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Oral Calcitonin Market Wide Open for Tarsa After SMC021 Miss

By Jennifer Boggs

BioWorld Today Managing Editor

Shares of Emisphere Technologies Inc. were walloped Monday after oral calcitonin candidate SMC021 failed to reduce the occurrence of new vertebral fractures in a three-year osteoporosis study, but the news could be a boon to a late-stage competitor.

Calcitonin already is a proven player in the multi-billion-dollar osteoporosis space, but its problematic administration – it's given primarily as a nasal spray – has limited its share to a mere 3 percent to 4 percent of the market. However, its safety is superior to the top-selling bisphosphonates such as Fosamax (alendronate, Merck & Co. Inc.) and up-and-comers like Amgen Inc.'s RANK ligand inhibitor Prolia (denosumab), so it's easy to imagine an oral version of calcitonin potentially reaching blockbuster status.

Novartis AG has been working on SMC021 since 2000, when it licensed rights to Emisphere's Eligen drug delivery platform, which is designed to transport macromolecules across biological membranes using synthetic carriers. The Swiss pharma later gained access to a calcitonin manufacturing technology from Unigene Laboratories Inc.

Despite disappointing data last month from a pivotal trial testing the drug in osteoarthritis, the companies remained optimistic that the osteoporosis study would hit the mark. But Novartis informed its partners that the study had fallen short, though it did not disclose any specific data and said it will further analyze results from both trials prior to deciding whether to continue development. (See BioWorld Today, Oct. 17, 2011.)

Emisphere's stock (OTCQB:EMIS) was hit the hardest, losing $1.20, or 75.3 percent, to close at 39 cents, a 52-week low, with the company's future in doubt. As of Sept. 30, the Cedar Knolls, N.J.-based firm had only $4.7 million on its balance sheet.

Executives of Emisphere could not be reached for comment, so it's not clear how the latest failure might affect the company's overall pipeline. It has a human growth hormone deal, also partnered with Novartis, a diabetes deal in collaboration with Novo Nordisk A/S and is working on an oral formulation of B-12, but all of its offerings are underpinned by the same Eligen technology.

For Unigene (OCTQB:UGNE), which saw its shares drop only 5 cents Monday to close at 95 cents, likely due to missing out on near-term royalties from Novartis, the news may have a silver lining, since SMC021 wasn't the only oral calcitonin product in Unigene's pipeline.

In 2009, the Boonton, N.J.-based biotech licensed rights to an oral calcitonin candidate to start-up Tarsa Therapeutics Inc., which was charged with finishing up pivotal trials and seeking regulatory approval. Unigene, which has participated in both of Tarsa's funding rounds – the most recent being a $24.5 million round closed in July – holds a 20 percent stake in the new firm. (See BioWorld Today, Oct. 21, 2009, and July 13, 2011.)

And Tarsa's oral calcitonin, Ostora, has so far done well. The product hit its endpoints in a 565-patient Phase III trial earlier this year, demonstrating statistically significant superiority to placebo and noninferiority to calcitonin nasal spray in increasing lumbar spine bone mineral density after one year of treatment in postmenopausal women with osteoporosis. (See BioWorld Today, March 25, 2011.)

Tarsa, which has said it hopes initially to aim Ostora at patients with mild to moderate disease who cannot tolerate the existing therapies, anticipates filing a new drug application by the end of this year. A filing in Europe could come in 2012.

Had SMC012 met its endpoint, Novartis could have filed for approval early next year. The failure means Tarsa's drug could have the market to itself for a while – the next oral calcitonin coming down the pike is Australian firm Bone Medical Ltd.'s Capsitonin, currently in Phase II testing. That fact could help land the privately held company a lucrative commercialization deal – even an acquisition.

Under its agreement with Unigene, Tarsa holds worldwide rights to the Ostora, excluding China, and has the option of commercializing the product on its own or seeking strategic partners.