials will be to prove that the antigen it selected, in this case a myelin-based protein, is the most effective therapy to block the immune-system response associated with MS, said John Richert, executive vice president of research and clinical programs for the National Multiple Sclerosis Society in New York. "This drug could be a very important advance, but it also represents a significant challenge to researchers," Mr. Richert said.

Cambridge, Massachusetts-based Biogen Idec Inc. and Elan Corp., in Dublin, Ireland, removed the MS drug Tysabri from the market in February 2005 after three patients contracted a brain illness and two died. Four cases, with one death, were reported since the drug was reintroduced in the U.S. in 2006. Tysabri is aimed at treating an earlier stage of MS called relapsing-remitting.

BioMS was founded by Clifford Giese, a 61-year-old Alberta native who went into semiretirement after selling an automotive oil-change business 21 years ago. He licensed the drug from the University of Alberta in 2000 and took the company public in 2001.

While he had no interest in biotech, Mr. Giese wanted to save his wife, Robin, who was diagnosed with MS in 1977, he said.

"We were desperate to find a cure, to find or do anything that would stop the progression of her disease," said Mr. Giese. "I was told about a peptide that looked promising, so we decided to give it a go."

Now, after 12 years on the treatment, Robin Giese said she wakes up every morning to exercise, plays with her five grandchildren in the afternoon and attends parties with her husband in the evening. She suffers from secondary progressive, an advanced form of the disease.

Before entering the clinical trial for dirucotide, "I was consistently tired and needed help doing the most minor tasks," the 60-year-old said in an interview in her kitchen. Today, "I keep improving. I've experienced no side effects."

Most sufferers are first given a diagnosis of relapse-remitting, an early form of the disease marked by occasional flare-ups. More than 50% eventually progress to Robin Giese's condition, characterized by continuous deterioration.

Mr. Giese predicted that Dirucotide will be approved and sold in Canada and Europe in 2010, followed by approval from the U.S. Food and Drug Administration about a year later.

BioMS lost money until the third quarter of 2008, when it recorded its first profit on a payment from Lilly for completing an interim analysis of the drug.

The University of Alberta is the company's biggest shareholder, with a 19% stake, according to data compiled by Bloomberg. The Edmonton-based school received the interest as part of its licensing agreement with the company.

Mr. Giese, BioMS's chairman, is the fourth-largest shareholder, with 1.9%. His brother, Kevin, owns 1.1%, according to Bloomberg data.

"We view ourselves as a long-term investor because the prospects for the company are very favorable," said Ron Ritter, the university's director of investments and treasury. "We hope dirucotide is a highly successful product, and all indications are the clinical trials will prove that."

In mid-2009 BioMS will hand off dirucotide to Lilly so it can complete clinical testing and eventually sell the product. At any time during testing, Lilly can break its agreement with BioMS, which has no other drug in its pipeline.

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