Emerging Drug Developer: Oncothyreon

Oncothyreon clears the deck for clinical trial work

The past year has brought some big changes at Oncothyreon.

Twelve months ago the Seattle-based developer struck a deal to sell its manufacturing facility in Canada to Merck KGaA, which has aggressively pushed ahead with late-stage clinical trials on Stimuvax, a closely-watched cancer vaccine they're partnered on. A revival in the developer's stock price set the stage for the biotech to raise $24 million through the sale of shares. And the small staff remaining at the company's headquarters now has the luxury to concentrate on two clinical and one promising preclinical cancer programs now in the pipeline.

Merck KGaA "took over the Canadian facility in Edmonton and a large number of employees" back in December of 2008, says CEO Bob Kirkman, M.D. "We got a nice cash payment of $13 million and our burn rate was cut dramatically. It was a great thing for us."

Merck KGaA has also been an ideal development partner, he adds. The German pharma company recently launched another late-stage trial of the cancer vaccine, this time zeroing in on Asian patients with advanced non-small cell lung cancer.

Merck KGaA "is clearly running a Phase III program that would be impossible for most normal-sized biotechs to run," says Kirkman. "That's really important for a therapeutic vaccine in oncology, a field made more difficult by the fact that earlier trials were run by companies that couldn't afford proper trials. From our perspective, it's great to have a partner that can do a program like this."

Oncothyreon's deal with Merck KGaA includes a low double-digit royalty stream from a successful launch, along with milestone payments along the way. And with Merck leading the charge for the cancer vaccine, Oncothyreon's staff, which is now around 20 people, is focusing on two clinical and one preclinical program.

One of those clinical stage drugs, PX-866, inhibits PI3 kinase, a hot field in cancer drug development. PI3 kinase regulates the growth, proliferation and survival of cancer cells. Windhover Information recently selected it as one of the Top 10 most promising oncology development projects currently available for partnering.

"We made some data public from the Phase I trial," says the CEO, which offered evidence of the "clear cut inhibition of the target. We made the decision to go into Phase II trials, which start in 2010."

The second drug, PX-478, "is an inhibitor of HIF-1 alpha, which is nearing the end of Phase I." HIF-1 alpha is a protein that regulates the response of growing tumors to hypoxia, or low levels of oxygen, and finding an effective inhibitor would be a valuable addition to the range of drugs used to fight cancer. No data has been issued and "there's nothing I can say there yet. Our view at this point is that on our own we can only afford one Phase II program," he adds, and that's likely going to be 866.

"If 478 should go forward," says Kirkman, "we'd need a partner for one or the other. If you're going to do Phase II you'd need multiple trials to learn how to use the drug. I think we'd like to do Phase II for 866 ourselves if we can."

Oncothyreon's reorganization has helped buoy a share price further fueled by the success--so far--of Dendreon's cancer vaccine Provenge. And Kirkman didn't waste his chance to gin some added cash while the market sun was shining. Oncothyreon has banked $24 million from the sale of stock, and that will give the developer the funds it needs to get through this next phase of development.

"We're going to grow a little in 2010, particularly as 866 moves into Phase II," adds the CEO. "We'll need a little larger staff for that. We also have a follow-on vaccine to Stimuvax." Merck KGaA has the rights to engage in the first commercialization talks, but Oncothyreon's rights for that preclinical program could be worth quite a lot more if Stimuvax is a success in Phase III.

"If the revenue kicks in," notes Kirkman, "we can grow the pipeline and define ourselves as a therapeutic development company in oncology. We like to find preclinical, late preclinical products, and take them through early trials, looking for partners for commercialization.

"We're in a good financial position," says a confident Kirkman. "We raised $24 million in 2009 and we've been burning about a million dollars a month. So that plus the money we got from Merck has positioned us to really have the resources to get to some of these milestones with some of the products. We have the cash that we need to get to where we need."

Emerging Drug Developer: Oncothyreon

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