Scouting Turbulence For Opportunity
By Ben Comer, Chief Editor, Life Science Leader
With bad news in the headlines at home and globally, and a seesawing public market capable of wiping years of value from company books almost overnight, it can be difficult to remain focused on the bread-and-butter tasks that keep a company afloat. A rising tide raises all boats, but the opposite isn’t necessarily true: a sinking tide can reveal unseen treasures for people willing to dig them out.
This month’s feature on Rain Therapeutics and CEO Avanish Vellanki offers the first example of an instance where an unexpected change in priorities (outside of the company) led to a desirable outcome. Because of a rigorously defined set of criteria established for the type of precision oncology drugs Rain hopes to develop, and a dogged pursuit of those assets, Rain was able to license its Phase 3 lead clinical candidate, milademetan, from Daiichi Sankyo, after being rebuffed in its initial approach.
Milademetan has a lot of potential upside; the drug’s initial indication in liposarcoma, a rare cancer occurring in fat cells, is modest, but the follow-on trials — in tumor agnostic cancers, among other indications — could expand the relevant patient population dramatically. Rain had looked closely at the drug, performing analyses, and speaking with clinicians, and felt confident about its ability to bring the drug forward for patients. The problem was that Daiichi had come to a similar conclusion and had no reason to part with the asset. That changed when clinical data supporting what would become Enhertu (trastuzumab deruxtecan) rolled in, pushing Daiichi to shift resources in support of a launch. The company reached back out to Vellanki and Rain, remembering the latter company’s diligence and interest, and made the deal quickly.
A second instance of serendipity, from the perspective of KemPharm, at least, was born out of a spectacular stock plunge catalyzed by an FDA Complete Response Letter (CRL). Orphazyme, a Denmark-based company, had been working to develop arimoclomol, a “heat shock protein amplifier” for the rare and fatal Niemann-Pick disease type C. Development had reached the regulatory submission phase, and the drug was already collecting revenue through an early- access program in the U.S., France, and Germany. Upon filing an NDA, however, the FDA balked at “marginal statistical significance,” and “didn’t like the primary analysis … and how Orphazyme handled missing data, which is important in rare disease indications,” says KemPharm President and CEO Travis Mickle.
KemPharm began eying Orphazyme’s arimoclomol asset last May, but at the time, Orphazyme had a market cap of “$400 million or $500 million,” and didn’t have much of a reason to talk to KemPharm, which had a market cap of half that amount. But then the CRL hit, fundraising dried up, and Orphazyme’s stock price took a nosedive, plunging the company into structured bankruptcy. Mickle saw an opportunity and re-engaged, and KemPharm picked up a first-in-class, revenue-generating product for $12.8 million. Arimoclomol is designated as a rare pediatric drug, and if approved, would provide KemPharm with a priority review voucher worth upwards of 10 times the amount it paid for the drug.
There is always a silver lining, if companies are willing to seek it out. Look for the full story on KemPharm in an upcoming issue, and remember to keep an eye out for opportunities, even when it seems like the sky is falling.