Jim Greenwood was feeling bullish when he spoke with The Boston Globe on May 10. The president of the Biotechnology Industry Organization declared that, even though "there will be some attrition" due to the roaring recession, "for the most, (the industry) will survive."

Maybe so, but there remain plenty of troubled players among publicly traded U.S. biotechs. In fact, even Greenwood conceded that about half of these companies are down to their last 12 months in cash. And a May 11 report from Rodman & Renshaw analysts made the point in stark terms by listing 25 biotechs with one month of cash or less. [Three of those - Alseres, Anesiva and Advanced Life Sciences - are companies previously profiled in this feature (¹ Also see "Troubled Biotechs: Intercytex, Vanda, Advanced Life Sciences" - Pink Sheet, 24 February, 2009.).]

The biotech industry continues to generate a bewildering mix of good news and bad news. On April 28, Genaera, which is based in Plymouth Meeting, Pa., and has a market cap of $4.2 million, decided to cease operations and liquidate its assets, roughly $8.1 million in cash, to shareholders.

A week later, however, came the surprise announcement that FDA had approved Vanda's Fanapt (iloperidone). Subject of a July 2008 "complete response" letter from FDA, the atypical antipsychotic won agency approval May 6, greatly improving the fortunes of the Rockville, Md., biotech (² Also see "Vanda’s Fanapt Approval Is FDA U-Turn" - Pink Sheet, 7 May, 2009.).

With its stock trading around $1 on the day of the approval, Vanda since has seen its stock price explode, with shares on May 11 up 21 percent for the day to $10.20. The good news also enabled Vanda to end a shareholder bid by Tang Capital Partners to take control of the company's board of directors.

Most U.S. biotechs, however, remain somewhere between the extremes represented by these two companies. For instance:

Orexigen Therapeutics: This San Diego firm, which is focused on obesity therapies, is playing a game of beat the clock, hoping final data from the last three of its four Phase III trials for Contrave will arrive before it runs out of cash. The plunge in its cash level from the end of 2008 to the end of 2009's first quarter places that scenario in some doubt.

Although Orexigen finished 2008 with $45 million in cash, as well as $41 million in ready-for-sale securities, giving it about $86 million overall, as of March 31, the company's cash level stood at just under $20 million, although it still held nearly $45 million in salable securities, giving it about $64.7 million overall.

The biotech reported a net loss of $19.3 million during the first quarter, with total operating expenses tallying $19.1 million.

Orexigen, which recently hired former Amgen anemia business chief Michael Narachi as president and CEO, noted that expenses decreased by $5.9 million, year over year, due to the gradual winding-down of the Contrave Phase III program. The drug, which is a sustained-release combination of buproprion and naltrexone, met primary endpoints in its NB-302 trial this past January - data from the remaining Phase III studies are expected during the 2009 third quarter (³ Also see "Orexigen Starts Partnership Talks On Obesity Drug Contrave" - Pink Sheet, 13 January, 2009.).

The NB-302 data showed a clean safety profile in addition to meeting statistical significance in weight loss from baseline, but investors were disappointed the results compared with placebo weren't stronger. Rodman & Renshaw notes the biotech has lost exactly half of its market cap over the past year, dropping to $96.7 million.

R&R projected that Orexigen had 14 months worth of cash on hand in its May 11 report, but that estimate was based on cash levels at the end of 2008. In a May 6 note, however, J.P. Morgan analyst Cory Kasimov sounded a more positive refrain, writing that Contrave "confers some important metabolic benefit" and that he expects data from the remaining three trials to be more impressive.

Telik: This Palo Alto, Calif., biotech has $57.3 million in cash on hand, which is estimated to be good for 21 months. But a question remains what the company will do with its money in the wake of the FDA's 2007 clinical hold of Telcyta , an oncologic that was being tested in combination therapy for solid tumors (⁴ Also see "FDA Puts Clinical Hold On Telcyta Following ASCO Presentation" - Pink Sheet, 5 June, 2007.).

More recently, Telik licensed its entire portfolio of five patents for insulin receptor activators to a new company, ReceptorBio, which plans to conduct work in type 2 diabetes (⁵ Also see "ReceptorBio Licenses Telik’s Diabetes Program" - Pink Sheet, 19 August, 2008.). Financial details weren't disclosed, but the biotech maintains the rationale for the sale was to focus solely on oncology.

Telik, however, has not given up entirely on Telcyta, revealing that it will present data for the drug in combo therapy with pegylated liposomal doxorubicin in platinum-refractory or resistant ovarian cancer at the American Society of Clinical Oncology meeting this month.

But during its quarterly earnings call May 7, Telik focused mainly on one clinical candidate, Telintra , now in Phase I or Phase II in four different indications, as well as two preclinical programs. The biotech also said its strategy is to pursue corporate partnerships to help advance Telcyta and Telintra.

Meanwhile, one of Telik's top preclinical programs, TLK58747, a small-molecule cytotoxic that has been developed in both oral and intravenous formulations, might hold the most promise. A novel dual Aurora Kinase/vascular endothelial growth factor receptor (VEGFR) inhibitor, it has shown preclinical activity in leukemia and an ability to penetrate the blood/brain barrier, according to the company.

This may be a rare case of a fairly well-capitalized firm seeking a clear direction - Telik reported a net loss of $7.7 million during the first quarter, with R&D spend totaling only $4.0 million, less than half of what it had spent during first-quarter 2008.

Among small-cap biotechs, Telik suffered one of the steepest market-cap declines in the past week, Rodman & Renshaw reported, falling 17.1 percent to $30.9 million, with shares trading at under $0.60.

Trubion Pharmaceuticals: The future is uncertain, but not necessarily bleak for this Seattle biotech, which remains, for now at least, partnered with Wyeth on two clinical programs, SBI-087, in Phase I for lupus and rheumatoid arthritis, as well as TRU-015, in Phase IIb for RA.

Unlike many biotechs, Trubion, which focuses on developing novel proteins for oncology and autoimmune and inflammatory diseases, enjoys some measure of control over its fate. With Wyeth's recent acquisition by Pfizer, biotechs that have deals with both big pharmas are nervously waiting for the next shoe to drop (⁶ Also see "Who Stays, Who Goes? Tricky Guessing On Wyeth/Pfizer’s Keeper Deals" - Pink Sheet, 9 February, 2009., p. 15).

Under its 2006 collaboration with Wyeth, Trubion holds a "change of control" provision, which would enable it to opt out of its arrangement with the Madison, N.J., drug maker. However, given that Trubion has $44 million on hand and has cut its workforce by one-quarter in February, it seems more likely the biotech will try to leverage that clause into a more lucrative arrangement with Wyeth.

The company announced a net loss of $11.0 million during the first quarter on May 7, a higher loss than expected, Lazard Capital analyst Joel Sendek wrote in a May 8 note. He attributed the higher-than-expected loss to greater manufacturing costs as well as one-time charges related to the headcount reduction.

Trubion anticipates earning between $15 million and $20 million in milestones from Wyeth this year, and has operating cash requirements ranging between $30 million and $35 million. Sendek largely concurs with those estimates, predicting Trubion has enough money to operate into first-quarter 2010. As luck would have it, research support under Wyeth currently is slated to end this December.

-Joseph Haas (j.haas@elsevier.com)

Troubled Biotechs: Orexigen, Telik, Trubion

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