Testing Tysabri’s risks

The scientist who was instrumental in developing Tysabri has come up with a test to identify patients at risk of getting a potentially deadly brain infection known as progressive multifocal leukoencephalopathy, or PML.

Since 2005, Tysabri has been linked to 23 PML cases worldwide, that’s about 1 in 400 patients who received the drug. Four patients have died.

Elan, an Irish company that developed the drug, and Boston-based Biogen Idec, which makes it at its Research Triangle Park plant, maintain PML is rare. But patients and investors are getting worried – particularly after it became known recently that the caseload in Europe is much higher than initially thought.

Only eight of the PML cases occurred in the U.S., where doctors must follow strict guidelines of who may get Tysabri and regulators closely monitor adverse event reports for the drug. Most of the 16 cases reported in Europe were in Germany, where regulatory oversight was less strict.

Elan projects Tysabri sales of about $1 billion this year. But more patients could get the drug if a test became available to sort out those at risk of developing PML.

GSK’s need for a new Advair

GlaxoSmithKline will advance efforts to develop a next-generation treatment for chronic obstructive pulmonary disease, or COPD, but the British drugmaker stopped short of updating patients and investors about its next-generation asthma treatment.

GSK’s Advair is currently the top seller to treat asthma and COPD. But Advair, which generated about $8 billion in sales last year, could get competition from cheaper generic copycats starting next year. GSK, which has its U.S. headquarters in Research Triangle Park, fills the Advair disk at its RTP-area plant in Zebulon.

A next-generation Advair is in the works. GSK has a partnership with Theravance, a Bay Area drug development company, to develop a once-daily treatment that is a combination of a new long-acting beta agonist and a corticosteroid GSK already uses in another product.

On Tuesday, GSK said both partners “remain committed to the progression of the … program for the treatment of asthma. ” But for now, the new combination treatment will only go on to late-stage testing in COPD.

In other company news:

• Aldagen made its second attempt in two years to raise $80.5 million in an initial public offering of stock. The Durham biotech company filed for an IPO in May 2008 and withdrew its filing five months later.
• Metabolon, a Durham biotech company, completed a $12.3 million fund raiser. One of the investors in the round is Syngenta, a Swiss agricultural products company that has its research center for genetically modified crop seeds in RTP. Metabolon, which identifies biochemical biomarkers associated with disease and medicines, already had a partnership with Syngenta.

Oil from sticks and grasses

The RTP area is already a hot spot for biofuels research. Researchers, economists and economic developers at universities, companies and government organizations have been working on efficient ways to make ethanol from biomass such as wood chips, corn stover and switch grass.

Now, researchers at RTI International in RTP have received a $3.1 million contract from the U.S. Department of Energy to develop a one-step process that turns biomass in a type of bio crude. The biomass “oil” is an effort at finding a replacement for petroleum, the world’s most important source of energy since the 1950s.

Developing medicines is a minefield that Tranzyme Pharma has navigated well so far. But the Durham company is about to embark on one of its trickiest missions.

Unlike its two rivals, which had to cut costs, delay projects or sell itself in past months, Tranzyme has had enough cash to sit out the financial crisis of the past 18 months. With the recession easing and Wall Street coming back to life, the company is about to act on one of three options: Go public, sell part or all of itself or go back to its investors hat in hand one more time.

Tranzyme’s board of directors and executive management will have to weigh costs and benefits of each option, said Mike Constantino, who oversees Ernst & Young’s life science business in the Southeast. “They have to look into their own crystal ball.”

Like any investor, they will want to squeeze the most out of their stake in the company, Constantino said. But, he added, “this is a very interesting time.”

Initial public offerings of stock, favored by venture capitalists because IPOs can recoup large investments plus gains, all but vanished when the burst housing bubble turned into a full-fledged financial crisis about a year ago. (See Renaissance Capital graphic on right.)

Elixir Pharmaceuticals, a Tranzyme rival, filed for an IPO in September 2007 and withdrew the filing in May 2008. Tranzyme, which had toyed with the idea to go public  about the same time, also scrapped its IPO plans.

As investors became tight-fisted, venture capital fundraising and investment declined sharply.

With sources of cash limited, research and development companies cut costs and then turned to other deals that brought in money or kept the research alive. Some sold themselves. Others sold the rights to some of their medicines to large drugmakers.

Tranzyme was able to stretch the about $20 million in venture capital it received in 2007. But now, the company cannot wait much longer.

To stay competitive, Tranzyme has to figure out a way to pay for the large, international tests it must embark on next to get regulatory approval for its experimental drugs.

Vipin Garg, Tranzyme’s chief executive, said the company may still find a large drugmaker willing to buy it or the rights to develop and commercialize its drugs. Existing and possibly new investors may be willing to put another $30 million into the company, enough to get a first product ready to go to market.

But Wall Street’s rekindled appetite for biotech and pharma stock sales in past weeks could prompt Tranzyme to revive its IPO plans, Garg said.

After being dead in the water for months, the market looks like its coming back, said John Fitzgibbon, who tracks IPOs on iposcoop.com.

Wave of IPOs to come?

Several publicly traded pharmaceutical companies were able to sell large chunks of stock, including Inspire Pharmaceuticals of Durham, which raised $115 million on Aug. 10. The same day, Cumberland Pharmaceuticals, a specialty pharmaceutical company in Nashville, Tenn., pulled off the first IPO of a health care company in 12 months, according to Renaissance Capital.

Fitzgibbon expected a wave of IPOs after Labor Day. Venture capitalists are under a lot of pressure to recoup investments, he said. “There’s a big backup.”

Ernst & Young’s Constantino also projected a possible flurry of activity on Wall Street after Labor Day. If the IPO window opens, he said, it could stay open into the first quarter next year and allow Triangle biotech companies such as Tranzyme and Talecris Biotherapeutics to take the plunge. Talecris, which makes blood-based therapies, aims to raise as much as $1 billion in one of the Triangle’s largest IPOs.

In the past eight years, Tranzyme raised about $55 million in venture capital and moved its drug development ahead steadily without the unpleasant surprises that so often accompany a biotech company’s maturation. It’s an accomplishment that earned Garg this year’s Ernst & Young Entrepreneur of the Year award in the Carolinas.

Targeting gastrointestinal problems with custom-made ghrelin drugs was a strategy that proved smart financially and scientifically.

In three different tests TZP-101, Tranzyme’s most advanced drug, was safe and highly effective, according to results announced in October and April. The oral version, TZP-102, is being tested as a treatment for chronic gastroparesis, which particularly affects patients with diabetes.

By mid-2010, the company could have two therapies ready to advance into final testing and a pipeline of other ghrelin drugs in the wings.

Garg acknowledged that an IPO that raises $50 million to $100 million would allow Tranzyme to go ahead with the testing and build a sales force to bring its drugs to market.

A sale is likely to accomplish the same, but Trazyme would no longer be an independent company and the Triangle would lose a corporate headquarters.

And then, there’s the punt: Asking Tranzyme’s existing investors for another cash injection to gain time.

The call is the board’s.