West Coast Editor

With one cancer drug in Phase III trials and another behind it, Telik Inc. priced a public offering of 7 million shares at $18.75 per share, expecting to net about $123.6 million.

Carol DeGuzman, senior director of corporate communications for Palo Alto, Calif.-based Telik, declined to comment and referred questions related to the offering to the prospectus.

The company's stock (NASDAQ:TELK) closed Friday at $18.84, down 39 cents.

Before the financing, the company had $154.9 million in cash, cash equivalents and restricted investments, according to the prospectus, which said the firm anticipated using the net proceeds from the offering to fund clinical trials of Telcyta and Telintra, for research and development, and for general corporate purposes.

Telik's lead drug, Telcyta, is the first in a new class of cancer cell-activated chemotherapeutics designed to exploit the overexpression of glutathione S-transferase P1-1 (GST P1-1), an enzyme overexpressed in many cancer cells. High levels are associated with a poor prognosis and resistance to certain chemotherapeutics.

Telcyta apparently starts working when GST P1-1 splits the compound into a pair of active pieces - a glutathione analogue fragment and an active cytotoxic fragment. The cytotoxic fragment reacts with RNA, DNA and proteins, leading to cell death, while the other fragment might remain bound to GST P1-1, limiting the enzyme's ability to inactivate other cancer drugs.

Along with the Phase III registration trial in ovarian cancer begun in the first quarter of 2003, Telik is testing Telcyta against non-small-cell lung, colorectal and breast cancer.

The company also started a Phase III registration trial of Telcyta last spring, and another in combination with carboplatin vs. Doxil as second-line therapy in platinum-refractory or -resistant ovarian cancer last month.

Those trials pit Telcyta against a control arm consisting of established standard drug treatments. Telik noted as a risk factor in its prospectus that London-based AstraZeneca plc, maker of Iressa (gefitinib) for NSCLC, recently disclosed that the drug does not significantly prolong survival in the overall patient population, and Iressa is being used as the comparator drug in the Telcyta trial. (See BioWorld Today, Dec. 20, 2004.)

Telintra, in Phase II trials for myelodysplastic syndrome, is a small molecule that stimulates production of blood cells in bone marrow. Preliminary data presented at the American Society of Hematology meeting in San Diego last month showed that 61.5 percent of MDS patients on Telintra had clinically significant improvement in one or more blood cell lineages, in some cases getting off transfusions.

Both drugs come from Telik's Target-Related Affinity Profiling methodology, which, by screening as few as 200 compounds (rather than 2 million, as with some other approaches), zeroes in on those that interact specifically with a disease-related protein target.

With TRAP, Telik measures the binding of a small molecule to a proprietary reference panel of proteins to create a profile for each compound, with what the firm describes as "tens of thousands" of compound profiles on hand. Computational tools are deployed to search the database and identify promising drug candidates.

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