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By Donna Young
Washington Editor
The second fastest way to clear a room of venture capitalists and other investors is to announce a bomb threat or yell "fire."
But the quickest way is to tell them you are a drug developer targeting traumatic brain injury (TBI) or stroke, said Harry Tracy, who runs Cardiff, Calif.-based NI Research, a consulting and research firm focused on the neurological and psychiatric therapeutics industry.
In recent years, investors in general have shied away from companies developing therapies for brain injuries and illnesses, except for Alzheimer's and Parkinson's diseases, Tracy said.
While the Alzheimer's development area in particular is "a huge potential market" that would meet a "huge social need," it "sucks up a lot of the money," leaving other brain conditions, such as TBI and Huntington's disease, woefully underfunded, he said.
The proportion of mid- to large-size firms developing drugs for brain injuries and illnesses ranges from "zero to maybe 5 or 10 percent," Tracy said.
Most in the space are small or micro-size biotech or specialty pharma companies "some of which are barely in existence," he said. "It's very hard for them to get any sort of funding to move ahead. There are some promising programs that have really suffered."
A series of failures over the past decade for brain illness drugs, specifically for stroke, has led large pharmaceutical makers and investors to "shun" the market, Tracy said.
Many drug developers in the 1990s had mistakenly assumed that because there had been great successes in the cardiac medication market, triumphs in the stroke space would easily follow, said analyst Raghuram Selvaraju, of Rodman & Renshaw LLC.
But, he said, there have been about 50 stroke drugs that have failed over the past decade.
Several of those failures, Tracy noted, came after very extensive Phase III testing.
Stroke, Selvaraju explained, is a very heterogeneous disorder in which not only are the occurring clots in patients' brains very different from one another, but the size of vessels also varies.
In addition, he said, the amount of time between when strokes occur and when patients reach the hospital can vary widely.
"And so it is very difficult to conduct clinical trials that actually return statistical significance in this kind of indication, because there is no guarantee what sort of patients you are going to get," Selvaraju said.
To be successful, he said, companies will have to subdivide stroke into different categories of patients and conduct clinical trials only in the subcategory where their therapy is most likely to work.
"This blanket approach of trying to do massive trials in thousands of patients and hope to eke out an effect is clearly not effective," Selvaraju said.
Stroke, he said, has become a "minefield" for drugmakers, and from Wall Street's point of view, it is an "anathema."
TBI Challenges
Firms targeting TBI share many of the same clinical and financial obstacles as those developing therapies for stroke, Tracy said.
Despite the recent attention on TBI as a result of the thousands of U.S. troops affected by the injuries, drugmakers targeting the condition are still struggling for funding, even from the Department of Defense, he said.
"It's painfully ironic, given the fact that returning soldiers are such a high profile for a new and very sad market for traumatic brain injury," Tracy lamented.
TBI is the second leading cause of death for soldiers serving in Iraq and Afghanistan, second only to hemorrhage, said Larry Glass, U.S. CEO of Neuren Pharmaceuticals Ltd., which has dual headquarters in Bethesda, Md. and Sydney, Australia. In addition, he said, it is one of the leading causes of disability for injured soldiers.
While the current wartime experience has raised awareness of TBI, the condition has been "very much underappreciated from a drug development perspective," Glass said, noting there currently are no drugs approved to treat TBI and few in development.
More than 1.5 million cases of TBI are reported annually in the U.S. alone, he said, noting that at least 300,000 of those are hospitalized with severe injuries.
Yet, Glass said, "There have been virtually no big pharma efforts to develop drugs" for the condition.
While clinical development for TBI is complicated, uncertain and expensive, "the potential returns are phenomenal," he said.
Neuren, which has most of its operations in New Zealand, has partnered on its drug NNZ-2566 in TBI with the U.S. Army, Glass noted.
The drug is intended to prevent the secondary damage to brain cells in patients with TBI by interfering with the inflammatory and apoptotic phenomena that are upregulated following a brain injury, and in the end, reduce the amount of brain impacted by the initial injury, he explained.
Under a 2004 cooperative research and development agreement, Neuren funded the early-stage research of NNZ-2566 conducted by the Walter Reed Army Institute of Research, Glass said.
The Army will use a portion of the $300 million it received last year for TBI and post-traumatic stress disorder research under the Congressionally Directed Medical Research Program to help support part of the cost of a Phase II clinical trial of NNZ-2566, which is expected to start this year, he said.
However, Glass noted, the patient population targeted in the study includes U.S. civilians and not soldiers.
"This is an acute drug, so it needs to be administered, at least in terms of the trial protocol, within eight hours after injury," Glass said.
"The challenges of trying to conduct a clinical trial in a war zone are sort of beyond us," he said, noting that most soldiers are medivaced to Landstuhl, Germany, for treatment before arriving at U.S. military hospitals.
NNZ-2566 is an analogue of Neuren's lead compound Glypromate, a N-terminal tripeptide of insulin-like growth factor-1, which has been shown to protect neurons and their surrounding infrastructure against cell death as a result of so-called micro-strokes associated with coronary surgery.
An Unfunded, Unmet Need
With VCs and Wall Street wary of investing in the brain injury and illnesses market for the most part, firms developing drugs in the space are having difficulty advancing their compounds, Tracy said.
"Neurodegenerative diseases are an unmet medical need with a capital 'U'," he said. But unfortunately, Tracy said, drug developers in the space are forced to "beg, borrow and steal enough money to keep going."
The majority of companies pursuing neurodegenerative disease targets "have less than a year of cash available, which means they are always looking for money," he said.
As a result, Tracy said, the firms are restricted in how fast they can move ahead and are often forced to develop only one compound.
Zack Lynch, executive director of the Neurotechnology Industry Organization, noted that lawmakers in May introduced a bill intended to boost the current annual federal funding by $75 million for small biotechs and other companies targeting therapies for brain illnesses and injuries.
The bill also seeks to provide $80 million per year to the National Institutes of Health to pump up its neuroscience infrastructure and $30 million to the FDA for hiring new medical review officers for neurological-related products and other activities, Lynch said, noting his organization played a key role in getting the legislation introduced.
The measure also calls for $5 million to be spent on creating a national coordinating office to ensure the NIH and other agencies are aware of each other's research efforts for brain injuries and illnesses, he said.
Lynch noted that the bill's $200 million annual funding is not expected to fill the financial void in the neurodegenerative disease space.
Rather, he said, it is meant to relieve some of the critical bottlenecks that are slowing drug R&D in the U.S.
Orphan Drug Strategy
Firms in the brain injuries and illnesses space must consider new financial strategies not only for advancing their products, but also for making a profit, Selvaraju said.
One strategy is to exploit the crossover between orphan disorders, such as Huntington's disease, and much larger indications, like Alzheimer's disease, he said.
Those two illnesses, as with others, have the common pathological hallmark of protein misfolding, Selvaraju explained.
"So because there is this mechanistic commonality among many of these neurodegenerative diseases, it has been hypothesized that therapies could be developed that would work to address all of them," he said.
A firm seeking approval of an orphan drug typically has a quicker pathway to approval, which therefore, could benefit a second non-orphan indication in numerous ways, Selvaraju said.
For instance, he said, a company could set a pricing structure for the orphan drug at a premium and then keep the same high price for the much larger indication.
One firm that such a strategy could work for, Selvaraju said, is San Francisco-based Medivation Inc., which is developing Dimebon as a drug for Huntington's and Alzheimer's diseases.
There currently are no drugs on the U.S. market to treat Huntington's disease, which is a fatal neurodegenerative illness, said Medivation CEO David Hung. The company expects to enter Phase III in Huntington's next year and already is in Phase III for Alzheimer's.
Recently reported Phase II results showed that Dimebon improved cognitive function in patients with Huntington's disease.
Results from a new Russian study showed that the drug continued to improve the cognitive symptoms and functioning of Alzheimer's patients over 12 months.
Hung said his firm has yet to decide which indication to first seek approval. But Selvaraju projected that by filing for an orphan indication first, firms like Medivation could potentially quadruple their revenues.
However, he noted that his proposed strategy has yet to be successfully tested. | 
