The stock chart for Trubion Pharmaceuticals tells an ugly tale this past year. The company had sunk to $4.48 as of yesterday’s close, after selling shares in an initial public offering at $13 in October 2006. Steven Harr, an influential biotech analyst at Morgan Stanley, summed it up in a report in March, saying Trubion “fits into the category of stock we have advised avoiding.” The stock is thinly traded (meaning any big buyers have to bid up the price to get shares), there’s little news coming soon to provide a lift, and the company will probably need more capital in a year or two, Harr said.
It’s been a slide for Trubion, one of the hotter biotech companies in Seattle since it was founded in 2002. The company lured top managers from Seattle-based Immunex, and its backers include Arch Venture Partners, Frazier Healthcare Ventures, and Oxford Bioscience Partners. So I was curious to find out what the company is doing to re-ignite its spark when I stopped by its offices yesterday.
Trubion CEO Peter Thompson was sanguine about the situation, since much of it is out of his control. The company is in the middle of clinical trials that won’t provide an obvious payoff until at least next year. In the meantime, investors are running scared from biotechs like Trubion without moneymaking products, especially with supposedly safer investments like Fannie Mae and Freddie Mac tanking. Plus, Trubion’s lead drug candidate, TRU-015, missed expectations last September when it didn’t blow the doors off Genentech and Biogen Idec’s Rituxan in a study of patients with rheumatoid arthritis. “Enthusiasm is tough to come by in the smallcap biotech space,” says Thompson, an Xconomist. “The trial results will come,” he says. “We are definitely focused on execution this year.”
Here’s where things stand. Trubion’s lead drug, TRU-015, is still in development for rheumatoid arthritis in a collaboration with Madison, NJ-based Wyeth (NYSE: WYE). The results of a 276-patient, placebo-controlled trial showed the drug was about as good as Rituxan was in other studies at reducing the signs and symptoms of rheumatoid arthritis, according to research presented in November at the American College of Rheumatology.
The product has been designed by Trubion scientists to have the same targeting capability of Rituxan against cells with a marker called CD20. But because the Trubion drug is a smaller molecule than Rituxan, it should be better at penetrating deep into tissues like bone marrow and lymph nodes, where it can stop overactive immune system B-cells from causing damage. Ed Clark of the University of Washington, an immunologist and scientific adviser to the company, once called these “leaner and meaner” drugs.
If proven in clinical trials, that has big implications for business and health. An estimated 2 million people in the United States have rheumatoid arthritis, and Rituxan generated $2.3 billion in U.S. sales last year. The Trubion drug appears good enough to win approval for rheumatoid arthritis, and may have an edge over Rituxan because of the need for fewer injections, said Shiv Kapoor, an analyst with Ferris, Baker, Watts, in a note to clients in May. “We believe that investors will be rewarded for their patience once the proper value of TRU-015 and the pipeline are reflected in Trubion’s stock price,” he says.
The stock has come down, Thompson says, because investors expected Trubion and Wyeth to march on with a new Phase III clinical trial, and set a date for submitting an application to the FDA for permission to start selling it in the United States. That didn’t happen. Instead, Trubion started a second Phase II trial of TRU-015 in May, which will compare how patients do on a single dose over a roughly six-month period, versus a repeated dosing schedule. Results from that trial should be available in the second half of 2009, Thompson says. Trubion is also collecting more data from the earlier study from patients who remain on the drug, to see if their arthritis symptoms remain at bay over longer periods of time, without having their immune system B-cells wiped out to the point they become too vulnerable to infections.
If those studies go well, Trubion and Wyeth will be able to move on with a Phase III program that could provide enough data to win FDA approval, Thompson says. Trubion isn’t saying how long it will be before it applies for FDA clearance, but he didn’t correct me when I said it sounds like they could do it in late 2010 or early 2011.
Thompson mentioned two other drugs Trubion has in early stages of human testing. Both of them, TRU-016 and SBI-087, are expected to generate clinical trial results in 2009, he says. It’s a busy time inside Trubion, but it sounds like it’s going to be a few more quarters before investors will tune back in to this story.
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