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"Regeneron's CNTF Drug Could Push Leptin Out Of Obesity Race," trumpeted a BioWorld Financial Watch headline in late 2000. "Obesity's Next Savior? Leader Axokine Ready For Phase III," declared another the following year. By April 2003, it was: "Regeneron's Axokine Story Continues; Subset Holds Hope."

Last week, just as investors and analysts had begun talking about "fat chances" and "niche markets," Regeneron Inc. said its meeting with the FDA regarding mixed Phase III data with Axokine had proved encouraging, and the company will push ahead with the pivotal program.

What some had overlooked about Axokine, Regeneron will try to exploit.

Helped by a potential $485 million development deal with Aventis SA focused on another product, VEGF Trap (a vascular endothelial growth factor antagonist), disclosed last week, and by an earlier $75 million agreement with Novartis AG focused on its Interleukin-1 Trap technology (which regulates immune and inflammatory responses by attaching to cell-surface receptors), Regeneron has enough cash to push Axokine forward.

It could work. Axokine is "a relatively low-risk, small-product potential right now," George Yancopoulos, chief scientific officer of the company, told BioWorld Financial Watch. "We think it has a very reasonable, very high chance of becoming a product."

Yaron Werber, analyst with SG Cowen, agreed. "There's been a lot of noise [about Axokine]," he acknowledged. "I'm not sure all the noise is positive." The once-ballyhooed drug is "a lot less important for the stock" these days, he added.

Just the same, Werber said, the company has something - possibly much - to gain, and very little to lose by pursuing Axokine.

Yancopoulos said Regeneron "didn't necessarily want to rob from other programs to put into Axokine," but found itself in the pleasant position of not needing to do that, as a result of the Aventis and Novartis deals.

The Aventis project, still in Phase I, is not as far along as the one at the center of the Novartis agreement, but both are funneling cash into Regeneron, allowing the firm to take its chances with Axokine in a tough indication dominated by Xenical (orlistat), from Hoffmann-La Roche Inc., and Meridia (sibutramine hydrochloride monohydrate), from Knoll Pharmaceutical Co.

" Niche product' might not be a bad term for [Axokine's] minimal possibility," Yancopoulos said. "But we're just one little breakthrough away from a huge success."

Could be. Early results from a Phase III trial with Axokine, a modified form of ciliary neutrophic factor, sent Regeneron's shares into a 56.6 percent tailspin in late March. Neutralizing antibodies had compromised efficacy, and Wall Street was anything but happy. In May, at a meeting of the American Society of Hypertension, the company offered a more complete - and more circumspect - examination of the data, which brought cause for a degree of optimism.

Though Axokine led to only moderate weight loss in most patients, some came away with substantial reductions. Almost three times as many patients treated with Axokine plus a weight-control program lost more than 10 percent of their body weight over 12 months of treatment compared to those on a weight-control program alone - 11.3 percent vs. 4.2 percent - and the patients averaged more than 30 pounds of weight loss.

"We hit, with great statistical significance, both primary endpoints," as Yancopoulos pointed out, and also met two of three secondary endpoints. More Axokine-treated patients lost at least 5 percent of their body weight as compared with placebo, and Axokine patients achieved a greater average weight loss than those treated with the non-drug.

Not bad. Not quite amazing, but not bad.

"Studies have shown that even these degrees of moderate weight loss can have huge impacts on future health," Yancopoulos said. "If you stay on Axokine for a year, you lose about 8 pounds" - nothing to sneeze at, especially "if you look at obesity as a serious chronic disease without too many available treatment options," he added.

Werber said Regeneron might have a shot at even better revenues with Axokine by testing it in combination with the one or both of the other obesity drugs, and "that's exactly what we're thinking about," Yancopoulos said. "The most important thing is that when you have a legitimate product, you pursue it."

The pursuit of VEGF's potential, of course, is what allowed Regeneron to land the deal with Aventis at such an early stage. Yancopoulos acknowledged the "murky history" of anti-angiogenesis drugs.

"We're in a very fortunate situation because of Avastin [bevacizumab]," he said, referring to Genentech Inc.'s VEGF drug that yielded positive Phase III data for colorectal cancer.

"Our program was for a long time rather ignored," he noted. "There are so many unvalidated approaches out there. The media, big pharma companies, lots of people didn't know how to pick and choose. Genentech deserves credit for refocusing the entire field."

As it makes money from its deals with Aventis and Novartis, Regeneron will be focusing on Axokine.

"I think it's quite likely that one will start to see combination effects," Yancopoulos said, and Axokine "might be tested with a lower dose of Meridia and maybe phentermine." In the longer run, the company might also get around some of the issues with antibodies by working to better identify the likely responders.

With 60 million obese people in the U.S. - a nation that can't seem to stop eating - to capture even a percentage segment of the market can mean worthwhile profits, Yancopoulos said.

Against the condition, "the more weapons you can get on board, the better," he said.

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