Targanta Therapeutics: IPO based
on oritavancin
Targanta Therapeutics has filed for an initial public offering of up to $86.3
million in order to commercialize its antibiotic oritavancin. The big question
for investors will be whether the company is worth the risk given the
checkered past of oritavancin and the fact that certain payments remain
outstanding to the drug's originator, Eli Lilly.
Targanta has worked hard to secure confidence in oritavancin
US biopharmaceutical company Targanta is facing a significant number of
competing candidates in the late stage pipeline for serious bacterial
infections both in terms of pathogen coverage and site of infection:
Methicillin-resistant Staphylococcus aureus (MRSA) and complicated skin and
skin structure infections (cSSSIs) have respectively drawn significant
interest from major antibiotics market players. As the antibiotics market has
become increasingly genericized and restrictions placed on antibiotic usage in
order to curb resistance, serious bacterial infections have afforded these
players a potentially protected market niche.
Targanta has therefore had to work hard in order to secure sufficient
confidence in order to push for its $86.3 million in funding to further its
antibiotic portfolio. The company will be competing for attention against 15
other biotech companies waiting to price their IPOs. With a backdrop of 18
biotech IPOs already this year, bringing in an average of $45.7 million
(according to BioWorld Snapshots), Targanta's expectations may be optimistic,
but it is more likely to be aiming for a high start point, potentially to
offset concerns about its lead candidate's history.
Oritavancin's checkered past largely circumstantial
Oritavancin's checkered past will have raised questions amongst investors
about its commercial potential. Many of these concerns are largely answerable
by the circumstances surrounding the drug's development, rather than being
significantly worrying characteristics of the compound itself. However, as far
back as 2002, InterMune had expected to file an NDA by the end of 2003. This
had been put back until the end of 2004, due to adverse events. The FDA
subsequently stipulated more data due to the inconsistencies in the data.
When Targanta relieved InterMune of the drug in 2005, it intended to spend
three years trialing the drug prior to filing for an NDA in late 2007.
However, this was stalled due to the fact that a change in manufacturer would
require a bio-equivalence phase I trial prior to further development. All of
this will have had an impact on the duration on the proportion of the drug's
lifecycle that remains within the bounds of market exclusivity conferred by
patent protection.
Strong competition and regulatory scrutiny ahead
Furthermore, oritavancin is competing with a significant number of products
already on the market, including the already generic vancomycin, Zyvox (linezolid
from Pfizer) and Cubicin (daptomycin from Cubist) and a number of pipeline
candidates including Theravance's telavancin and Arpida's iclaprim.
Nevertheless, its bacteriocidal activity is impressively rapid, and Targanta
has demonstrated an in vivo activity approximately equal to that of vancomycin
and Synercid. Furthermore, a significant advantage is likely to lie in its
ability to inhibit VRE-caused endocarditis. Uses in these indications as a
monotherapy would be preferable, although a combination use has not been ruled
out.
The key to the drug's success therefore lies firmly in its presentation of
outstanding trial results and its ability to tackle known areas of interest
for regulatory bodies. All efforts are likely to be on reassuring regulators
of the drug's safety. While it has been noted that the adverse events noted in
previous trials had been associated with outsourced drug supplies, regulatory
bodies cannot afford to take the risk that this is not the case.
Targanta may also be timing its IPO in advance of the FDA's decision on
telavancin, slated for later on this year, given that Theravance's telavancin
filing also relies on non-inferiority trials in cSSSI. This is an
industry-wide dilemma regarding the FDA's stance on non-inferiority versus
superiority trials. While Targanta has quoted multiple instances of the FDA
agreeing to the company's appropriate use of non-inferiority trial design,
last year it requested that Replidyne produce superiority data for faropenem
in several indications, while an advisory panel made a similar request of
Oscient Pharmaceuticals Factive (gemifloxacin) in acute bacterial sinusitis.
Assuming oritavancin is approved without the need for further trials,
Targanta's US commercialization plans may also attract some scrutiny. Although
the company's management team of ten comprises five former Lilly executives,
its own hospital directed sales force may need to be complemented by
partnering or licensing deals. Given its royalty commitments to Lilly, this
will reduce its own proportion of revenues further, and accordingly make it
reliant on a subsequent broadening of use through additional indications. The
company has plans for phase II trials for non-hospital use in cSSSIs
(potentially valuable given the increasing number of community acquired MRSA
skin infections), and a phase III trial in bacteremia planned for 2008.
These indications may prove more commercially attractive than its plans for
the anthrax market. On May 24th, 2007, the company released findings from
trial to determine the candidate's potential use in case of anthrax exposure.
There may be a civilian demand for prophylaxis, or indeed post-exposure
prophylaxis in the case of bioterrorist attacks such as those in 2001 when 22
cases of anthrax (including five deaths) were caused by the distribution of
Bacillus anthracis spores via the US Postal Service. However, as with the more
likely military need for such a product, B. anthracis responds effectively to
several widely marketed oral products already available at much lower costs
than a new branded product, and more readily administered than oritavancin's
current intravenous formulation.
Confidence in commercialization plan key to investor support
In summary, Targanta's proposition for funding is relatively strong: it has a
lead compound that demonstrates good potential for use in areas of high unmet
need, and the company has succeeded where its predecessors have failed in
terms of progression through clinical evaluation to regulatory assessment.
However, it will still need to produce an eloquent and thorough evaluation of
trial data to gain the approval of the FDA, which has proved fickle in its
dealings with other companies producing similarly structured trial data as a
foundation for market approval. The company will require a strong
commercialization plan to maximize the drug's potential during its limited
period of market exclusivity, and gain market support.
Related research:
•
Stakeholder Opinions: Nosocomial Infections - The need for new gram-negative
drugs
•
Commercial Insight: Antibacterials - Growth in resistance rates drives niche
indications•
