2 Biotechs to Keep an Eye On
06/21/2011 11:30 am EST
There's a new way of treating cancer and these two companies are leading the pack, notes Michael Murphy of New World Investor.
I’ve spent the last few weeks looking at two more biotech companies going after cancer by improving the immune system. Since Dendreon’s (DNDN) success, this has become a legitimate alternative to the burn-it-out chemotherapy approach.
Think of cancer not as a disease, but as a symptom of a disease. The underlying disease is an impaired immune system. We all have cancerous cells circulating in our body all the time.
Normally, your immune system identifies them and sends killer T-cells to latch on and inject hydrogen peroxide to kill them. Then macrophages sweep up the detritus and carry it out of your body.
Even the American Cancer Society once wrote in its yearbook that if you have a strong immune system, you will not get cancer. That was back in 1975.
The statement has since disappeared, as it would mean the War on Cancer required improving the immune system, as the alternative health people had been saying for years. Plus, it threatened the multibillion-dollar chemotherapy drug industry.
So we spent 30 more years attacking the tumor—the symptom—instead of the problem, and using methods that drastically weaken the immune system to do it.
The few cancerous cells that survive radiation or chemotherapy then have to be taken out by a weakened immune system, or the cancer will recur with tumors based on the strongest cells (the ones that survived the original treatment). That’s why recurrent cancers are so vicious, and survival rates so much lower than for first-time cancers.
The two biotech companies I have been looking at are working to boost the immune response to brain cancer, an especially bad cancer. (Not the worst—that’s pancreatic cancer, which Steve Jobs has. Much of the immune system is built in the pancreas, so cancer there is a direct attack on the body’s main defenses.)
I think each one will have a successful trial. But at the end of the day, I decided not to recommend either stock, for totally different reasons.
Micromet (MITI) is headquartered in Bethesda, Md., but most of its operations are in Germany.
It was founded by a team of scientists from the University of Munich. They developed an antibody technology to mobilize T-cells, which they called Bi-specific T-cell engager, or BiTE. They went public via a reverse merger with CancerVax, a California company, in 2006.
The BiTE technology is in several pre-clinical and very early stage trials. The lead product candidate is blinatumomab, which has demonstrated single-agent activity in both adult and pediatric patients with acute lymphoblastic leukemia. The drug is currently in a Phase IIb pivotal clinical trial in Europe.
The second company, Celldex (CLDX), is even more interesting, and they do have only a $100 million market cap.
They focus on precision-targeted antibodies—combining monoclonal antibodies, some with a cytotoxic drug load, with antigen-presenting cells to produce drugs and vaccines. They have several drugs in early stage development.
CEO Anthony Marucci still lives in New Jersey. Every other week, he drives four hours and 15 minutes one-way from New Jersey to Needham, 287 miles.
Now, this isn’t as bad as Ron Pickett of Telkonet (TKOI), who claimed to be the CEO of the Germantown, Md. company while restoring, living, and entertaining in the Governor Dudley Mansion in Wilmington, NC—385 miles away.
Nor is it another case of Declan Daly, who ran Isolagen out of money—and he was the former CFO!—while trying to run the Exton, Penn.-based company from Ireland (a scenic, 3,166-mile commute).
But after the Telkonet experience, I added another check-off item to my list that the CEO has to be “in the house.” Marucci is only “in the house” part time. I will have to get much more comfortable with this before I change my mind.
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