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Eirx Therapeutics (LSE:ERX) Focus Of The Month

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Overview

Eirx Therapeutics is a Cork-based drug discovery company, focusing on the identification and commercialisation of genomic targets associated with the biological process of programmed cell death (apoptosis). The company has chosen to concentrate on three key therapeutic areas, cancer, chronic inflammatory diseases and neurodegenerative disorders, all of which offer billion dollar market opportunities.

The company was founded in 1999 as a spin-out from Cork University and to date has raised circa 9 million to expand its research and development programs, such that it now employs 12 individuals and has a strong patent portfolio. The most recent funding was a 1.25 million placing, executed in conjunction with an introduction to AIM (Alternative Investment Market) in January 2004. This is the second Irish biotech company to list on AIM, the first being Dublin-based Alltracel, increasing Irelands profile as a centre of biotechnology excellence.

Eirx Therapeutics has currently signed three collaborative agreements and is in negotiations with several other biopharmaceutical companies. In addition, the company has already intimated that it intends to expand the company through a series of strategic acquisitions.



Apoptosis


The term apoptosis was first used in a paper by Kerr, Wyllie, and Currie (Brit J. Cancer 26:239) in 1972 to distinguish a morphologically distinctive form of cell death associated with normal physiology from necrosis, which was associated with acute injury to cells. Apoptosis is characterized by nuclear chromatin condensation, cytoplasmic shrinking, dilated endoplasmic reticulum, and membrane blebbing. Apoptotic death can be triggered by various stimuli, however, not all cells will necessarily die in response to the same stimulus.

Apoptosis is as essential to an organism as cell division. In human development, the selective destruction of cells through apoptosis is responsible for the formation of fingers and toes in a forming foetus and the establishment of neural pathways within the brain. Apoptosis is also necessary for killing cells that would otherwise cause damage to the organism, for example cells infected with viruses.

If the process of apoptosis is in some way defective and these cells are left unchecked, a variety of disorders may ensue. The inability to destroy certain immune cells may lead to autoimmune diseases such as rheumatoid arthritis, multiple sclerosis and insulin dependent diabetes. Cells with DNA damage may become cancerous, or in the case of reproductive cells cause birth defects. Conversely, neurodegenerative disorders, such as Alzheimer's, Parkinson's and Huntington's diseases and stroke are associated with neuronal cell death caused by apoptosis.

Thus, the genes/proteins involved in the various apoptosis pathways are of increasing interest to the pharmaceutical industry as therapeutic targets, either through the use of inducers to initiate apoptosis or inhibitors to prevent apoptosis.


Technology


The structure and function of cells and ultimately of an organism, is dependent on a set of proteins. The protein complement encoded by the entire genome of an organism is referred to as the proteome. Proteins can be classified into various groups including, enzyme which catalyse reactions, antibodies, which are involved in the immune system, and signaling proteins which form complex pathways that mediate intracellular events such as apoptosis. Any mutations, either hereditary or spontaneous, in the genome can lead to the production of defective proteins and/or the incorrect regulation of gene expression, resulting in too much or too little of a protein being produced. Failure to produce the correct level of protein, at the right time and in the right place can have disastrous consequences and have been shown to be the underlying cause of numerous diseases.

Genomic studies have identified a plethora of genes directly and indirectly associated with both cell survival and apoptosis. However, many of these genes are incorrectly implicated in these processes, i.e."guilty by association". In order to eliminate genes associated but not causal to apoptosis, Eirx Therapeutics has developed a proprietary drug target discovery platform - ALIBI, which consists of a series of overlapping assays. By analysing temporal expression (i.e. when a gene is active compared with other apoptosis genes) and looking at the pathways associated with the gene products, Eirx Therapeutics is able to optimise the selection of target candidates. ALIBI is already being used as part of Eirx Therapeutics' research program, but is now being offered to third parties on a fee-for-service basis.



Research Pipeline


It is estimated that 70% of human diseases can be associated with defects in the apoptosis pathways. However, Eirx Therapeutics has chosen to initially focus on cancer, chronic inflammatory diseases and neurodegenerative disorders, as all of these markets offer significant commercial opportunities. Eirx Therapeutics looks to identify both the genes involved in the apoptosis pathway and the genes associated with their expression. The characterisation of these genes may ultimately lead to the diagnosis and treatment/prevention of certain diseases. Of the 15 patent applications filed, 7 are for specific genes associated with cancer or inflammation:





Market Opportunity


As detailed, Eirx Therapeutics main foci are cancer, inflammatory diseases and neurogenerative disorders.

Cancer: The many forms of this disease share a common element, in as much that malignant cells fail to undergo apoptosis, resulting in uncontrolled cell proliferation. The global market for branded cancer drugs was estimated to exceed $14 billion in 2000. This figure is expected to more than double by the end of this decade.

Inflammation: Caspase-1 plays a key role in the generation of two important pro-inflammatory cytokines (IL-1b and IL-18). These cytokines have been shown to be associated with a number of chronic diseases, such as asthma, rheumatoid arthritis (RA), inflammatory bowel disease (IBD) and chronic obstructive pulmonary disease (COPD). In 2000 the global sales of asthma drugs was estimated to be between $7-10 billion, RA - $1.6 billion, IBD - $1 billion, with the treatment of COPD estimated to cost nearly $3 billion per annum.

Neurodegeneration: Conditions associated with premature cell death within the brain include Alzheimers and Parkinsons diseases. Global sales in 2000 for Alzheimers medication were estimated at just over $500 million. As the average age of mortality increases, due to better medication and standards of living, there is likely to be a dramatic increase in this market.

Although by targeting such large therapeutic markets, Eirx Therapeutics is maximising it commercial opportunities, it is still an early-stage company, which will out-license drug development pre-Phase I. Therefore, it would be meaningless to attempt to derive any valuation from the sales figures given above. When making its investment in Eirx Therapeutics, Billam Ag has taken a more realistic approach by evaluating the short to medium term potential of the research pipeline.



Business Model


The main source of revenue for Eirx Therapeutics will be milestone payments associated with out-licensed/partnered compounds. However, to reduce cash burn, Eirx Therapeutics will carry out contract research for third parties.





Commercial Partners


Eirx Therapeutic is currently working with three bio-pharmaceutical companies:


Regen Therapeutics (LSE:RGT) Service contract

SR Pharma (LSE:SPA) Research agreement-click for link to news story

OSI Pharmaceuticals (NASDAQ:OSIP) Currently evaluating several novel oncology targets with the option to license for drug discovery.
To date, the OSI Pharmaceutical deal represents the most exciting opportunity for Eirx Therapeutics, generating upfront access fees, consultancy fees and milestone payments totally up to $4.7 million per target based on successful commercialisation of a novel therapeutic. However, the company is in discussions with several other potential collaborators.

Pharmaceutical companies are increasingly interested in therapeutic agents that directly and selectively target the apoptosis process in humans cells. The table below gives examples of potential drugs undergoing clinical trials at present. The companies detailed can be viewed as competitors. However, given that Eirx Therapeutics are a target discovery company looking to out-license clinical development and the strength of their intellectual property portfolio, we are more inclined to view these companies as potential partners. Therefore, the level of interest in this field is encouraging.



Financial Statements


A summary of the key financial statements for the last 3 years are shown in the tables below:



Major Shareholders


Eirx Pharma is a life science investment company, which adopts a synergistic strategy in order to optimise its portfolio and drive shareholder value. Eirx Therapeutics is represent on the board of Eirx Pharma by and John Pool (Chairman of Eirx Therapeutics) and Peter Hoskins (CEO Eirx Pharma and advisor to Eirx Therapeutics). Shareholders of Eirx Pharma include institutions such as 3i Group, Enterprise Ireland and the University of Cork, as well as several investment companies and private individuals (see pie chart below):

http://www.billamag.net/focus-document-text.asp?FocusTextID=1

http://www.billamag.net/focus-document-text.asp?FocusTextID=1

6th September

Dr Telfer will also present EiRxs research and collaboration activities to an audience of industry executives in Osaka, and attend business partnering meetings with potential alliance partners in Tokyo.

Ethnicity And Cancer Susceptibility
Main Category: Cancer / Oncology News
Article Date: 12 Sep 2006 - 22:00pm (PDT)
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Genetics





Researchers from the UCL Branch of the global Ludwig Institute for Cancer Research (LICR) have uncovered how a genetic variation present in ethnic groups from around the equator may influence cancer susceptibility. The findings published in Nature Genetics have implications for pharmacogenetics, the study of how inherited variations may affect drug metabolism and response, and present a target for future 'designer' cancer therapies.

The p53 tumor-suppressor protein removes damaged cells by a programmed cell death (apoptosis). When the p53 gene is mutated - as it is in approximately half of all human cancers - damaged cells do not die, but rather continue to grow and divide and eventually form a tumor. The two most common polymorphic forms of p53 are p53Pro72 and p53Arg72 and the distribution varies in different ethnic groups. The two forms differ by just one amino acid in the protein sequence. Several years ago, the LICR team discovered that the ability of p53 to control apoptosis is regulated by the ASPP family of proteins.

In this study, the investigators showed that the ASPP family preferentially regulates the p53Pro72 over p53Arg72 form. These results suggest that ASPP protein levels determine cancer susceptibility in people with the p53Pro72 form, the prevalence of which is linked closely to latitude.

According to Professor Xin Lu, the senior author of the study and Director of the LICR Branch, the occurrence of the p53Pro72 form is highest in ethnic populations from around the equator. "It's really interesting to speculate whether the increased exposure to DNA-damaging ultraviolet radiation has resulted in the need for a second level of p53-regulation. The results are important for furthering our understanding of how p53, the tumor suppressor, is regulated, and also offers intriguing hints about how these regulatory mechanisms might have evolved."

While speculations about how the mechanism evolved are largely academic at this stage, Professor Lu says the findings have practical applications for future cancer therapies and the growing field of pharmacogenetics. "It's not hard to imagine a scenario in the future where we might examine the p53 sequence of a cancer patient as part of tailoring an individualized therapeutic strategy. If the patient has p53Pro72, then she might get a specific therapy that alters ASPP protein levels to re-activate p53's anti-cancer function. If the patient has p53Arg72, we know the therapy would be less effective."

http://www.pipelinereview.com/joomla/content/view/6361/104/

Discovery on Target 2006
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Dr. Finbarr Murphy, Managing Director, EiRx Therapeutics Ltd. is attending Discovery on Target 2006 in Boston from October 23-26, 2006 at the World Trade Center, Boston, MA, USA.
Dr. Murphy will take part in the Roundtable Buzz Session on Wednesday 25th and will also speak on "siRNA and the Problem of Getting What You Want" on Thursday 26th @ 11.35am.

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What we want now are upfront payments and a large deal!!

MGI phara results out wednesday news on milestone payment to ERX expected for its trial of ZYC300

MGI Pharma
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http://www.eirx.com/eirx_heading_images/Vaccine%20Antigens%20v2.0.pdf#search=%22mgi%20pharma%20zyc300%22

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