Theralase Technologies Inc (fka TLT.V)

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Theralase: A Prime Roche Target
Just found this article about a big pharma company, Roche, and two potential targets for it to acquire based on its 'patent cliff', particularly its expiring Herceptin sales...

A patent cliff is the decline in revenues a pharmaceutical company experiences when the patents on one or more of their protected compounds expires. The lack of patent protection opens up the market to generic alternatives, which generic drug manufacturers sell at a discount to the branded option. This reduced cost redirects revenues from the manufacturers (generally big pharma) that bore the cost of research and development.

During 2014, the patent cliff concept will expose a number of incumbent pharmaceutical companies to potential revenue redirection. One of those companies is Roche Holdings (RHHBY), with the European patent for the company's breast cancer drug, Herceptin, due for expiry. Roche's Herceptin sales totaled $6.07B during 2013, 16% of the company's total annual sales.
What Can Roche Do About The Expiration?
One way to offset the risk of a patent cliff is to extend the life of the expiring drug through modification. Modification might involve combining a drug with another compound to improve efficacy, or simply altering the delivery of the drug. There are problems associated with these actions however. Conducting trials to seek enhanced efficacy can be costly and time consuming; further, there is no guarantee that a combination will be successful. Altering the delivery method necessitates improved release rates, which even if achieved offer no guarantee of approval and extended exclusivity.
An Alternative, More Aggressive Option
Another option is to acquire smaller biotech companies that are taking treatments through the FDA approval process, or to license treatments from these smaller companies. As the pharmaceutical community is likely already aware, Roche generates the majority of its revenues from oncology drugs. As such, and in light of its potential Herceptin losses, Roche will likely look to strengthen this area of it operations. Examples of Roche's activity of this sort include the company's acquisition of Piramed Limited, which at the time had a drug candidate in phase I clinical testing for treating breast and lung cancer; and more recently, Roche'spartnership with Inovio Pharmaceuticals Inc, (INO) that gave the company an exclusive license for Inovio's DNA-based, prostate cancer targeting vaccine, INO-5150. Below are a couple of potential targets that could help Roche bolster oncology revenues over the next two years.
Theralese: Potential Target Number One
The first company that could be the target of a Roche deal in the next two years is Theralase, Inc. (TLT.V) (TLTFF). Theralase currently generates revenues from the sale of its cold laser technology, which practitioners use to simulate the healing process in patients with muscle damage. In addition to this however, Theralase is currently developing a type of cancer treatment, which uses lasers to activate compounds that, when activated, kill cancer cells.

How Does The Treatment Work?

Theralase has a portfolio of patented photodynamic compounds ("PDCs") that, via intravenous introduction, attach to cancer cells. Practitioners then use one of Theralase's laser platforms to activate the compounds, which upon activation induce apoptosis, a type of programmed cell death that cancer cells do not undergo naturally.

Theralase's Trials to Date

To date, Theralase has conducted a mouse model trial that investigates the efficacy of its PDCs in the treatment of bladder cancer. Researchers at Princess Margaret Hospital injected cancerous cells into the bladder of a mouse. Following this, they injected TLD1633, one of the Theralase's patented PDCs, into the tumor site. Twenty-four hours post activation, the PDCs had induced apoptosis in the cancer cells, and the mouse lived for 20 months post treatments. Eighteen-twenty months is the average lifespan of a mouse, meaning the treatment completely cured the cancer.

Theralase's 2014-2016 Strategy

Having cured bladder cancer in a mouse, the company is now carrying out the same test in a rat, the aim being to validate the previous results. During 2015, Theralase expects to achieve breakthrough status for its PDC treatment and to complete a phase I/IIa human clinical study. If successful, Theralase expects to execute a strategic partnership with big pharma during 2016, the point at which a company like Roche will get involved.
Agenus: Potential Target Number Two
The second potential takeover or licensing target is Agenus, Inc. (AGEN). Agenus focuses on another area of cancer treatment, immunotherapy. The company's lead immunotherapy candidate is Prophage G-200, which is currently undergoing trials for use in the treatment of glioblastoma multiforme ("GMB"), a malignant, deadly brain cancer.

How Does The Treatment Work?

Two major factors make GBM a difficult cancer to treat using traditional methods. The first is the tumor's location. Its proximity to the brain makes surgery extremely risky. The second us the tumor's form. A GBM tumor has long, tentacle-type fingers that spread throughout the brain. Agenus' treatment removes much of this risk, as it only requires a small sample of the tumor. Once removed, the company uses the sample to manufacture a vaccine, which contains the tumor's unique antigenic fingerprint. Practitioners then introduce this vaccine intravenously into the patient, and it stimulates the patient's immune system to combat the tumor. As with that of Theralase, the Agenus treatment is highly targeted and does not have any of the negative side effects traditionally associated with standard of care treatment.

Prophage G-200 Trials to Date

At the end of last year, Agenus announced the results of a phase II clinical trial. Of 41 patients enrolled, 90% were alive at six months, compared to 36% for a placebo and 56% for current chemotherapy standard of care.

Agenus' Forward Strategy

Agenus currently has 23 programs in clinical development, a combination of its own pipeline and a number of strategic partnerships. Four of these programs are currently in Phase 3 clinical trials and nearing data readouts. The company expects these data readouts during the first half of 2014. In addition to its pipeline, Agenus also seeks value through expansion. Last week, the company announced the completion of its acquisition of 4-Antibody AG, a private European-based biopharmaceutical company.
Conclusion
Over the next two years, the incumbent pharmaceutical companies will likely seek acquisition targets and licensing opportunities to offset potential patent related revenue losses. For Roche, a company that generates the majority of its revenues from oncology treatments, these acquisitions will likely include development stage cancer treatments. If they can prove the efficacy of their respective treatments, both Theralase and Agenus would offer Roche exposure to cutting edge cancer treatments over a range of disease instances.


http://www.investing.com/analysis/with-patent-cliff-looming,-2-potential-takeover-targets-for-roche-204220