From GS Report:
TLRK discussed plans to 1)discontinue development of T611 for
cytomegalovirus infection, 2)to stop funding of cancer agent T64, which the
company has been planning to license out and 3)the formation of a new
partnership with Sankyo for the development of candidates that address
GCPR receptors. Plans to begin Phase 3 studies with cancer agent T67 are
on track. We believe that the most promising programs have yet to enter
clinical studies and look for IND filings on 2-3 new, potential first in class
targets in 2002. We maintain our MO rating for l.t. investors.
TLRK discussed plans to 1)discontinue development of T611 for
cytomegalovirus infection, 2)to stop funding of cancer agent T64, which the
company has been planning to license out and 3)the formation of a new
partnership with Sankyo for the development of candidates that address GPCR
receptors. Plans to begin Phase 3 studies with cancer agent T67 are on
track for H1 03. We believe that the most promising programs have yet to
enter clinical studies and look for IND filings on 2-3 new, potential first
in class targets in 2002. We maintain our MO rating for long-term.
investors.
I.INVESTMENT OPINION & OUTLOOK
Tularik is focused on developing novel oral agents to address multiple
diseases that represent large commercial opportunities. While the pipeline
is at an early stage, many candidates in preclinical development may
represent first in class drugs. While we do not expect all candidates to be
successful, only a few candidates need to be successful in order to create
significant commercial value, long-term. With a market cap approximating
$350 million, roughly 1.7X net cash, we believe that Tularik is trading at
an attractive valuation for long-term oriented investors.
II. CLINICAL DEVELOPMENT PROGRAMS
** Oncology **
Tularik’s most advanced programs are in the oncology field. Phase II
studies have been conducted for T67, a non-reversible beta tubilin binder
with low resistance potential, developed in house.
At the American Society of Clinical Oncology, data were presented from a
Phase II study of T67 in patients with unresectable hepatocellular
carcinoma as first or second line therapy. Because T67 is metabolized by
the liver, it is thought that this may be a potential indication. Dosing in
the study was low, 165mg/m2, administered intravenously every week. Partial
responses were observed in 3/34 first line patients and one second line
patient. Stable disease was reported in 38% and 24% of first and second
line treated patients respectively. A reduction in alpha fetoprotein, a
marker for hepatocellular cancer, was observed in 19% of patients. We
believe that the data suggest that additional studies, at higher doses, are
warranted to better assess the potential of T67 to address hepatocellular
cancer.
Tularik has announced its intent to pursue Phase III studies with T67 as
well as to perform additional trials designed to assess pharmacokinetics,
higher dosing, and the effects of a shorter infusion times, to optimize the
dose for Phase III studies. The company hopes to meet with the FDA in the
third quarter to discuss the Phase III study design.
Although the total market for similar anticancer compounds exceeds $2
billion, we have not factored potential revenues into our model because of
the early development stage of the candidates.
Behind T67, Tularik is studying T607, an analog of T67 designed not to
cross the blood brain barrier, in cancer. The company has selected a dosing
regimen for Phase II studies in hepatocellular carcinoma, non-Hodgkin’s
lymphoma, gastric/esophageal cancer, and ovarian cancer. Phase II studies
are expected to begin this quarter.
T64 - seeking partner
Tularik has been planning to establish a partner for the development of
T64, an antifolate compound licensed from Eli Lilly. Tularik plans to
complete Phase II studies with T64 as first line therapy for non-small cell
lung cancer, and plans are underway for second line therapy.
** Infectious disease **
Dropping T611, a disappointment, but better to cut losses early
Tularik has decided to discontinue development of T611, citing the likely
need for additional formulation work, not justified by the commercial
opportunity. T611 had been in development for the treatment and potential
prophylaxis of cytomegalovirus (CMV). The global market for CMV
therapeutics approximates $150-200 million.
III. Preclinical programs - 2-3 new INDS in 2002
In 2002, Tularik hopes to file two to three new INDs and one to two INDs
per year thereafter. The company has currently selected five oral compounds
as advanced preclinical candidates. At the presentation, Tularik provided a
bit more detail on the characteristics of leads. Two candidates target
immunological/inflammatory disorders. T6487 has shown preclinical activity
in transplant rejection and T6204, which targets the IL-1/TNF pathway, has
shown preclinical efficacy in animal models of ulcerative colitis and
collagen-induced arthritis. Three candidates target metabolic disorders.
T659 is an oral agent, which increases HDL cholesterol, T792 is an oral
agent that acts through the central nervous system to effect weight loss.
Additional leads have been identified with potential application in
diabetes. They target the PPAR gamma receptor, the same target as the
glitizone class of diabetes drugs. Candidates in development may obviate
the fluid retention and weight gain side effects commonly associated with
this class.
IV. SANKYO PARTNERSHIP
Tularik formed a collaboration with Sankyo to develop therapeutics that act
on orphan G-protein coupled receptors (GCPRs). These are membrane bound
receptors that have diverse biological functions. Tularik will receive an
undisclosed cash payment. After one year, Sankyo will have the option to
select up to 5 targets for further development. The companies will share
development costs and potential profits on these compounds in the U.S. and
Europe, and Tularik is entitled to milestone and royalty payments for
potential commercialization outside these territories.
2002 Milestones
- Announce new pharmaceutical alliances
- File up to 3 INDs in 2002, potentially 1-2 each year going forward
H1
* Initiate additional Phase II studies of T611
* Initiate Phase II studies with T607
* Present Phase II results for T67 (ASCO, May)
* Present Phase II results for T64 (ASCO, May)
* Present Phase I results for T607 (ASCO, May)
H2
- Two new IND filings
- Initiate Phase III T67
* = Milestone attained |
