Former Keryx Exec’s Mission: Turn TG Into the Next Pharmacyclics

Seven years running a publicly-traded biotech are likely to give anyone a sense of the manic nature and the volatile ups and downs of drug development. And Mike Weiss, who headed Keryx Pharmaceuticals (NASDAQ: KERX) from 2002 to 2009, has both the scars and the trophies to prove it.

But those lessons have left Weiss with a sharpened idea of how to build a drug company as he dreams of molding his latest venture, cancer drug developer New York-based TG Therapeutics (OTC BB: TGTX), into the next Pharmacyclics (NASDAQ: PCYC) or Infinity Pharmaceuticals (NASDAQ: INFI).

Doing so is no small task, and Weiss is well aware that TG has plenty to prove to put his new company into the same conversation as those two highfliers. Sunnyvale, CA-based Pharmacyclics is one of the most successful biotech stories in recent memory, riding ibrutinib, a blood cancer drug that selectively blocks a molecular target called Bruton’s tyrosine kinase (Btk) to a meteoric rise in value. Pharmacyclics now trades at over $80 per share, with a market capitalization of $5.75 billion. Its stock traded at just $6 per share two years ago. And Cambridge, MA-based Infinity has made its own steep climb, shooting up from just under $6 in 2012 to roughly $40 per share today by advancing a cancer drug targeting the PI3 kinase pathway. But both started out roughly where TG sits today: treating a small number of patients, holding a tiny sample of promising data, carrying a share price of less than $6, and preparing for the most crucial time of its existence.

Mike Weiss, CEO of TG Therapeutics

“If you look back at Infinity and Pharmacyclics, some of their largest appreciation really came in this kind of a year, when they were just really getting enough information to give a confidence level of the activity of their drugs,” Weiss says. “So yes, we’re looking at that model and we’re saying this is a pivotal year in terms of value creation.”

Just how does Weiss believe he can propel TG to such starry heights? By applying the lessons of hard worn biotech experience running New York-based Keryx for seven years, a tenure that included more than its share of highs and lows.

Keryx was in the cellar when Weiss entered the picture in 2002. The company had $15 million to $20 million in cash and investors didn’t consider the company to be worth much more than that. Weiss came in and jettisoned almost all of Keryx’s 75-member workforce, save for then-head of Keryx’s investor relations department in Israel, Ron Bentsur (now the company’s CEO), and a few people in the U.S. doing some clinical work, he says.

Weiss’ plan was to take the drug Keryx already had in development, sulodexide—which it was testing in patients with diabetic nephropathy—and surround it with enough other drug candidates that it could withstand a failure in clinical trials.

Weiss specifically looked for targets in the risky cancer field. So he merged Keryx with Access Oncology, a company making cancer drugs that Weiss founded prior to joining Keryx. One of those drugs was perifosine, a colon cancer treatment that Access Oncology licensed from Zentaris (now known as Aeterna Zentaris) in 2002.

Weiss, however, didn’t bet the company on cancer drugs. Keryx also had a foot in the door in kidney ailments with sulodexide, which treats kidney damage that results from diabetes. Weiss wanted to leverage that drug with something complementary, hoping to one day selling the two in tandem.

Keryx found that opportunity in Taiwan from a company called Panion & BF Biotech, from which it licensed the rights to ferric citrate, a ferric iron-based compound taken orally that could be used to lower phosphate levels for kidney disease patients on dialysis, in 2005. The pull was obvious: Keryx could stack drugs combating kidney disorders while adding something far less risky than anything it had in development. Phosphate binders, after all, were already a proven commodity, as shown by Genzyme’s sevelamer hydrochloride (Renagel) and Shire’s lanthanum carbonate (Fosrenol).

“From the moment we licensed the drug, we knew that it worked,” he says. “Iron binds to phosphorus. You can do it in a test tube, you could do it in a water treatment plant, or you could do it in your gut.”

The deal was an immediate steal for Weiss: Keryx obtained the rights for “several hundred thousand dollars” and roughly a year later Keryx sold just the Japanese commercial rights to the drug to Japan Tabacco and Torii Pharmaceutical for $20 million upfront and another $80 million in milestones, he says. But it was also very fortunate. Sulodexide crashed and burned after flunking a late-stage clinical trial in 2008, and Weiss was out the following year, replaced by interim CEO Michael Tarnok and later Bentsur.

For his part, Weiss claims to be the victim of his own success, in that when he took over Keryx, his goal was to work on multiple companies at one time.

“We started with no market cap and no one cared about the company so I could do whatever I wanted, and when we were a billion dollar market cap, the big large institutions wanted to make sure I was spending my time exclusively on Keryx,” he says.

So Weiss says he focused on getting ferric citrate and perifosine into late-stage trials, but didn’t want to stick around for the next three years to wait for the studies to bear fruit.

“I wanted to build new businesses,” he says. “It was the perfect time for me to exit, [and] it was the perfect opportunity to bring Ron Bentsur back into the company as CEO. So all the stars aligned perfectly for me to exit at a time when no one would care. “

Still, Weiss’ fingerprints are on the current-day Keryx. While perifosine flopped, Keryx’s entire future now rests on ferric citrate, which hit all of its goals in a late-stage clinical trial in January and could win FDA approval later this year.

Weiss, in the meantime, moved onto his next ventures. After setting up a hedge fund, New York-based Opus Point Partners, Weiss stumbled onto a French company called LFB Biotechnologies, which was looking to spin out some of its assets into a new company. In examining LFB’s assets, Weiss found an antibody targeting CD20—a cellular target found on the surface of B-cells—called ublituximab. Much like with phosphate binders, the drug was designed to go down a well-trodden path: Roche/Genentech’s blockbuster cancer drug rituximab (Rituxan) works the same way.

But Weiss was intrigued when he was shown a small patient study of ublituximab consisting of 12 patients with advanced relapsed/refractory chronic lymphocytic leukemia. Of the 12, half of them saw their tumors shrink by more than 50 percent.

“[That’s] pretty remarkable activity, and it certainly doesn’t occur by chance in cancer,” he says. “If we didn’t see the activity that we saw even before we took in this drug, TG wouldn’t exist today.”

Indeed, the drug presented an opportunity for Weiss, who had learned from his previous experiences at Keryx: start with a low-risk asset you are confident will work, and then build a portfolio behind it.

So Weiss pounced. LFB spun out TG and handed it the rights to ublituximab in return for an equity stake, plus royalties and milestones tied to the drug’s success. Weiss then raised $25 million from unspecified investors and reverse-merged the company with a publicly-traded biotech known as Manhattan Pharmaceuticals.

Much like he did when stacking ferric citrate on top of perifosine, Weiss then moved quickly to add a drug he could offer in tandem with ublituximab, specifically searching for either PI3K inhibitors, or Btk inhibitors—both of which scientists say are likely to work in combination with CD20 inhibitors such as ublituximab. Ultimately, TG grabbed the rights to a PI3K inhibitor from Switzerland-based Rhizen Pharmaceuticals in August.

Weiss’ thesis for TG going forward is this: almost all of the patients that take rituximab end up taking something else after the drug stops working. Weiss expects this market, which contains a lot of old generic chemotherapies, to triple over the next 10 to 15 years with the introduction of newer, more effective, and more expensive drugs such as PI3K inhibitors and Btk inhibitors. His plan is for TG’s cancer drugs to find a niche among the several potential treatment cycles after patients stop responding to rituximab. For a small company like TG, even a small portion of that market could change its value dramatically.

“You’re most likely to see an anti-CD20 plus a Btk inhibitor, or an anti-CD20 plus a PI3K inhibitor, than any of those drugs given alone in those third, fourth, and fifth- line settings,” he says. “We hope that every time someone thinks of taking a Btk inhibitor off the shelf, they’re going to pick our anti-CD20.”

The next year will go along way towards proving it. At the American Society of Clinical Oncology’s annual meeting in June, TG will present the data from the early-stage portion of its study of ublitximab in patients with non-Hodgkin’s lymphoma who either haven’t responded to rituximab or have relapsed. TG will release the data from the mid-stage portion of the study at the American Society of Hematology’s yearly meeting in December, as well as early-stage data from a separate study combining the treatment with Celgene’s lenalidomide (Revlimid). In the meantime, it is trying to get as many patients onboard as it can to prove to the world that its drug’s promise is real.

“That’s exactly what Pharmacyclics did, that’s exactly what Infinity has done,” he says. “The more patients you’ve put on, the more confidence you can give around the activity level of your drug, and the valuation increases.”

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