I attended the stockholders meeting today. Here are some highlights.
Paul Freiman opened with a discussion of the history of the company and its core strategy: to in-license products patented by others, to then bring them through the development stage, and finally to partner with a third party to handle the manufacture and marketing. NTII is not a start-up; it is an "old biotech" company, 10-years old. Over that 10-year period it has spent $30 million. That is about 6X its current market capitalization.
Lisa Carr presented the scientific update. Xerecept has some logistical problems. TBI studies are far too costly (and it is difficult to establish statistically significant results because of the heterogenous nature of the patient population) to consider without a cash partner. The current peritumoral brain edema study (phase 2A) is having trouble with enrollment. Only 24 of the contemplated 90 patients have been enrolled. Their supply of clinical grade Xerecept will lose its potency if not used by June 30, 1999, so they cannot afford to enroll any new patients after the first half of 1999. The reason for the slow enrollment is that patients only receive dosing for 2 weeks. Apparently the animal toxicology studies will not, under current FDA guidelines, support dosing for a longer period. The patient population does not want to go through the bother and possibly get their hopes up only to have the drug taken away after a mere two weeks. In the second half of 1999 NTI will analyze the data from the patients enrolling through the first half of 1999 and look for trends. If the data is good, they hope to use it to find a partner for a new peritumoral brain edema study with infants/children (instead of adults). The current treatment for peritumoral brain edema, dexamethasome, has much more serious side effects in infants/children than in adults, so Xerecept's implications for the pediatric population would be optimal.
Now the good news. Based upon Merz's Phase 3 trials in severe Alzheimers dementia and vascular or mixed type dementia, Memantine looks like "a real drug" that has very high odds of proving successful in the current Phase 2 trials for AIDS Dementia Complex. The recurring theme throughout the meeting, and in the question and answer period, was: we have a real drug here, and all we need is a measly $2 million to bridge us through the period of time needed to find a partner for marketing Memantine, after which everything else will be clear sailing. The question and answer period became a brainstorming session with stockholders offering ideas about how to raise $2 to $5 million: e.g., try to get Bloomberg to post news releases; more press releases from the newly hired PR firm (Russell Welch is the name, as I recall), go the the AIDS community and ask them to invest in the company, do a "rights offering" (give existing stockholders an option to buy more shares at a discount and ask Merz to co-invest dollar for dollar with existing stockholders exercising the purchase option). Barry Cohen (Chairman) and Paul Freiman (CEO) assured the stockholders that they would find a way to raise the money and that the existing stockholders would not be sold down the river. Everyone in the room seemed to feel that it would be inconceivable for the company to fail to find the money it needs (at least the $2 million).
Back to Memantine and the Merz severe dementia trials. Lisa Carr stressed that the etiology of the severe dementia (whether Alzheimers or vascular or mixed) did not seem to matter. Across the board, Memantine produced positive results. That is so encouraging for the current AIDS dementia complex trial.
The AIDS dementia complex trial is enrolling patients much faster this time around than it did a year ago. 90 of the 120 patients planned for the trial have been enrolled thus far, and they hope to complete enrollment by March, 1999. The earliest patients enrolling in the trial lobbied for and received an open label extension, allowing them to stay on the drug for 48 weeks. Safety data from past trials do not go past 6 months, so this open label extension should produce important new data. Mike Donnelly, who made a presentation on behalf of the AIDS Clinical Trial Group, felt that the lobbying effort by the early enrollees suggests that they were experiencing a benefit from the drug. He shared with us an anecdote (for which he apologized, because anecdotes are not science) of a friend of his whose dementia, after treatment with Memantine, abated sufficiently to allow him to return to work. Mike said that it is unheard-of for an AIDS patient, once he takes a leave of absence from work due to AIDS dementia complex, to ever return to work. Mike also went out of his way to compliment NTI's management for its cooperation with the AIDS advocates in obtaining the open label extension.
Mike, himself an AIDS victim, suffers from AIDS-related neuropathic pain. He therefore had a personal interest in observing that thus far 60% of the patients enrolled in the Memantine trial suffer from neuropathic pain as well as dementia, so NTI will get a side benefit of good data on the effectiveness Memantine against AIDS-related neuropathic pain.
Lisa Carr also talked about the Phase 2B trial that started October 30,1998, for diabetic neuropathic pain. The Phase 2A trial had tested for efficacy in treating both diabetic neuropathic pain as well as shingles (post herpetic neuralgia). The Phase 2A trial proved negative for shingles, but positive for diabetic pain, with the highest scores in nocturnal pain. In retrospect, the difference in efficacy should not be surprising. Lisa mentioned that another company (unnamed) with an MNDA inhibitor also found positive results in diabetic pain but negative results in post herpetic neuralgia. Apparently the two indiciations have different mechanisms of action.
The Phase 2B trial will use a tablet formulation of Memantine (capsules were used in the Phase 2A trial). The primary end point will be nocturnal pain. The trial schedule contemplates one week for screening, 8 weeks for drug study, and 4 weeks for follow-up.
Freiman concluded the formal presentation (before the Q&A) with a statement of his goals for 1999: (a) complete the diabetic neuropathy trial by year end 1999, (b) complete the AIDS dementia complex trial by year end 1999, (c) raise an extra $1M needed for a new batch of Xerecept so that its trial can be completed notwithstanding the slow enrollment (possibly raising money through grants from SBIR and an Orphan Drug Grant), (d) assist Merz in finding a corporate marketing partner for Memantine, and (e) raise at least $2M to stay in business (current cash won't last much past yearend 1998) long enough to close that partnering deal, or better yet, raise the $5M needed to last through year end 1999. Freiman said that he is in advanced stages of negotiating a marketing partnership with at least four different companies. Closing that marketing partnership is the key. And raising at least $2M is key to closing that deal. Under the deal struck with Merz, both companies share revenues from the various indications of Memantine. A company gets a larger share of revenue from sales for an indication licensed to that company. NTI will thus get a small share of revenues from Memantine sales for Alzheimers, vascular, and mixed type dementia, but a large share of revenues from Memantine shales for AIDS dementia complex and neuropathic pain (and the flipside is true for Merz). Given Merz's recently successful Phase 3 trials in severe dementia, a revenue stream for NTI appears to be near at hand. Remember, Memantine has been marketed in Germany since 1982 (originally for Parkinson's); it has a longstanding history of excellent safety, so it is hard to imagine a major roadblock to getting it approved for Alzheimers, vascular, and mixed type dementia.
Freiman's closing promise was that he will not sell out the existing shareholders. He struck me as a man of integrity. I believe him. |
