Radius Bone Drug Delivers--Will Novartis Bite?

Radius Health yesterday released top-line Phase II data from its osteoporosis hopeful BA058, demonstrating statistically significant increases in bone mineral density (BMD) versus placebo in the lumbar spine and hip.

Big deal, you say. Well, it kind of is, since Novartis has an option on the compound, exercisable following Phase II evaluation, which is happening now. These days, option deals might be ten-a-penny, but back in 2007, when the deal was signed, they were less common. And Novartis took the option at the same time as the MPM/Novartis 'Strategic Fund', a joint program between the VC firm MPM Capital and Novartis' pharmaceutical business unit, made a $10 million equity investment in Radius. (Read this for background.)

Novartis has since signed option deals on a bunch of other assets, and created a separate venture fund, the Novartis Option Fund, which also inks option-based deals. (For more on their recent activity and the pursuits of corporate venture groups generally, check out this START-UP piece.)

The souring economy and the travails of traditional venture capitalists have made the MPM/Novartis experiment one worth watching. As the first product officially up for grabs, its hard not to see Novartis' decision to exercise--or not--its option to BA058 as a test case for the viability of this particular mix of business development and corporate VC. If Novartis says no, won't traditional VCs and biotechs think harder about the potential taint of an option spurned? Won't an early 'no' also make it harder for the side-by-side fund to ink future deals, especially if the capital markets come roaring back and traditional VCs put money to work again?

Radius' CFO Nick Harvey confirmed to The IN VIVO Blog that "Novartis do now have the Phase II data," but isn't revealing the time period granted to the Swiss group to decide whether to bite. Earlier this year, Joe Jimenez, Novartis Pharma's CEO, included BA058 in an email description of Novartis' osteoporosis development portfolio, suggesting Radius (and its investors) were onto a winner.

But at a recent Elsevier Business Intelligence conference, Novartis' head of BD and Licensing ,Tony Rosenberg, was more circumspect. Moreover, he downplayed the significance of the BA058 decision on the viability of the option model. According to Rosenberg, it would be naive to expect the drugmaker to exercise all the options it has currently taken. "Phase II compounds have a 20 to 30% success rate. If we do five deals, we should expect one or two of them to pay off," he argues.

Do investors buy Rosenberg's logic? Maybe. According to Biogen Idec's Michael Lytton, who invested in Radius while still at Oxford Biosciences and who has become a convert when it comes to these kinds of deals, there's still a bias against such transactions because of their potential to curb a biotech's future deal-making activity. In the case of Radius, Lytton says "co-investors partially accepted the answer that with a primary care product such as Radius' osteoporosis drug, Novartis was one of the few logical acquirers anyway." And after a thorough analysis, they grew more comfortable that the deal's economics were a reasonable approximation of what the biotech might hope to gain from a future partnership.

If it works, BA058--which is parathyroid hormone-related protein--will compete with Lilly's teriparatide (Forteo), a form of parathyroid hormone, and the only bone-building, or anabolic, drug on the market currently. (Check out this START-UP feature for some background on the space.) Appropriately, then, the Phase II trial included a Forteo arm, and, according to Harvey, the highest dose of BA058 boosted BMD at the hip (femoral neck) significantly more than Forteo. (Hip fractures are rarer than spinal ones, but more debilitating and thus costlier.)

Still, since "the trial was designed and powered to show a primary endpoint vs placebo," the Forteo-related statistics are therefore being regarded as "exploratory, rather than pre-planned," Harvey clarified. But he and CEO Richard Lyttle declare themselves pleased with the data, which they say looks "as we expected". Of particular interest: findings show only half the occurrence of hypercalcemia in the group taking the highest dose of BA058 versus those taking Forteo.

Radius reckons this is because BA058 has less effect on bone resorption than Forteo, which means it's less likely to lead to high blood calcium, currently a dose-limiting factor for parathyroid hormone--and the key reason NPS' Preos, for instance (a full-length PTH), never made it onto the US market.

Forteo sold about $800 million in 2008 despite a black box warning related to osteosarcomas, inconvenient administration, and a refrigeration requirement. Radius thinks it has a better molecule, one that's room-temperature stable, and which may be more convenient (Radius is working with an undisclosed partner on a transdermal delivery form).

So will all this plus the crucial Phase II data be good enough for Novartis? We may find out soon--although MPM has said it will support the company whatever the Big Pharma's decision. As to whether there might be any half-way house outcome, other than an opt-in or opt-out scenario, "we could never anticipate that there wouldn't be something [possible] in between," says Harvey.

(Image courtesy of flickr user rachel_r used with permission courtesy of a creative commons license,)

Denosumab: Let's Make a (Hypothetical) Deal

Not too long ago, the idea that a top-ten biopharmaceutical company would out-license a potential blockbuster project was way out in left field. Not so much anymore.

Deutsche Bank analyst Mark Schoenebaum notes in a recent report to clients that Amgen stock has been on an upswing for the past few weeks, and rhetorically asks why. A major reason, says Schoenebaum, is that Amgen is saying it will likely partner its Phase III denosumab (d-mab, for the nickname inclined) in postmenopausal osteoporosis (PMO) instead of building its own 2000-strong field force to sell the product, should it get approved.

If you'll allow us to grab our plaid jacket and dust off our best Monty Hall impersonation, we'd like to take the scenario a step further. If Amgen wants to offload d-mab--what's the drug going to be worth to a partner? Should it partner a significant piece, like the PMO indication, or 50% of the entire package (d-mab is being investigated in preventing 'skeletal related events' in patients with breast and prostate cancers and a variety of other tumors--on Monday the company released positive top line data from one Phase III study, for example). What is the ideal scenario for Amgen?

You, dear readers, are the experts here. And so we turn to you. We're even going to give you the tool necessary to come up with your own NPV estimates: the profile of denosumab from Elsevier's Inteleos database. Click the link to access the free PDF, dig around, and leave your estimates in the comments ...

Come on, people. Let's make a deal.

Denosumab: Outclast by Reclast?

Just when things couldn't look any gloomier for Amgen. After a series of setbacks the Big Biotech is relying heavily on the future success of its late-stage denosumab osteoporosis therapy. One of the main attractions of the antibody therapy is its convenient route of administration: the drug will only have to be infused twice a year--a big improvement over weekly pill-taking that can lead to poor patient compliance.

Too little too late?

In a three-year study of nearly four thousand patients, Novartis' once-a-year infusion Reclast (a.k.a. Aclasta, a.k.a. Zometa) was shown to decrease bone turnover and improve bone density at 12 months in postmenopausal women with osteoporosis. Results were published yesterday, in this week's New England Journal of Medicine.

Analysts have predicted the drug could be approved in that indication later this year. Although side effects included a higher rate of atrial fibrillation in the treatment group, the drug is on the market for other conditions, such as Paget's disease and the A-fib wasn't seen by observers as a deal breaker in osteoporosis either.

Amgen shares were down nearly two percent yesterday. Denosumab--currently being tested in a handful of late-stage trials, comprising a variety of oncology and bone-related indications--won't hit the market for postmenopausal osteoporosis until at least 2009. We'll take a look at Amgen's post-EPO R&D prospects in the May IN VIVO.