Emerging Pharma: Which Companies Should Be on the Radar?

14 March 2005 00:01  [Source: ICB Americas]

As the innovation drought continues at big pharma, emerging pharmaceutical companies become increasingly important to driving industry growth. One measure of the potential value of these companies is the influx of venture capital. Among the largest recipients of venture capital last year were Synta, AlgoRx, Corus Pharma, Eximias and JDS Pharmaceuticals.

Overall, venture capital funding in the biotech industry increased by almost 10 percent in 2004 to $3.8 billion, according to a recent analysis by PriceWaterhouseCoopers. In all, 329 deals were completed, up slightly from 320 in 2003. The five largest deals involved Synta Pharmaceuticals Corp. ($80 million), AlgoRx Pharmaceuticals Inc. ($65 million), Corus Pharma Inc. ($65 million), Eximias Pharmaceutical Corp. ($63.5 million) and JDS Pharmaceuticals ($62 million).

One company—Synta—is already testing the market, and filed for an initial public offering in January. Safi Bahcall, president and CEO, co-founded the company with Lan Bo Chen, a professor of pathology at Harvard Medical School’s Dana-Farber Cancer Institute. Unlike other biotech companies, which typically start out with only one product or a single technology focus, Synta began as buyout of a fully formed drug development company. “Our current drug candidates and drug discovery capabilities have their origins in research begun in 1992 by the US-based research subsidiary of a Japanese imaging company,” says the company. “A unique chemical compound library developed by this entity was acquired in 1998 by Shionogi BioResearch Corp., a US-based research company formed by Shionogi & Co., Ltd., a Japanese pharmaceutical company. Synta began operations in July 2001, and in September 2002, we acquired Principia Associates, Inc., which had acquired Shionogi BioResearch Corp. a few months earlier. Through this acquisition, we obtained the chemical compound library, a pipeline of preclinical and research programs, and the chemistry, biology, and pharmaceutical development assets built over the preceding decade. Since the Principia acquisition, we have devoted our efforts to advancing the clinical development of our current drug candidates and discovering new drug candidates. We remain, however, a development-stage company.”

Synta’s two lead products are STA-5326 and STA-4783, which are both now in Phase II trials. STA-5326 is a small-molecule oral compound that selectively inhibits IL-12, a cytokine critical to the development of certain chronic inflammatory diseases, including Crohn’s disease and psoriasis. If approved, the company says it expects STA-5326 to compete against currently approved treatments for chronic inflammatory diseases, including large-molecule, injectable TNFa antagonists such as Johnson & Johnson’s Remicade (infliximab), Amgen’s Enbrel (etanercept), Abbott Laboratories’ Humira (adalimumab), and Tysabri (natalizumab), the recently withdrawn antibody marketed by Biogen Idec and Elan Corp. It will also compete against broadly immunosuppressive small-molecule agents such as the corticosteroids, methotrexate and azathioprine. STA-5326 may also compete with CNTO-1275 and ABT-874, two antibody-based clinical candidates targeting IL-12 being developed by Johnson & Johnson and Abbott Laboratories, respectively.

STA-4783 is Synta’s lead drug in a new class of small-molecule compounds that kill tumor cells via two separate pathways: inducing expression of heat shock protein 70 (Hsp70) on tumor cell surfaces, and disruption of the cytoskeletal network. Synta is currently evaluating STA-4783 in patients with non-small cell lung cancer, melanoma, and sarcoma. If approved, the drug would compete with other drugs that are being used or tested in combination with taxanes, including Genentech’s Herceptin (trastuzumab), OSI/Genetech/Roche’s Tarceva (erlotinib), Roche’s Xeloda (capecitabine) and other taxane-like molecules such as epothilones.

Synta does not have any manufacturing capacity and says it is working with undisclosed third-party manufacturers for supplying clinical quantities of the drug.

Two companies—AlgoRx Pharma-ceuticals Inc. and Corus Pharma Inc.—shared the second spot in venture capital biotech funding last year, with each company raising $65 million. AlgoRx, headquartered in Cran-bury, N.J., is a privately held pharmaceutical company focused on the development of pain management products. AlgoRx’s late-stage pipeline consists of two drugs. Algrx 4975 (capsaicin for injection) is a treatment for localized severe and intractable pain in Phase II trials, and Algrx 3268 (PowderJect dermal lidocaine) provides a powder formulation of the local anesthetic lidocaine into the skin using AlgoRx’s proprietary needle-free dispenser. Chiroscience Group PLC and PowderJect Pharmaceuticals PLC had initially developed the technology, and AlgoRx acquired the license to the technology with its 2002 acquisition of certain of PowderJect’s assets. The drug is in Phase II-III trials, and the company expects to file a new drug application with the Food and Drug Administration by the end of the year.

Meanwhile Corus is banking its hopes on two drugs. The first is Corus 1030 (inhaled lidocaine) for treating asthma, which Corus licensed from the Mayo Clinic in 2002, and which is now in Phase II trials. The second drug candidate, Corus 1020 (aztreonam formulated for inhalation), is also in Phase II trials as a treatment for cystic fibrosis.

Eximias Pharmaceutical Corp., based in Berwyn, Pa., is a privately-held pharmaceutical company focused on the acquisition, development and commercialization of products for treating cancer and cancer-related disorders. Its two lead products are Thymitaq (nolatrexed dihydrochloride) and Orataq (an oral form of nolatrexed). “[Our] main focus right now is to complete enrollment in the Ethecc trial, analyze the data, and pending a positive outcome of the trial, move toward a successful NDA [new drug application] filing for Thymitaq,” says Brenda Gavin, chairman of Eximias. Thymitaq is being evaluated in Phase III trials as a drug to treat inoperable liver cancer.

Finally, JDS Pharmaceuticals LLC,headed by Phillip M. Satow, chairman and CEO, formerly an executive with Forest Laboratories, is a New York-based specialty pharmaceutical company that sells, markets and develops proprietary and branded pharmaceutical products in niche therapeutic markets. Armed with $62 million raised last year, JDS acquired two products: Lithobid, a twice-daily sustained release form of lithium carbonate for treating bipolar disease, and a related late-stage developmental compound, JDS 103. In February, JDS formed a co-promotion pact with Synthon Pharmaceuticals Ltd. for Lithobid.

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