These Results Will Have A Significant Impact

Before I go on, I must emphasize that both release events are highly anticipated
by the medical and investor community. The experimental drugs being tested by
both companies have attracted a lot of attention because both have targeted
diseases that are difficult to treat with current methods today.  In addition,
both new drugs are being groomed for large, growing healthcare markets with the
potential to generate substantial long-term revenue. Over the last several
months, the background biotech “market chatter” has been rising for both
companies. This increase will only translate into serious volatility when the
data is made public.

Regeneron Pharmaceuticals
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Regeneron will soon show its clinical hand on its experimental drug
Axokine to treat severe obesity sometime near the end of March or early
April. The company has a large, ongoing phase III trial testing Axokine in
severely obese patients to see if it results in significant weight loss. No
phase III data has leaked out yet because the company has been blinded to the
ongoing analysis. 

As we all know, obesity is a serious, highly public health problem in this
country with very few effective medical treatment options. The cumulative
medical cost of this disease is in the billions.  Aggressive surgery to bypass
the stomach is effective. However, it does carry risks and can be potentially
fatal.

Regeneron has been testing an experimental drug that is a genetically engineered
version of a naturally occurring human protein called ciliary neurotrophic
factor. This protein is found in a specific part of the brain and thought to
suppress the human appetite. The scientific thinking behind the drug is that it
mimics this protein and suppresses appetite in the brain, leading to weight
loss. Several years ago the company did release favorable phase II data showing
patients taking the drug did exhibit a statistically significant weight loss
over a 48-week period when compared to those taking a placebo. 

This is promising, and the words “statistically significant” are the two most
favorite words in the summary of any clinical trial.  However, as we all know,
positive phase II data may not be a true reflection of any drug’s ability to
work. Only well-designed phase III trials can validate whether or not a drug is
efficacious. 

So where does that leave the company now?  Well, I can tell you that when the
data is released, positive or negative, the stock will experience a substantial
move. The depth of the move will be similar to that experienced by VaxGen after
that company released data on its experimental AIDS vaccine several weeks
ago. Unfortunately for VaxGen, its move was downward and fortunately for
Regeneron the direction of its move has yet to be determined. 

At this point, I have some cautious reservations about the data Regeneron is
about to release. First of all, the drug Axokine does have some history behind
it. Several years ago the drug was being tested to treat Lou Gehrig’s disease
and phase III trials showed it to be not effective. It was only at this time the
company realized many of the patients in the trial, although not helped by the
drug, lost weight. This is when the company decided to rejuvenate the drug and
test it for the treatment of obesity.

Personally, I am always leery of a repackaged drug with a past history of
failure despite having an acceptable safety profile. In addition, the science
behind Axokine, despite making theoretical sense, may be a little more
complex. Obesity is a very complex disease in humans and it just may be too
complex for on drug to tackle alone. Yes, the phase II data was statistically
significant but the actual number of pounds lost over time (relative to the
actual weight of the patient) was not jaw dropping. Despite this, there is no
denying that the release of this data is a sentinel event in the life of this
biotech.

Isis Pharmaceuticals
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 This
company, like Regeneron, will also soon release pivotal phase III clinical data
on its experimental drug to treat a common, resilient type of lung cancer. Isis
has directed its research and development toward a novel approach to treating
disease called “antisense” technology. Antisense drugs act on a molecular level
and interfere with the lifecycle of a diseased or cancerous cell before it can
ever become a threat. 

Any diseased cell has its origin in its diseased strands of DNA. This mutant DNA
is the blueprint for the production of subsequent mutant proteins, which direct
the production of diseased cells. In order for mutant DNA to direct the
production of disease-specific proteins in a cell, the mutant genetic message
must first be translated to the rest of the cell. 

A substance called messenger RNA (mRNA) is the cellular translator. Strands of
messenger RNA are called “sense strands” because they make sense out of the
mutant genetic message for the rest of the cell. Drugs that act to inhibit the
mRNA, and thus prevent the production of disease-specific proteins, are called
“antisense” drugs. This is the novel approach that Isis has adopted and its
drug, Affinitak, is its most advanced antisense compound.

In late March, Isis Pharmaceuticals will release phase III clinical data on its
experimental antisense drug to treat NonSmall Cell Lung Cancer (NSCLC). The
ongoing trial compares the use of standard chemotherapy vs. standard
chemotherapy plus Affinitak to treat this difficult, often fatal disease. 

Lung cancer is the most common cause of cancer death today and NonSmall Cell
makes up 75% of the new cases each year. This disease, like obesity, is a large
market disease with no real effective medical treatment today.Unlike obesity,
patients with NSCLC often die of disease within two years.  Again, akin to
Regeneron’s phase II data, the phase II data supporting Affinitak’s
effectiveness in improving survival is impressive. In phase II, the drug doubles
the survival duration for patients with NonSmall Cell Lung Cancer when added to
standard chemotherapy. This is impressive because this type of cancer is often
recalcitrant to current forms of chemotherapy. 

To date, Isis Pharmaceuticals has not given any indication on where the phase
III data will fall.  There are a lot of medical and investor eyes focused on the
results of this trial because there are many who doubt the actual science of
antisense technology. If the results are positive, it would validate this novel
approach to treat disease within the medical establishment. In addition, if the
drug significantly improves survival over standard chemotherapy, the stock will
not only acutely reflect this validation, but will also have some serious
long-term momentum. 

Good Luck,