​What's OBI Pharma Getting For Its Money With Its Purchase of the Rights to Threshold Pharmaceuticals' TH-3424?

Mark Collins  |

OBI Pharma Inc. (4174:TWSE), a Taiwan-based biopharmaceutical company, just announced an agreement with Threshold Pharmaceuticals Inc. (THLD) that will see the former acquire the latter's drug, TH-3424. TH-3424 is a first-in-class small molecule prodrug (a biologically inactive compound which can be metabolized in the body to produce a drug) that selectively targets cancers that overexpress high levels of the enzyme aldo-keto reductase 1c3 (AKR1C3). The drug, TH-3424, will be renamed OBI-3424 by OBI, effective immediately.

Here's a look at the terms of the agreement, the drug in question, and an attempt to figure out what OBI is getting for its money.

OBI-3424 has been evaluated as a potential remedy for treatment-resistant cancers, which correlate with AKR1C3 overexpression; which has been documented in a number of difficult to treat cancers. Firstly, hepatocellular carcinomas (HCC), in which the drug has demonstrated remarkable activity in preclinical models of the ailment, including a model resistant to the standard of care treatment, sorafenib (co-developed and co-marketed by Bayer and Onyx Pharmaceuticals as Nexavar). OBI-3424 will also be tested in castrate-resistant prostate cancer, and the US National Cancer Institute is performing preclinical evaluations for the drugs' use in the potential treatment of T-cell acute lymphoblastic leukemia.

Under the terms of the agreement, Threshold will transfer to OBI its ownership rights, as well as preclinical and manufacturing data for OBI-3424, in exchange a one-time, undisclosed, payment. No further payments or future royalties are required. This deal will permit OBI to obtain not only Threshold's global intellectual property, but also the commercial, developmental, and manufacturing rights to OBI-3424 (excluding a few noted countries in Asia, including China, Japan, and India).

Now, let's dive more into the science behind the condition and the mechanism of action of the drug. As touched on above, cancerous tumors overexpressing AKR1C3 can be resistant to radiation therapy and chemotherapy. OBI-3424 selectively releases a potent DNA cross-linking agent in the presence of AKR1C3. This selective mode of activation distinguishes OBI-3424 from traditional alkylating agents, such as cyclophosphamide and ifosfamide, which are non-selective. So, this means that the drug can potentially treat these resistant cancers and could serve as an effective alternative to the current standard of care treatments in this space.

Another advantage is that individualized patient selection by staining for AKR1C3 overexpression by immunohistochemistry can be performed, to identify patients with other tumor types likely to respond to treatment with the drug, offering the possibility for a streamlined clinical development.

OBI is enthusiastic about its planned applications for the drug: "We will continue the preclinical work and hope that OBI-3424 develops into a solid treatment option for patients with cancers that express AKR1C3," said Amy Huang, general manager at OBI. "This novel cancer therapeutic enhances our pipeline and moves us another step toward becoming a global cancer biopharma company,” she continues.

As for the timeline, the company plans to accelerate the development of OBI-3424, with an Investigational New Drug (IND) application filing with the U.S. Food and Drug Administration (FDA) planned for early 2018. As many readers will know, an IND is the first step in the clinical development process once pre-clinical studies have confirmed proof of concept. An FDA approved IND will allow OBI to carry the drug into human trials and – as these trials unfold – we should see a spate of catalysts hit press rooted in the safety and efficacy of the drug.

As a bit of background on Threshold, back in December 2015, the company was hit by the failure of its lead cancer drug, evofosfamide (TH-302) in two phase 3 trials (trials for which the company was partnered with Merck); and in 2016 a second candidate tarloxotinib flunked a phase 2 proof-of-concept study in skin cancer and was subsequently dropped.

Despite these setbacks, however, Threshold hasn't given up on evofosfamide, as it maintains it saw an improvement in overall survival in Merck's MAESTRO study among a subset of Asian patients. Conversations with Japanese authorities about the possibility of a marketing application based on the data weren’t particularly favorable, however, with the latter mentioned authority concluding that the company needs to conduct another trial (with the goal being to confirm the overall survival benefit that Threshold identified as part of its retrospective analysis of the phase 3 data) if it's going to submit for approval in Japan.

For us, this is a longshot, but the additional trials could serve up some catalysts if the data reads out as indicative of clinical benefit when it hits press.

In a recent SEC filing, Threshold said it had resources on hand for another 12-months or so of operations and was looking at partnering TH-3424 (now OBI-3424) and possibly another early-stage candidate, PET imaging agent HX4, to help fund future development of evofosfamide. The latest development, the OBI offload, represents the first step in this strategy. Now it's all about the PET agent and the future success of evofosfamide in the Japanese market.

By way of a brief look at OBI, the Taiwan-based biopharmaceutical company was established in 2002 with a focus on the development of novel therapeutic agents for unmet medical needs, including cancer and infectious diseases. More generally, and as per the company's marketing spiel, OBI hopes to improve health and the quality of life through innovative and cost-effective therapeutics. The company has pipeline of products built on what's called its carbohydrate synthesis discovery platform and works in close collaboration with research institutes such as Academia Sinica of Taiwan and the Memorial Sloane-Kettering Cancer Center of the US.

The company’s flagship product is Adagloxad Simolenin – formerly known as OBI-822 – which is a first-in-class active immunotherapy for metastatic breast cancer. There's an ongoing Phase 2/3 multinational trial investigating the safety and efficacy of this asset right now, which the company launched in 2011. OBI is also developing next generation immunotherapies for other difficult to treat cancers, such as lung, colorectal, pancreatic, gastric, and ovarian cancers; this being on top of its more recent acquisition of OBI-3424.

The company is listed on Taiwan's GreTai Securities Market Exchange as an Emerging Company. It has established wholly-owned subsidiaries in the US and China and is led by a management team with a track record of success in new drug development and commercialization.

So, to answer the question, what is OBI getting for its money; the company is picking up a preclinical asset that – as yet – is still to demonstrate any real clinical benefit in human studies and – as such – is tough to value at this stage. Sometimes (often) these drugs are promising ex-vivo but the benefit fails to transfer to the clinic when it goes from animals to humans. With that said, preclinical data is strongly indicative of some degree of potential, and while the terms of the deal are undisclosed, there's a good chance OBI picked this one up cheap given that Threshold isn’t in a particularly strong bargaining position – it needs cash to run the trial that is based on retrospective analysis of a failed phase 3.

Bottom line: This is a final roll of the dice for Threshold and an opportunistic acquisition for OBI.

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