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Friday, 01/06/2006 4:05:30 PM

Friday, January 06, 2006 4:05:30 PM

ADH oldie but goodie from the Ottawa Citizen:

[Thanks to marcus_nano on Yahoo.]

http://www.canada.com/ottawacitizen/index.html

>>
Cancer killer:
After its own near-death experience, Ottawa bio firm Adherex shows signs of delivering on its exceptional promise in tackling several forms of cancer.

March 11, 2004
By James Bagnall

Mr. William Peters couldn't quite believe what he was hearing. On a humid, mid-summer morning in 2002, he had been whisked from a downtown hotel to a low-level office complex next door to the General campus of the Ottawa Hospital. The new facility belong to Adherex Technologies, a biotech startup specializing in anti-cancer drugs.

Ottawa native John Brooks and British-born Dr. Robin Norris, the CEO and chief operating officer respectively, took turns explaining the company's technology. Both were slim and wiry. Brooks is a former track star who has kept in shape; Norris likes to climb mountains. This was their first meeting with Peters.

Peters was a difficult guy to impress. The U.S. oncologist and medical professor had pioneered the use of bone marrow transplants as a treatment for breast cancer at North Carolina's Duke University Medical Center. He later ran a key unit of the Detroit Medical Center, which oversees the activities of 14,000 researchers and medical staff. More recently, Peters turned his attention to the private sector where, among other things, he was helping a former Duke colleague evaluate new medical technologies and drugs.

And so he was in Ottawa, wanting to find out if Adherex had something real under its hood. His friend from Duke, Dr. Mark Rogers, was a bio-tech entrepreneur with investments in a string of startups. Rogers had heard that Adherex was not only a potentially good merger candidate for one of his startups, but that it had some unusual anti-cancer drugs under development. He wanted to know more.

Peters was open to new approaches to treating cancer. In Detroit, he had directed cancer care and research at the Barbara Ann Karmanos Cancer Institute. [Peter Karmanos is on ADH’s BoD.] He was expert in a wide range of conventional cancer treatments including radiation, chemotherapy, antibody medicines and surgery. Peters was also familiar with newer remedies such as anti-angiogenesis drugs and vascular targeting agents -- substances that attack a tumour's support mechanisms. Across the globe that year there were probably more than 400 anti-cancer drugs under development by 170 different firms.

But he saw that Adherex was tackling the problem from an unexpected direction. His first report to Rogers was succinct: "These guys have something very interesting," he said.

In fact, Peters wasn't quite sure what Adherex had. When he returned to Detroit, he telephoned colleagues to ask what they had heard about a "cadherin antagonist" -- the basis of Adherex's technology. "The thing that surprised me was that nobody knew about it," says Peters. "But they all said that if it could be done, it was a good idea."

The deeper Peters dug, the more impressed he became. Adherex had developed Exherin, a drug that in effect dissolves the glue that holds cancer blood vessels together. Exherin works by targeting N-Cadherin, a protein responsible for promoting linkages between cells in blood vessels.

Exherin exhibited two remarkable properties.

First, it was capable of killing solid tumours. This alone marked a sharp advance over a class of drugs, angiogenesis inhibitors, which had been pioneered by Harvard University's Dr. Judah Folkmann. Anti-angiogenesis medicines block the development of new blood vessels in tumours but are less effective at destroying the tumour's existing vasculature.

"By the time people walk into the clinic with symptoms," says Peters, "they already have cancers with well-established networks of mature blood vessels."

The second attribute of Exherin was equally interesting. In lab tests, the substance did not appear to affect otherwise healthy tissue. Although normal and tumour blood vessels both contain N-cadherin, Exherin appeared to disrupt only the cancerous vessels. The reason: the blood vessels in the tumour are leaky and inherently less stable.

As a result, Exherin caused few, if any, side effects so common with conventional cancer therapies. On top of everything else, Adherex had compiled an impressive array of patents related to cadherins. This was a company that knew the importance of protecting its findings.

Of course, Peters recognized there was much work to be done. Exherin had not yet entered Stage I [they mean phase-1] clinical trials on humans. Assuming these were successful, subsequent trials, which measure how Exherin interacts with other cancer treatments, could take another four years or so. The company was also developing a number of related compounds and had to sort out which cancers are best treated with which drugs. But Peters was impressed with the potential. "This company has one of the best platforms I have ever seen for fighting cancer," he says. "It's an extraordinarily enabling technology."

Peters had no trouble convincing Rogers that Exherin was worth acquiring. With that conclusion, the American physicians set a course for gaining control of Adherex and, along with it, potentially one of the most remarkable technologies to emerge from a Canadian university.

In August [2002] Rogers proposed merging Adherex with Oxiquant, a one-year-old New York firm with three anti-cancer drugs already in clinical trials. Rogers was Oxiquant's single largest shareholder. Adherex, the publicly-traded firm of the two, would do the acquiring. But the net result of a merger would give each firm control of roughly 50 per cent of the combined shares and seats on the board of directors.

There was never any doubt about who was running the show. By March 2003, Peters had taken over as CEO. Adherex soon opened an operational headquarters in Research Triangle Park in North Carolina, an important technology cluster for the biotech industry. Today, the CEO, chief operating officer and chief financial officer are all based there, and hiring continues apace. Although the company's shares trade only on the Toronto Stock Exchange [it now trades on the Amex too], Peters says Adherex is planning a U.S. listing. He says that the firm's official headquarters remain in Ottawa, but this appears to be a distinction in law only. Adherex has swiftly transformed itself into a de facto U.S. corporation with its eye on a very big prize.

The dispiriting part is, it's hard to see how this story could have turned out differently.

From the beginning, Canada's longstanding weakness in commercializing pharmaceuticals -- moving a discovery from the lab to the market -- has been a terrific obstacle in unlocking the potential of Adherex.

Orest Blaschuk, the soft-spoken cell biologist from McGill University who developed Exherin, understands this reality. For him, this has been a two-decade journey of remarkable peaks and valleys, including sizeable chunks of time when very little happened at all.

Blaschuk learned to love science early. He was born and raised in Winnipeg, the only son of Ukrainian parents who fled Europe at the end of the Second World War. His father, a baker, eventually found a job with a government agency that involved testing the quality of types of wheat. He did it in a very scientific way, conducting experiments by making bread and comparing results. Orest would often accompany his father, using the microscopes to peer into the world of fermented grains.

Blaschuk entered science projects often. One involved plucking a layer of cells from a plant and watching them develop into leaves. Naturally specializing in science, he earned two degrees in Manitoba, completed a doctorate at the University of Toronto and pursued post-doctoral studies at Princeton University in New Jersey. Since earning his masters degree, his specialty was cell adhesion -- the study of what makes cells stick together.

It was an unusual choice. "Very few of us were working on cell adhesion at the time," he says. "People would say 'It's just glue. What's the big deal?'" Many of his colleagues during the 1980s had been seduced by molecular biology - a field of study that was being rocked by exciting developments such as the invention of DNA fingerprinting and techniques for understanding the genes themselves.

But Blaschuk believed that cell adhesion was in some way fundamental. Part of his inspiration came from Malcolm Steinberg, a Princeton professor and Nobel Prize winner who devoted his research to the field of cell adhesion. Of particular interest to Blaschuk was the family of cell adhesion molecules called cadherins, which had been discovered in the early 1980s by Japanese scientist Masatoshi Takeichi, among others. Cadherins were believed crucial to the ability of adjoining cells to link together. The unknown part was which molecule within the protein was involved in the link.

While working at McGill in the late 1980s, Blaschuk had two conceptual breakthroughs. Drawing on his own and others' research, he deduced which part of the cadherin adhesive protein contains the key sequence of molecules involved in linking cells. The second step was to formulate a peptide (a portion of a protein) capable of blocking the linkage. Blaschuk managed the trick with a synthetic peptide containing the amino acid sequence, histidine alanine valine. In short, he had come up with a substance that prevents certain types of cells from linking. However, at this point, Blaschuk was still a long way from developing anti-cancer drugs. In fact, he wouldn't start thinking in this direction until 1995, when he developed Exherin.

Blaschuk's academic effort in the 1980s had been aimed at obtaining a research grant. Without a grant, he wouldn't be able to gain tenure. Astonishingly, his grant application based on cadherin research was initially rejected. "No one had heard of a cadherin," he says, "and no one had heard that a peptide could do these things."

A friendly professor suggested that Blaschuk re-submit his grant application to another committee. This attempt was more successful. However, when Blaschuk made inquiries about patenting the HAV peptide, he was told bluntly to forget about it. As a result, he published his papers on the peptide in 1990 and moved on to other research projects. By 1993, Blaschuk had his tenure but wasn't feeling good about it. "I was doing teaching and research but not feeling fulfilled," he says. "I was too comfortable."

Inspiration struck again and once more, the catalyst was in the U.S. Telios, a California-based startup had developed a series of medicines based on integrin inhibitors. Integrins are a separate class of adhesion molecules that influence the movement of cells. Telios had raised $20 million U.S. in a 1993 public offering. It was pouring the money into developing treatments involving the regeneration of skin and ophthalmic tissues, and a gel for healing burn wounds.

Blaschuk urged his fellow cadherin scientists -- a network of colleagues scattered from North America to Israel -- to help him start a company aimed at developing drugs using their knowledge of cadherins. They responded that they would help, but that Blaschuk had to take the lead. Blaschuk arranged in 1996 to secure a provisional patent for Exherin through McGill, which also served as the company's headquarters. Adherex was supported by $200,000 U.S. in investment capital supplied by a Montreal physician and his Bermuda-based business partner.

It wasn't a very focused enterprise.

In addition to the anti-cancer therapies, Adherex was trying to develop ways of delivering drugs through a skin patch rather than a needle. Cell adhesion has such wide applicability that the young firm even received inquiries from a foreign air force wanting to know if the technology would allow its pilots to react to events at the speed of thought. The application, which involved putting a chip in the pilots' brains, was not pursued. [LOL]

It quickly became clear that developing the various drugs would require serious investment capital. One of Blaschuk's co-founders, McGill chemist Barbara Gour, had a contact in the investment community: a Wood Gundy executive named John Brooks.

Brooks, based in Ottawa, was immediately intrigued by Adherex's technologies. His epiphany came when he saw photos of what Adherex' medicine had done to tumours in mice. Blood vessels within the tumours had started rupturing within 30 minutes. Six hours later the damage to the cancer was extensive.

While not an expert in biochemistry, Brooks did have a degree in physiology and knew many wealthy investors who might be interested in betting on Adherex. In fact, he liked the firm so much, he agreed to serve as its CEO, starting in September 1998. He soon negotiated a 30-year exclusive licence with McGill to develop cell adhesion technology.

The principals moved the company's headquarters to Ottawa in the spring of 1999, in part to accommodate Brooks but also because Gour had relocated here. A number of the firm's early investors, including former top federal bureaucrat Ray Hession and entrepreneur Douglas Tam, were also based in Ottawa.

Brooks raised nearly $20 million through a succession of private placements followed by a $10-million initial public offering in May 2001. He also put a priority on protecting the firm's intellectual property by spending a small fortune on patents. Nearly 30 have been granted to date and there are plans to more than double the base of intellectual property.

But, no matter how promising its lines of research, Adherex burned through cash without any real prospect of generating revenues for years. Nor did Brooks have any decent, hands-on knowledge of the pharmaceutical industry and what it took to take a chemical compound from the lab through several phases of clinical testing. Adherex needed was an executive who better understood the industry.

Brooks moved to address this weakness by commissioning a professional headhunter. The search yielded Robin Norris, the British-born physician who has been immersed in the pharmaceutical industry since 1979, working from large to medium-size drug firms. "I'm very commercially driven," Norris says. When Brooks found him in 2001, Norris was the U.S.-based chief operating officer for PowederJect Pharmaceuticals, a U.K. vaccines firm which was acquired by California-based Chiron Corp. last year for nearly $900 million.

"My first thought is that Adherex had some very interesting technology," Dr. Norris says. "But I also felt that it would have a very hard time of it, operating from a base in Canada."

The problem, he felt, was the lack of supporting infrastructure in Canada. "Most pharma companies in Canada are subsidiaries," he says. "It's the parent companies who move products to commercial production."

Nevertheless, Dr. Norris was ready to try something more entrepreneurial. He signed on as chief operating officer early in 2002.

He was amused to discover that Adherex had had a very tough time getting the formulation right for Exherin, its star anti-cancer compound. When Exherin was injected intravenously, the substance would crystallize and could not be monitored in the blood.

"It's very well known in the industry that you keep peptides stable by shoving them in a sugar solution," he says, "They didn't know that."

The problem had been fixed late in 2001 after Adherex hired Weiping Yu, a California-based researcher with experience in the art of formulating drug solutions. Yu is no longer an employee but Adherex has retained him as a consultant.

The early miscue may have done some financial damage. Adherex had signed a deal in 2000 with BioChem Pharma (subsequently acquired by U.K.-based Shire Pharaceuticals Group) calling for investments of $3.25 million U.S., assuming certain R&D targets were met. When Adherex failed to come up with the Exherin formulation on time, Shire was able to opt out of its obligation.

Norris doesn't see it like that. "Shire just didn't want to be associated with early-stage R&D," he says.

Norris recognized the top priority for Adherex was getting Exherin into a clinical study involving humans. He was quick to line up a manufacturer and other specialists capable of preparing blood and toxicology reports on a consistent basis.

This helped to pave the way for Phase I clinical human trials, which began in December 2002 at the Ottawa Regional Cancer Centre.

By that time, Adherex shareholders had approved the merger with Oxiquant, which had three anti-cancer drugs of its own already in trials. One compound, STS, helps prevent hearing loss in children undergoing certain types of chemotherapy. STS is already in Stage III [phase-3] clinical trials and could soon receive U.S. Food and Drug Administration approval for sale.

“Without the merger, we would have just one product in clinical trials," Norris says. "That's not much of a story for investors."

When the merger was approved in November, Brooks expected to remain as CEO for at least another year, at which point he felt Peters would step in. "I could see the writing on the wall," says Brooks. But things progressed more quickly than he anticipated. Rogers effectively controlled the Adherex board, thanks to support from fellow directors nominated by Oxiquant, and the support of Norris.

Doug Janzen, the Sprott Securities analyst who originally briefed Rogers' analysts about the Adherex opportunity, says a new CEO was vital to the firm's future. "Adherex needed someone with more experience in pharmaceuticals and oncology," says Janzen, the chief financial officer of Vancouver-based Cardiome, a company launched by Rogers.

Brooks disagrees, arguing he always felt comfortable dealing with pharmaceutical executives. But he acknowledges that breaking into the closed world of cancer doctors and researchers was tough. "I did feel a disadvantage there," he says.

Within weeks of shareholders' approval of the merger, Brooks stepped down as Adherex's CEO, which left him to run Cadherin Biomedical Inc., a firm spun out of Adherex. Its focus is using cadherin technology to develop non-cancer applications such as skin patches and medicine aimed at stimulating the growth of nerve cells. Adherex agreed last December to pay $1 million in shares and a 2 per cent royalty on future revenues, to re-acquire the licence for non-cancer related cadherin applications. Shareholders will be asked at the CBI annual meeting on Mar. 18 to approve the transaction.

CBI is a sideshow, however. Adherex's future will be decided on its merits as an anti-cancer company and its ability to break into the U.S. There, connections count. After Peters became CEO in early 2003, he met with company director Ray Hession in the firm's Ottawa offices. Hession recalls describing the difficulties the company had had in becoming known within U.S. cancer testing circles. Peters picked up the phone and connected almost immediately with a key official at the U.S. National Cancer Institute. The result was an announcement last May by the NCI that it had agreed to evaluate the anti-cancer effects of cadherin antogonists.

This came on top of news that Canadian patients were experiencing no side-effects from the use of Exherin in clinical Phase I clinical trials.

In many ways, Adherex was on solid ground. It had four products in clinical trials, its technology was proving out, the firm had a respected CEO and it was becoming known in the U.S.

Just one problem, though. It was quickly running out of money. The firm had less than $2 million cash on hand and was chewing it up quickly. Norris had sacked half the firm's full-time staff, leaving a total of only 14 (although it had access to a network of academic researchers as well). Equally worrisome, Dr. Peters was receiving a lesson of his own. He was lacking a few connections in the financial world that Brooks knew so well.

He began his hunt for fresh investor capital in the first week of March last year [2003]. It began on Sherbrooke Street in Montreal on a day so cold, Dr. Peters says he "wanted to die." What shocked him, though, was the cool reception from Canada's institutional investors. "These guys really had to be convinced," he says. Many venture firms and investment banks were already familiar with Adherex, thanks to its IPO and repeated forays by Brooks to raise money in its early years.

But the company just wasn't playing out that well as an investment story. It had gone public in 2001 at $1.50 per share but was trading well below that during 2003. Much of this decline could be attributed to the fact biotech shares generally were out of favour. Peters of course felt he had a potential blockbuster with Exherin. But many potential investors remembered similar claims made by other anti-cancer drugs, including those based on angiogenesis inhibitors.

Dr. Peters was caught in a bind. Canadian investors were skeptical and risk-averse. Potential U.S. investors were wary of buying into a Canadian biotech firm. They wanted to know when Adherex would begin trading shares on a U.S. exchange.

Finally, Peters' personal contacts paid off. During a marketing presentation in Europe, he ran into Dr. Erich Platzer, a partner with Zurich-based HBM, an advisor to HBM BioVentures (Cayman) Ltd. Platzer was familiar with Peters' earlier work in clinical research and recommended that his company take a look at Adherex.

Back in Canada, Peters caught another break. Luc Marengere, a general partner with Vengrowth, a Toronto-based venture capital firm, had been approached in the fall to assess its interest in making an investment in Adherex. What no one in Adherex knew was that Marengere had been keeping a careful eye on Adherex for years and was therefore ready to move quickly if necessary. He had worked at MDS Capital, which had considered investing in Adherex in the late 1990s but decided the firm needed to mature. Marengere knew and liked Orest Blaschuk. He was also pleasantly surprised by the huge strides that had been made in the company's management and drug development efforts.

"No one can give you a guarantee in this business," says Marengere. "But their approach to clinical testing is based on such a good knowledge of how cadherins work. There are more than 5,000 scientific papers on the subject now."

After giving roughly 70 presentations to dozens of prospective investors, Peters announced a $21.5-million U.S. financing just before last Christmas [2003]. HBM and Vengrowth led the round, which also included an investment by New York-based OrbiMed, an investor with a reputation for making bets on promising but relatively unknown biotech firms.

The new capital should be enough to get Adherex through some key milestones. The results of the Canadian clinical tests will likely be known within weeks. In June, Peters expects to present an abstract about his firm's anti-cancer technology before his peers in New Orleans at the annual meeting of the American Society of Clinical Oncology.

Does Adherex have the wherewithal to produce a magic bullet for killing cancer? Its principals would be the first to say 'no.' "It's very unlikely we'll be able to cure cancer," says Marengere. "It's more likely to be solved using a cocktail of approaches."

In certain tests, for instance, Exherin has been shown to rupture blood vessels that feed into solid tumours, killing cancer cells inside the mass, by depriving them of nutrients. However, parts of the tumour still survive on the periphery. Adherex maintains that this outside ring of cancer tends to be heavily oxygenated, meaning it can be eradicated by smaller doses of conventional anti-cancer therapies such as chemotherapy. Adherex is testing Exherin in combination with chemotherapeutics to determine the optimal amounts of Exherin and the appropriate time to buttress the drug with conventional drugs.

“We've concentrated for many, many years on treating the cancer itself and we haven't solved the problem," says Peters. "We need additional therapies."

Adherex may be able to provide them. Aside from Exherin, the company is preparing a wide variety of potential anti-cancer drugs based on its knowledge of cadherins. At one level, company researchers are developing peptides that may mimic what Exherin does but are potentially more powerful and easier to manufacture. Adherex researchers -- which, aside from fulltime staff include 20 or so academic research groups in Europe and North America -- are also exploring the development of inhibitors of OB-cadherin, a cell adhesion molecule that is thought likely to promote the spread of tumours. Disrupting OB-cadherin activity could prevent metastases.

The atmosphere within the company these days is peculiar. There is a huge amount of caution, perhaps due to the recognition that the hopes of so many cancer victims have been raised -- and dashed -- before. Peters does not intend to become yet another over-enthusiastic promoter of anti-cancer medicines.

He knows there is much that can still go wrong. Peters and his executives have to establish that they can reliably manufacture and market their medicines, not just develop them. As a tiny player in a $20-billion U.S. annual market for cancer drugs, they must ally themselves with the pharmaceutical giants who will likely distribute their drugs, if and when these medicines finally obtain approval for sale. [They now have a collaboration with GSK.]

For investors, there is also the very real risk that current holdings will be substantially diluted in years to come as Adherex seeks more investment capital.

But there is also something profoundly hopeful about what is happening at Adherex, an excitement about the very real possibility that the firm could be on the cusp of something great. The fact that its corporate future will almost certainly play out in the U.S. seems secondary to the bigger picture. This is a Canadian technology that deserves very wide play -- and the new stewards of Adherex have a legitimate shot at making it happen.
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