Editor

Gone are the days when a dollop of good news in any area of biotechnology lit a fire under stocks across the sector. Investors, having become at least somewhat more sophisticated, have narrowed their scrutiny to individual companies or platforms.

Or science. Validation through positive clinical data of a particular firm's approach to drug development can still do plenty by way of helping others using similar methods. A prime example: anti-angiogenesis.

Just about every company experimenting with such technology gained at least some favor in May when Genentech Inc. said the anti-angiogenesis drug Avastin (bevacizumab) "far exceeded" what Phase III trials were designed to show in metastatic colorectal cancer patients.

Things only got better when the declaration was followed by more detailed trial results from Genentech at the American Society of Clinical Oncology meeting, more closely profiling how well the vascular endothelial growth factor inhibitor worked.

One company riding high on encouraging anti-angiogenesis news - gaining a boost from Genentech, no doubt, but also offering evidence of its own progress in the field - is OxiGene Inc. The Watertown, Mass.-based company has seen its stock rise in recent weeks and last month raised $15 million through a private placement with institutional investors.

"I don't think they've deliberately tried to catch that wave, but I'm sure they have benefited from [the Avastin news]," said Jason Zhang, an analyst with Independent Research Group, a wholly owned subsidiary of www.TheStreet.com.

OxiGene, he said, is "in the broadly defined anti-angiogenesis field, but they think their technology is superior to inhibition of VEGF."

Fred Driscoll, president and CEO of OxiGene, told BioWorld Financial Watch his company is "the same church but a different pew" from Genentech.

"They're dealing with signaling pathways to stop the growth of new blood vessels," he said. "Our drug deals with the morphology and structure of the cell."

In mid-June, OxiGene said its lead product, Combretastatin A4 Prodrug (CA4P), would be combined with two standard-of-care chemotherapy drugs - carboplatin and paclitaxel - against ovarian cancer in a Phase I/II trial.

CA4P works by affecting the microtubules in the cytoskeleton of endothelial cells that line the tumor vasculature. By disrupting the tubulin structure, the endothelial cells are made to change shape and stop blood flow through the capillary, starving the tumor.

The Phase I arm of the study involves 30 patients, with the Phase II arm including between 20 and 30 patients and focusing on more safety data plus indications of antitumor activity. OxiGene's stock soared 67 percent on news of the trial, closing at $13.80.

Cardiac Toxicity In Trial Rare And Reversible

Even before this news, share prices had been on their way up for the company.

In late May, OxiGene said Cancer Research UK would collaborate on the final preclinical development of another vascular-targeting agent, OXi4503, which had pushed the stock price up $1.55, or 55.4 percent, to close at $4.35. On June 4, OxiGene said it received FDA fast-track designation for CA4P in advanced anaplastic thyroid cancer, for which the drug is being tested as a single agent in another Phase II trial, and the shares jumped $3.29, or 83.5 percent. Then came news of the Phase I/II chemo combination trial.

Late last week, OxiGene was trading just above the $10 mark.

The company, which disclosed the financing agreement June 10, sold 1.5 million shares at $10 per share - a roughly 22 percent premium to the five-day average closing price for the stock through June 9 and a 12 percent discount to the five-day volume-weighted average price through that period.

OxiGene got $14 million after commission fees and expenses, and investors received warrants to buy 375,000 shares, exercisable at $15 per share. If exercised in full, the warrants would bring in about another $5.6 million.

Nice. But Zhang has questions about CA4P, which is not yet partnered, and initiated overage of OxiGene with a "sell" rating.

"Few people have really looked at what they have with a critical eye and tried to assess whether the drug is for real or not," he told BioWorld Financial Watch. "I have always been positive about cancer drug development, but I have to say this one is [valued at] way over what the company has."

Zhang said Bristol-Meyers Squibb Co.'s October 2001 decision to end its commercialization deal signed in 1999 with OxiGene for CA4P was a sign of trouble.

Results of Phase I trials by BMS with CA4P never were made public, but Zhang pointed out in a research note that BMS' chemotherapy drug Taxol (paclitaxel) also is a tubulin-binding agent and BMS has "extensive development and commercialization experience with Taxol," making the company a "perfect partner" for OxiGene.

Unless, he said, something had gone wrong with the drug. Zhang said some trials with CA4P have shown it has "alarming cardiac toxicity" - a serious potential negative point in a patient population in which cardiac trouble already is common - and is unlikely to work as a single agent.

But Driscoll said that, "of 100 patients we had, we had two cardiac events" in OxiGene's trials. "In both patients, there were pre-existing conditions that the investigators were not aware of before [the patients] entered the trial. Even if they hadn't had pre-existing conditions, the events they had were [experienced at doses] well above the defined and declared maximum tolerated dose," as determined by clinical investigators.

"Give somebody 20 Advils in three hours and see what their liver looks like," Driscoll added.

Zhang said he had "contacted a lot of people" in an attempt to learn why BMS dropped out. "Nobody was able to give me a definitive answer but [cardiac toxicity was] certainly one of the reasons, I think."

Driscoll, however, said BMS "was looking for later-stage compounds. It was right after they in-licensed Erbitux. We were one of several internal and external programs they closed."

The Phase I trial with CA4P was "terminated at the conclusion of the agreement," he said. "There's nothing more or less to be said about it," and OxiGene was restricted by a confidentiality agreement anyway.

Strong Single-Agent Showing In Thyroid Cancer

As for another partner, Driscoll said OxiGene has "made it pretty clear that our strategy is to oversee early clinical development and then partner for advanced-stage and commercial development."

He said discussions with would-be partners are "active."

Regarding Zhang's claim that CA4P is unlikely to prove efficacious as a single agent, Driscoll said the drug "was always looked upon in treating in combination trials," but had gained one complete response as a single agent in a Phase I trial for anaplastic thyroid cancer and the company had an "ethical responsibility" to move into Phase II, which it did.

Although the disease is somewhat rare, it's extremely deadly, killing its victims in about four months, Driscoll said. "We filed and have received fast-track designation, and we've filed for orphan drug designation and we hope to receive that," he said. "There's nothing on the market for [ATC]."

CA4P was viewed as a combination drug from the outset, Driscoll said.

"We thought if we could combine it with radiotherapy, or chemotherapy or antibody therapy, you'd have a one-two punch at addressing the tumor," he said. The drug is in a Phase I/II trial combined with radiotherapy for lung, head and neck, and prostate cancers, and in Phase Ib trials in combination with carboplatin for various solid tumors.

Zhang said OxiGene is "on the right track" with its ovarian cancer study, but larger trials with multiple doses would have been better. "If larger trials are needed - and we believe they will be - results will be at least two years away," he said.

With its financing, OxiGene had about $22 million at the end of the second quarter, Zhang estimated - not enough to carry out CA4P's development if the company goes it alone.

"Unless these Phase II trials yield promising results, which we doubt, OxiGene will find itself in a tough position to raise more money," Zhang wrote.

Driscoll said disclosure of the precise cash on hand would have to wait for the earnings report, but the company's burn rate is between $5 million and $6 million per year. The company ended the first quarter with $10 million, to which was added the recent financing of $15 million.

"I'll have to let you do the math," he said.

In early July, OxiGene said the Johns Hopkins University School of Medicine was starting a Phase I/II clinical trial of CA4P in wet age-related macular degeneration.

Competitors in the particular vascular target area staked out by OxiGene with CA4P are AstraZeneca plc with its ZD6126 and Aventis SA with AVE-8062A.

"AstraZeneca is just completing Phase I, and Aventis is probably six to nine months behind with theirs," Driscoll said. "We're in the lead in this race."

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