Dawn of the Planet of the TLOGlodytes!

by DrKSSMDPhD | December 8, 2014 4:15 pm

DR. KSS LOOKS AT A COMPANY TACKLING HEPATITIS B

[Ed. Note: Dr. KSS writes about medicine and biotech stocks for the Irregulars. His words and opinions are his own, and he has agreed to our trading restrictions.]

Want to see something really cool? A hot video clip from a steamy biotech thriller? Watch this[1]. Better yet, when you pull up the video viewing frame, go to the cogwheel icon in the lower right corner, click on it, and adjust the video speed to slow-mo.

This is some of the best footage you’ll ever come across of cells dying. But they are not casually dying. They are not undergoing necrosis: they are not old, and neither are they injured. The footage is time-lapse, one in which the camera was not recording continuously but grabbing frames at intervals, perhaps every five seconds. Some molecular trigger has horse-whispered to the cells: “For the good of the greater organism, you must now die. Please despatch yourself.” The molecular trigger is not some poison, not some toxin that would kill any cell. It’s probably a protein that knows how to speak in tongues or give a password to the targeted cells, one that means, “You are non-negotiably ordered to commit suicide now.”

(Source: Yale Scientific Magazine)[2]

(Source: Yale Scientific Magazine)

The video is of cells dying by normal apoptosis, and while the footage is sped up somewhat, the overall sense you get from it is not misleading. Compared with necrosis, which can drag into hours, apoptosis is quick…mere minutes. Notice anything else? There is a Dutch-maid tidiness about apoptosis. A necrotic cell, one dying unwillingly, will balloon and swell and degenerate and spew contents everywhere. With apoptosis however, things trash-compact themselves into a wee cluster of vesicle-like blebs, to be snarfed up shortly by macrophage “clean-up” cells. Apoptosis has OCD, and leaves things spic-‘n’-span. If cell necrosis is about cells barfing and diarrheally giving up their enzymes, DNA, RNA and ions in ugly ways that can make the host organism toxic, apoptosis is a commando raid of bloodless stealth.

Apoptosis (people once quarrelled about its “correct” pronunciation, with many physicians pseudointellectualizing that it should be pronounced with a nod to “ptosis,” a clinical term with a silent p. Pronounce it aah-pop-TO-sis.) has been known about for several decades (see this fine full-text paper[3] from 1972) but has only made its way into the consciousness of clinical relevance in the last 15 years. Most biology students are introduced to the nematode Caenorhabditis elegans. In the development of an adult worm, precisely 1090 somatic cells are generated, and at pre-determined timepoints, precisely 131 of those cells die en route to the worm’s maturation. These cells die by apoptosis, and the precision of the dying, and that things happen this way in every single such worm, suggested to scientists something powerfully regulated. John Sulston, Sydney Brenner and H. Robert Horvitz shared the 2002 Nobel Prize in medicine for elucidating the genes in C. elegans that control apoptosis.

The forces behind apoptosis are extremely powerful. An analogy I have used before is a terrorist safehouse with closets stacked to their ceilings with dynamite; you don’t see it, and are unlikely to be aware of it, but every eukaryotic cell has the ordnance to off itself very quickly. Dynamite is an imperfect analogy, however, because it is noisy and messy, while apoptosis is more like a snakes-in-a-can trick in reverse. A cascade of enzymes, called caspases, gets ignited; caspases are proteolytic enzymes and when unleashed, quickly do a lethal hatchet-job on mission-critical cell proteins. Think of the SEAL raid on bin Laden’s Abbottabad compound; the caspases are the SEALS. A brutal set of nucleases is also set loose, and these take the paper-doll-like structures of the chromosomes (the DNA scroll with all the recipes for life) and chop them into laddered fragments of DNA no longer suitable for transcription or replication. Apoptosis is meant to be a quick exit onto a one-way dead-end off-ramp.

I won’t venture into the tricky and very personal terrain of religion except to point out that as long as humans are on earth, we will wonder about the origins of life on this planet. It is the nature of our minds to look for patterns, for explanations, for theories and model systems that explicate. I might venture so far as to say that creation and evolution are hardly worth fighting over because neither excludes the other. But where I am going with this is to hint at the idea that when you meditate on the ramifications of apoptosis, you recognize that, on tenets of Darwinian natural selection, its emergence is almost impossible to explain. Apoptosis has many useful functions and is a very good thing for living systems, but one wonders whether the goodness conferred  by it has to do more with survival of a species rather than of an organism. Darwin can’t get you there. I was thinking on this—about the biological left field from which apoptosis seems to have come— when I mulled the metaphysics of the plot in Ridley Scott’s fine film Prometheus, in which The Designers are, in both senses of the phrase, way out there. I am personally content not knowing where life came from because if you dabble in science long enough, you stumble onto certain Godelian peskinesses: that the data within our purview is inherently not enough to explain itself. Don’t believe me? Read a treatise on the 11 dimensions in string theory. Totally cool with its message? Hamlet proclaims to Rosencrantz and Guildenstern:

“What a piece of work is a man! How noble in reason, how infinite in faculty! In form and moving how express and admirable! In action how like an Angel! in apprehension how like a god!”

In fact, Hamlet was full of it. Our brains cannot even comprehend the basic nature of matter, time, dimensionality  and space around us, so how could those same brains ever possibly sort out the origins of life? Everyone contemplating the meaning of life should have a go at Martin Amis’s Time’s Arrow, a meditation on lives lived in reverse that dazzles because of how effect becomes cause, and vice versa. Despite the Poseidon Adventure that causality then takes on, things are still lovely and symmetric. Don’t be so sure that the convictions and dead-certainties imparted to you by your admittedly admirable brain are utterly Gibraltar-like in their rock-solidness…believe me when I speak for my own brain: I’m not. The only paradigm that ever survives is the one supple enough to encourage paradigm shifts.

The 1991 first edition of Time's Arrow. At once wry and sober. Near-winner of the Man Booker Prize.[4]

The 1991 first edition of Time’s Arrow. At once wry and sober. Near-winner of the Man Booker Prize.

If you read into the above paragraphs that apoptosis is healthy and desirable, you are correct. I think of the program CHKDSK still available in the background of Windows operating systems. Cells are constantly scanning themselves for checksum errors, for registry abnormalities, for fragmented files. While Darwinian organism survival is about whatever helps you make it to reproduce again, apoptosis is meant to be a bomb that goes off anytime the cell, in scanning its hardware and software, comes upon errors that could lead to unbridled perpetual reproduction. Individual cells may want immortality, but immortality disregards the balance of the whole organism. Just like you and I, our individual cells dream of immortality; just as our achieving it be bad for humankind (both the body politic and the collective unconscious), so would their achieving immortality would be bad for the organism.

Any time a single cancer cell breaks away into the blood or lymphatic circulation and succeeds in establishing a malignant metastatic colony, it has done so because it has devised a mechanism for not inciting apoptosis. All cancer cells need many things to succeed: DNA copying itself unbridled, several oncogenes (often unmasked from within chromosomes or created by accidental DNA strand shuffling) that confer paranormal properties on the cell, abundant oxygen and nutrients (all cancer cells are angiogenic, which is why antiangiogenic agents like thalidomide  and  $RHHBY‘s Avastin (bevacizumab) are great anti-cancer drugs), ways to fake out the immune system into thinking all is well, and anti-apoptotic proteins.

You also know that nature makes mistakes, that (for example) it whimsically lets DNA mutate, and so a reasonable question to ask is this: Is apoptosis ever pathological? Do the mechanisms causing it ever go awry and lead to death of healthy cells at the expense of the organism? In fact, one of the main ways HIV causes harm is that it enters T-lymphocytes and triggers wrongful apoptosis, those cells dying off faster than marrow can replenish them. Many things that harm liver, my favorite organ, appear to do so by triggering hepatocyte apoptosis rather than necrosis, and though I could joyously spend the next 10,000 words going into those, that’s well covered in this excellent and recent full-text review[5]. Many biotech investors have speculated that because hepatocyte apoptosis is a prominent part of liver disease from drugs and viruses, that blocking such apoptosis pharmaceutically would be useful; a company called Conatus ($CNAT) is trialling an agent called emricasan, a pan-inhibitor of caspases, for ailing livers. I am always happy to be proven wrong by solid data, but my deepest hunch is that this approach will fail and do not recommend investing in $CNAT. Cancer is a disease of failed apoptosis, and if emricasan hobbles apoptosis it will lead to liver cancer. Canine distemper virus ruins a dog by causing widespread brain cell apoptosis. In fact, a number of neurological and muscular diseases in mammals involve apoptosis, and that includes unusual forms of heart failure.

I think it’s a better biological idea for apoptosis to work when it should and err on the side of working, rather than for it to fail, and for it to err on the side of not working when certain triggers come along. Better to kill some cells and replace them than to rehabilitate ones with possible serious DNA script errors. This is probably why all-cause mortality among vitamin E users is high. Such takers are likelier to die of cancer, and the cancers come about because vitamin E activates the enzyme telomerase. Each time DNA copies itself, it must tear off a coupon, one of the repeating units in the  telomere, at the end of each chromosome. Telomeres are of finite length so that after so many replications, the cell is forced to die by apoptosis. The longer a strand of DNA is around, the more oxidative damage it gets, and the more times the DNA is copied, the likelier errors get introduced (particularly accidental replacement of the nucleotide cytosine (C) by guanine (G)). Most cells apoptose when they reach a so-called Hayflick limit of 30 divisions. Vitamin E allows them to go longer, and so cancer emerges more often.

Question: let’s say the liver donation scene in that old Monty Python film goes awry, and that someone comes along and takes out three-fourths of your liver. What would happen? Would you live or die? (Hint: Greek mythology…that Prometheus dude chained to a rock for giving mankind the gift of fire, and punished by that raptor coming back everyday to the right upper quadrant of his abdomen.) Well, presuming that the liver thief dabbed some of Arch Therapeutics’ ($ARTH) amazing AC5 onto the remaining liver and you do not bleed to death, your full liver mass would regenerate within two weeks after such an escapade, and you’d be none the worse for the adventure. Hepatocytes given the right cues can replicate like mad, and this may be an aspect of why they also are sensitive to apoptosis triggers.

 I once had a wise friend who, every time I would grumble about something, would say, “Well, think of it this way: it’s better than having four fingers on one hand and six on the other and having to go through life explaining to people why you list to the starboard side when you type.” He didn’t know it, but he was joking about apoptosis. In embryogenesis, it helps make sure you have but one nose, but not only one testicle or ovary. A human embryo and a tadpole both have in common that their tails  vanish by apoptosis. In fact apoptosis is so necessary and so vital than 50 billion cells apoptose each day in a normal healthy adult human adult. Each of our cell types replicates at its own rate. Skin and gut lining cells are extremely high turnover; at the opposite extreme is muscle tissue, which is replicatively inert by comparison. Tissues that have exocrine gland structures, like pancreases, prostates, breasts and lungs, have rather high turnover rates. Notice anything there? The higher the turnover of the tissue in question, the greater the number of opportunities for malignancy-conferring errors. Ever known anyone with a muscle cancer? In reading this column this far, you have had more than 100 million apoptotic events in your body, and most of those have saved you from the nefarious plans of cells with cancer potential. This can be placed in context: all told, your body has 37 trillion cells.

Somewhere way out there on the internet a hand is up. Yes?

“Dr. KSS, there are exceptions to everything in nature. As you say, exceptions that prove the rule. Is apoptosis always one-way, or can cells rise again after apoptosis?”

Last year, scientists in the urology department at MD Anderson, Houston, published an amazing paper on so-called “blebbishields.” Just as stem cells give rise to all the cells that make us up, so do cancers come ultimately from hard-to-kill cancer stem cells that hide deep within tumors and resist chemotherapy. CAR-T methodology, by the way, may work wonders in us by killing cancer stem cells. But when biological forces conspire to induce apoptosis in cancer stem cells, those cells can rise from the dead via the formation of so-called blebbishields, discussed in beautiful detail in this recommended full-text paper[6], one that will become quite famous. For cancer stem cells, apoptosis may not mean death. But as far as we know for all other cell types, including non-stem cancer cells, apoptosis is final.

My own bloodline is afflicted with a notorious genetic disorder of pathological, wrongful apoptosis. As we have discussed in prior columns and as we’ll come to again, all cell energy needs are met by mitochondria, small subcellular organelles that are the result of a division of labor eons ago. At some juncture on earth, forerunners of modern day Rickettsia bacteria, such as those that cause Rocky Mountain Spotted Fever, permanently invaded eukaryotic (animal, plant and mushroom) cells. In exchange for providing a steady stream of clean ATP round the clock, they would get shelter, warmth, oxygen and personal nutrients. Eukaryotic cells are now so utterly dependent on mitochondrial function that any time mitochondria sputter (such as in episodes of antibiotic-induced mitochondrial toxicity… see our “Antibiotics Don’t Get No Respect[7]” column), their host cells die by apoptosis. As such, mitochondria are important regulators of apoptosis. Mitochondria lose (or do they shed?) 75 percent of their ATP-making capability in us by the age of 25, and no one knows why or how to offset that, but being able to modulate mitochondrial function would heal many human diseases, including obesity and diabetes. When cells have an energy shortfall they die by apoptosis. How mitochondria negotiate with cells is one very hot field.

My father has three brothers and no sisters. All three of his brothers are completely normal and healthy except for one thing: all are crippled and wheelchair-bound. The cause of this defied the skill of legions of physicians. My uncles began having odd leg weakness symptoms in their forties. There’s nothing wrong with their muscles, but careful clinical characterization showed selective death and dropout of long nerve fibers in their spinal cords that govern their leg muscles. I picked apart their case histories and guessed, correctly, that this had to be from a mitochondrial DNA mutation. We get 99+ percent of our mitochondria from our mothers, but not because they are X-linked. An ovum has 100,000 mitochondria, typically, while a spermatozoa has about 750. The sperm’s mitochondria are in its midpiece, and usually only the head, not the midpiece or tail, is admitted at fertilization. Because of this, there is no chance I can inherit their disease, though there is a distinct chance that my father, as of yet asymptomatic, may come down with it. Because of the mechanism of the disease, it is impossible for any of the children of these men to have it.

Apoptosis from the Greek  ἀπό, roughly “away from,” and πτῶσις, “falling down,” is with living systems to stay. The full word ἀπόπτωσις is a functioning noun in Greece used to refer to flowers shedding petals or leaves deciduously falling from trees. Rather than contemplating it as a good or bad aspect of life, let’s think on useful things it can do. The goal of all interventions on the body is in some way to act on physiological pathways, and either by amping them up or dialing them back, to aid a sufferer. As the viral examples suggest, apoptosis can be a way that the system copes with viruses: if it cannot kill the virus via antibodies, T-cells, macrophages and Toll-like receptor mechanisms, it can then choose to sacrifice cells in which the virus is residing. The body already succeeds in eradicating most cancers before you know about them when those cancers begin meddling with cell processes and accidentally come upon an apoptosis tripwire. As corollaries to these ideas, successful cancers and successful viruses both advance themselves by interfering, by undermining, apoptosis. If you could restore apoptosis in those cells that would be a really great thing. And in fact, many readers here have already invested in treating cancer via apoptosis: Cellceutix ($CTIX) has a lead drug candidate called Kevetrin, an organic small molecule that drives up activity of a gene called p53. When cells take on malignant attributes, p53 is often there to coax them into apoptosis.

A small-cap biotechnology firm called TetraLogic ($TLOG) has been on Stock Gumshoe radar for months, awaiting data that would goad entry into the shares. Why a pharmaceutical company of any consequence would be in Malvern, PA, population about 3000, may make sense when you realize it’s a low-rent, cheaper-house, lower-tax alternative to nearby Philadelphia. Another Malvern biotech is the stuff of an upcoming Stock Gumshoe biotech investing column too.

$TLOG was founded in 2001 by John M. Gill and Mark McKinlay. It went through six debt funding rounds netting $73 million prior to its $50M December 2013 IPO, and investors in those rounds notably included Pfizer ($PFE) and Amgen ($AMGN). In April 2014, TetraLogic acquired Massachusetts firm Shape Pharmaceuticals, developing a topical agent for cutaneous T-cell lymphoma that is now in phase 1.

The single most important event in TetraLogic’s history was probably hiring J. Kevin Buchi, MBA, as CEO in the summer of 2013. Buchi’s background is in synthetic organic chemistry and in accounting. He rose through ranks starting at Cephalon starting in 1991, eventually becoming COO and then CEO, and helming it through a glory era of devising some of the most interesting neuropsychiatric drugs ever seen. Cephalon was acquired by Teva Pharmaceuticals ($TEVA) for $6.8 billion in 2011. Buchi moved to Teva and continued in a vice president role overseeing Cephalon operations for a time. Many view the fact that Buchi didn’t last long at TEVA as a sort of merit badge, in that management at Teva has been famously riven with strife and intrigue.

Buchi is rumored to be impatient. However, after some of the stunning dilatory feet-dragging moves we have witnessed this year in biotech, mostly I think you’ll agree that in early-stage biotech, impatience is virtuous. In one of Poe’s detective stories, two of his protagonists are frustratedly interviewing a witness who claims to know much about a crime, but is beating around the bush.

“”Proceed,’ said I.

“‘Or not,’ said Dupin.”

How many times this year have you wanted to say this to biotech execs? Fish or cut bait! In Apocalypse Now, Kilgore says, “Listen son….you either fight… or surf!”

You can get a feel for Buchi in this broadcast interview[8] from 2013. Buchi serves as a director for Benitec Biopharmaceuticals ($BTEBY, $BNIKF), Forward Pharma A/S ($FWP, a Danish firm whose ADRs went public in October 2014), Stemline Therapeutics ($STML),  and Alexza Pharmaceuticals ($ALXA, being delisted from NASDAQ). Buchi’s Benitec board seat was granted because of the stake he acquired in Benitec shares. Buchi has historically invested in what many would take to be next-generation small biotech companies that are now quite small but have enormous prospects once the street understands the science. He was formerly a director and shareholder at Australian stem cell firm Mesoblast ($MBLTY), one I have repeatedly eschewed as an investment and that has done very poorly, now literally having no large-block shareowners. Buchi is litigating against Mesoblast, one in which the nature of his complaints hasn’t been disclosed.

TetraLogic is NASDAQ-listed. Despite the recent blip in share price has a market capitalization of under $150M. Institutions own half of the shares, and ownership by large block owners accounts for nearly 73 percent of the shares. $PFE owns 11 percent of $TLOG. The single biggest position is the 18.5 percent stake of HealthCare Ventures, LLC. This fund has long positions in two companies discussed favorably at Stock Gumshoe: Radius ($RDUS) and Trevena ($TRVN). Buchi owns 1.3 percent of $TLOG. Of the 22.3 million outstanding $TLOG shares, $AMGN appears to own nearly a million. A review of insider purchases shows heavy buying in December 2013 at the IPO, followed by steady buying beginning in November 2014 of blocks of 2000 to 20000 shares on the open market by officers and directors. Since Buchi’s hiring, he has brought to TetraLogic several of his lieutenants from Cephalon that helped make that company resoundingly successful.

TetraLogic’s hopeful drug is called birinapant, and it may be able to restore healthy apoptosis in unhealthy cells. We’ll come to its potential anti-cancer roles a little later. What particularly excites me here in how this agent could cure hepatitis B (HBV).

HBV global distribution[9]HBV comes up again and again in the threads, but many readers of the columns don’t make it there, and so some overview about HBV is warranted. It’s not necessarily a big problem in the first world, where we vaccinate for it. Despite this, 70 percent of Americans who are HBV-infected are believed to be unaware of it, and many are immigrants or descended from immigrants. Worldwide, at least 350 million people have it in chronic form, most of them vertically infected at birth by their mothers. In trying to find a graphic about global HBV distribution, I rejected many and found one I regard as best (at left). It’s imperfect in the following ways, however: the worst areas for HBV appear to be breakaway ex-Soviet republics such as Turkmenistan, Tajikistan and Kyrgyzstan (15-20 percent prevalence). Also, the far east of Russia proper has high prevalence. As a big fan of Colin Thubron’s memoirs of traveling in Siberia and along the Silk Road, I sometimes found myself wanting to say “Colin, do NOT get injured. Do NOT get a haircut. Do NOT get a toothache.” As the map indicates, China has a massive problem, but we are now in a time when Chinese purchasing power parity is surpassing that of America. China will want to tackle this problem with drugs, such as that from TetraLogic, in the foreseeable future.

genghis khan[10]

Genghis Khan and his marauding hordes likely all had HBV.

The worst-infected on earth may be certain special populations: an acquaintance has passed on data that half of dentists in Mongolia, who do not use sterile technique or instruments, have both HBV and HCV. Many rural parts of Pakistan still have minor operations performed by old-school barbers, and HBV infection rates among them may exceed 50 percent

Of the Big Three viruses that come up (HIV, HCV, HBV), HBV is the most contagious, and also the most long-lived in the environment. It’s a DNA virus; the others are RNA viruses. Whether HIV or HCV is the more contagious depends upon the route of infection under consideration. HBV, however, is easily caught, in fact at least 100 times more readily passed by sexual activity of any sort than HIV is. If you are an American adult too old to have been HBV-vaccinated as a child, you are encouraged to be vaccinated, a series of three shots over six months. Part of the reason for this is that acute HBV is a horrifying illness for which antiviral drugs have no effect and from which serious morbidity is common. I don’t know the aftermath of this terrible episode[11] at a hospital in Swansea in the UK, but while exposure this way to HIV and HCV would carry a “chance,” a <100 percent risk, with HBV it is dead certain that people will succumb.

Surprisingly, 85 percent of the people infected with HBV acutely do manage to clear it, though usually after a jaundicing illness. Of those who seem to clear it, a small percentage have occult HBV and liberate HBV DNA in their blood from time to time. For the 15 percent who don’t clear the virus and stay infected, some are in a state where the immune system struggles against it and abuses the liver over the years in so doing. Others have an “immune tolerant” kind in which their viral DNA levels are extremely high and yet their livers are stone-cold normal….because the immune system doesn’t see the virus as a pathogen. Often these latter patients got HBV at birth, and because the virus and the immune system emerged at the same time, they are on friendly terms.

For the patient now with chronic HBV, what we have to offer are drugs, namely tenofovir and entecavir (first choices), adefovir and telbivudine (second choices), or lamivudine (very cheap but one that HBV quickly resists). Both tenofovir and lamivudine have potent anti-HIV activity. These drugs generally bring HBV DNA levels down to very low levels. Many patients with HBV also have, in their blood, so-called surface (s) and e antigens. Occasionally, these drugs can lead to e antigen clearance and presence of antibody to e antigen. 99 percent of the time, however, they do not lead to clearance of s antigen, and short of that goal, the benefits of treatment are modest. They may clean up your liver somewhat, but cannot prevent the most dreaded of complications and the way HBV commonly kills: development of liver cancer (still one of the top 10 causes of cancer death in the world). HCV can also cause liver cancer, but does so as the end result of ongoing liver damage and repair. If you kill and replace cells enough times, some will stray into malignancy. HBV can lead to liver cancer, however, even in those with absolutely no liver damage on biopsy. HBV rejiggers the hepatocyte genome and can activate cancer genes.

When TetraLogic first floated the idea of using birinapant for HBV, I was skeptical because, like all medical students and physicians in training, I was taught something (many things in fact) now known to be incorrect. We were taught that, on the basis of one form of liver tissue staining that falsely makes all hepatocytes in those with HBV appear to be infected, that all hepatocytes are infected in HBV. My concern was that birinapant would set into motion apoptosis of all hepatocytes in HBV patients, and kill them before they could be considered for transplantation. Spain is always regarded as having the finest hepatologists on earth, and in this at-first-disputed 2003 paper from a Madrid group[12], it seems clear that the correct proportion of HBV-infected hepatocytes is closer to 15-20 percent. Their observations have been validated by subsequent studies. As infectious as HBV is, some force or factor is keeping all the hepatocytes from succumbing, but we don’t (yet?) know what. A good thought question I always present to students and residents is: how much redundancy in liver function is there? How much liver function can you lose before your biology becomes unraveled? The correct answer, that you have to lose at least 80 percent of liver function before your lab tests and clotting times and health start to buckle, shocks many.

Once it becomes chronic, why is HBV so hard to rid? A major part of the problem is that it leaves something like a bathtub ring in infected cells: a piece of so-called covalently-closed circular DNA (cccDNA) that stays around forever, and can act at whim. It sits in cells like an episome or extra chromosome. True eradication of HBV has to mean finding a way to drive out the cccDNA, something no present drug for HBV does (there is no reason that $ARWR’s would), and something TetraLogic is totally capable of doing, by imploding the house where HBV lives.

Some may read this and wonder if, with what I am saying about $TLOG, I am walking back long sentiments on Arrowhead ($ARWR). The answer is no, not at all. No one expects Arrowhead’s present RNAi drug ARC-520, a so-called dynamic polyconjugate that appears to traffic more strongly to liver than Benitec’s AAV8 approach does, to emerge as a single-agent treatment for HBV. Neither will $TLOG’s birinapant become a single agent for HBV; though apoptosis involves DNA laddering, as of yet we don’t know that when birinapant causes an HBV-infected hepatocyte to die that the cell does not liberate infectious HBV.

Thus far, the goal of $ARWR’s trials have been to measure depth and duration of s antigen suppression after a single dose. The relevance of this to its therapeutic future? Nothing can be said from phase 2a (though had surface antigen levels not fallen that would be the death of the drug). The drug is entering a phase 2b study in Hong Kong in which patients will receive recurring doses, probably at one-month intervals while also being on entecavir. This will be among the most closely-watched trains in all of hepatology for the next 12 months, and I intend to keep a long position in $ARWR.

Since we have detoured into hepatitis B, this is a good point at which to make Irregular readers aware of one more little-known biotechnology company that may yet become a contender in HBV. It is not Gilead ($GILD) of course, a fine company and sleeper investment, but one whose collaboration with GlobeImmune ($GBIM) looking at Tarmogens for chronic HBV seems unlikely to succeed. Instead, I am referring to Assembly Biosciences ($ASMB), a $78M New York firm that is the Phoenix from the ashes of Ventrus Biosciences, which went belly-up on a high-profile 2014 phase 3 failure of diltiazem cream for anal fissures. Assembly has IP rights to a unique method for preventing HBV from both assembling and exiting liver cells. Assembly has no trials planned yet, and has provided no new pre-clinical data, but at some point this story, which I follow for all of us, may mature into a good long thesis.

In recent weeks, we have mused about the Ebola outbreak[13] and about Tekmira[14] ($TKMR) at Stock Gumshoe, and have expressed concern that investing in Ebola therapeutics was unwise. A strong reason for feeling that way is that literature watchers know that a certain competing technology called DRACOs, devised at MIT, is out there and likely to be pursued by a company that licenses the method. DRACOs stands for Double-stranded RNA-activated Caspase Oligomerizers. It is an agent that can induce apoptosis in ANY cell infected with nearly any virus, including Ebola, HCV, dengue, MERS….the list is quite long. DRACOs is discussed elegantly in this 2011 paper[15], and could eventually threaten the hegemonies in antiviral therapeutics of many companies, though start-up companies are the likeliest to be “scooped.”

We took a scenic sideroad, but let’s get back to TetraLogic.

Brilliant electron micrograph of mitochondria in eukaryotic cell (nucleus at top left). The rows and rows in the mitochrondria, which evoke the stair-stepped rice paddies of Indonesia, are membrane for generating ATP from glucose and oxygen. They are always yammering with the nucleus, but how?[16]

Brilliant electron micrograph of mitochondria in eukaryotic cell (nucleus at top left). The rows and rows in the mitochrondria, which evoke the stair-stepped rice paddies of Indonesia, are membrane for generating ATP from glucose and oxygen. They are always yammering with the nucleus, but how?

If there is one take-home message from today’s column, it is this, and remember to tell people that you read it first in Stock Gumshoe. The dialogue between the cell and the mitochondria (a tenant of the cell) is one of the least understood and most fertile areas in all of biology. I occasionally dream I am pursuing a second PhD in science because the first one was a happy time, and recently I dreamed I was working on a PhD concerning molecular mechanisms for how the cell nucleus and the mitochondria (one eukaryotic, the other prokaryotic, each speaking languages as different as Korean is from the click language of African bushmen) collaborate to run the cell and thus the organism. TetraLogic is among the very first biotechnology companies in this space, and with the expertise it is acquiring from developing birinapant, it is remarkably well-positioned to do further work devising drugs that achieve better outcomes from cell-and-mitochondria interplay.

Explaining fully how birinapant works is beyond the scope of this forum, but here is the Cliff’s Notes version. Each cell is always arm-wrestling with itself toward or away from apoptosis, and many factors favor one outcome or the other. Successful viruses and cancers learn to raise the apoptosis threshold, to make the apoptosis switch harder to throw. In B-lymphocyte malignancies, for example, an apoptosis-controlling protein called bcl-2 is dysregulated, and as a result those cancerous B-lymphocytes think they have drunk from a Fountain of Youth.

Many virus-infected or malignant cells resist apoptosis via a class of so-called IAPs, inhibitors of apoptosis proteins. The mitochondria emit a protein called SMAC, for second mitochondrial-derived activator of caspases. IAPs block apoptosis, while SMAC makes apoptosis likelier to occur. TetraLogic’s drug birinapant emulates the activity of SMAC. In street parlance, birinapant jams up IAPs and restores normal cell death.

My recently-initiated long position in $TLOG was because I had said before I would invest in it when it got underway a human HBV trial. TetraLogic didn’t divulge that protocol[17] until the last minute and caught some of us flat-footed, but rather than plowing the air and speculatively talking up HBV, they have gone and done it, Buchi style. Here are some highlights about this trial:

(1) For now, it is single-center, in Melbourne, Australia

(2) it is the only phase 1 trial I can recall that features a placebo arm and a randomized double-blind study design. It’s fair to say this study in sentiment is really phase 1/2a, but that also it is constructed and planned in very highbrow fashion. This fact alone raises the quality coefficient of TetraLogic.

(3) the trial seeks 48 patients, and for each patient study duration is only 4 weeks. Data will be coming down the pike, and one should anticipate it sooner rather than later.

(4) the inclusion/exclusion criteria are amazingly reasonable and permissive as compared with other virus  hepatitis trials. This trial will not flame out in excuses for non-enrollment the way that a company we all “love” has. Clearly, Buchi means to “git ‘er done.”

(5) the trial consists of once weekly iv doses of birinapant in ascending quantities, versus placebo

(6) the trial will be in chronic HBV patients already on standard of care (entecavir or tenofovir).

(7) 48 patients at a single center will not be a cakewalk, but given Buchi’s go-get-’em management style, it’s reasonable to think they’ll open further sites if progression is not brisk. Despite what the HBV map shows, Australia has more HBV-infected Asian immigrants than the US does, though the best city for this might be Perth. My concern here is that the study requires patients coming in for weekly infusions, and those will require careful vital-sign monitoring post-infusion. This consumes much site time, and so only a very finite number can be in the active dose phase of the trial at one time.

One way of restating the ultimate goal of HBV therapy, which is permanent eradication of virus for all time, may be to say that we want to kill all hepatocytes that have cccDNA in them. My sole criticism of this first trial in HBV by TetraLogic is that the study does not call for liver biopsies. I strongly suspect that their first full-blown phase 2 will remedy this however. Liver biopsy is the only means of searching for and quantifying cccDNA.

Although birinapant is thought to restore apoptosis only in cells that have become oblivious to it, the single biggest risk is that it may set off unwanted apoptosis. In above paragraphs we discussed the potential liver, neurological, muscular and GI ramifications of this.

I feel we can rest easy in this regard on the basis of two studies that TetraLogic is presenting at the American Society of Hematology meeting in San Francisco during the weekend I am writing this column. Let’s discuss this with due diligence about investing in TetraLogic in mind.

The first study[18] is a single-drug phase 1 study in Penn patients with either myelodysplastic syndrome (MDS) or acute myelogenous leukemia (AML).

Here is a need-to-know executive summary:

(1) useful birinapant maximum-tolerated dose (MTD) data came from this, and this evinces a can-do study design that is in stark distinction to the forever-in-phase-1 approaches of companies like $CTIX and Rexahn ($RNN).

(2) this is a novel trial by a novel mechanism, and many feared that apoptosis genies would be let out of bottles. But it didn’t happen. The main adverse events were one exacerbation of Behcet syndrome (an autoimmune disease), a case of Bell palsy, and reversible rises in the pancreas enzymes amylase and lipase without clinical pancreatitis. Folks this is 1000 times better than it could have been. The median age of study patients is 75…hardly Methuselan, but a somewhat more unpredictable category of patient.

(3) the molecular mechanism by which birinapant works preclinically, which involves IAPs and nuclear factor kappa-B, was confirmed, using sophisticated lab methods, to be going on in recipients.

(4) evidence of clinical activity in the form of falling blast counts (blast are immature malignant white cells) was seen just using birinapant alone. No one expects that it will see clinical use as a single agent. This is auspicious!

The second study[19], run primarily out of MD Anderson’s Leukemia Department, evaluated birinapant in combination with 5-azacytidine in MDS patients who had mostly failed treatment with the latter drug alone. The study is phase 1b/2a, is ongoing, and is mainly here reporting on the phase 1b findings.

Here is what you need to know:

(1) Tumor necrosis factor (TNF) is capable of inducing apoptosis. This is why patients on anti-TNF drugs like Humira and Remicade are at higher lifelong risk of cancer. One of the useful consequences of 5-azacytidine is that it causes elaboration of TNF. As a result, one might expect to see potentiated apoptosis in patients getting both birinapant and 5-azacytidine.

(2) there was evidence of the considerations above taking place in two patients who sloughed skin at 5-azacytidine subcutaneous injection sites. While skin sloughing is not good, it provides a mechanistic confirmation of the potential useful actions of birinapant. 5-Azacytidine will be subsequently given only iv.

(3) Three of 11 evaluable patients have shown early blast count reduction, and the study is ongoing.

(4) the study data as regards adverse and toxic events confirm that toxicity is limited and acceptable for advancing the drug deep into phase 2 and have provided dosing guidance.

(5) this is only an early, preliminary analysis in an ongoing trial likely to next present data at American Society of Clinical Oncology’s 2015 meeting.

While this data is too early to give $TLOG longs reasons to do handstands, the fact that the drug is tolerated and has an effect and that it is working along predicted molecular lines are all strong reasons to be in Tetralogic stock. These data are reasonably the basis of insider buying: they are good data! The data are too early for them to provide graphs and tables, but in picking carefully through these abstracts for problems the investigators or company might be soft-pedalling, I cannot find any.

TetraLogic’s other major study[20] of interest with birinapant is in ovarian cancer. It’s a phase 1b study seeking a total of 40 patients that began enrolling in November 2013. It combines birinapant with conatumumab, a monoclonal developed by Amgen ($AMGN) that tweaks the TNF-activated apoptosis pathway in cancer cells. This study is going on at 9 unnamed sites; from their locations, four are likely in tertiary care centers. This study has eluded attempts to find updates or interim reports, and the development status of conatumumab, seemingly no longer being pursued by Amgen, is unclear.

Birinapant has shown marked activity in one more cancer setting, when combined with irinotecan for metastatic colorectal cancer. Promising early data were presented in this 2013 poster[21]. Marked benefits as compared with historical comparator patients in a phase 3 trial of regorafenib were apparent. The patients studied, however, were so-called “third-line patients” who had failed many prior regimens. Whether TLOG will pursue  colorectal cancer as an indication has not been stated by the company. This trial also bumped into Bell palsy, a facial nerve paralysis, as a consequence of birinapant, something  seen in one patient in the present U. Penn. trial discussed above.

A final point to make about birinapant and cancer therapeutics is that in theory, TNF-associated cancer cell apoptosis may play a role in lung, breast, B-lymphocyte and pancreas cancers in addition to myeloid, colon and ovarian tumors. The molecular biology of the pathways involved is presented in a memorable 2008 paper[22] from the Nature-affiliated journal Oncogene. TetraLogic is pursuing the most promising kinds of cancer first, but may well be able to devise a large franchise in which birinapant becomes an agent used in combination with others to potentiate chemotherapy strongly and enable smaller doses and fewer courses of chemotherapy.

If this were an article at Seeking Alpha, possibly the worst source on the internet for investing advice about speculative biotechs, we’d wrap here, fist-bump and say that Bob’s your uncle and that $TLOG is your stock. And that no further questions need to be asked. But you’re Irregulars and you know better.

TetraLogic is doing good clinical work on a solid science foundation, but science never advances in isolation, and no company or lab or investigator has a monopoly on a good idea. Does TetraLogic have competition? Indeed it does.

Mayo Clinic and National Cancer Institute are trialling in phase 1[23] an oral IAP inhibitor called LCL161. It is being given in combination with cyclophosphamide to multiple myeloma patients. According to this 2014 paper[24], LCL161 is tolerated well enough to advance to later stage trials, but brought about no objective tumor responses. This may be why no company has purchased rights to the drug.

Curis ($CRIS) is a $119M biotech in the same Massachusetts brain-trust belt as Gumshoe favorites Celgene, Agios ($AGIO),  Arch, Cellceutix, and closely-followed Akebia ($AKBA), as well as possible future-fave Zafgen ($ZFGN).

Curis has licensed from Genentech/Roche ($RHHBY) worldwide development and commercialization rights for CUDC-427, an oral inhibitor of IAPs, the same mechanism by which birinapant works. This agent is still in phase 1, however, and has had a bumpy ride. It emerged in June 2014 from a clinical hold placed by the FDA following the death of a recipient from acute liver failure. Curis has reportedly seen complete responses from this agent used alone in both ovarian cancer and in MALT lymphoma, a kind of B-cell lymphoma in the gastrointestinal tract. Curis is now enrolling in a small phase 1 study of patients with solid tumors including lymphoma, operating out of two American non-academic sites. Maximum tolerated dose is being sought, and data are unlikely before 2016. TetraLogic is quite ahead of Curis, and frankly has the superior agent. CUDC-427 is a first-generation SMAC mimetic. Birinapant is a second-generation one, and one that is bivalent, or active at two sites, an attribute that confers greater potency seemingly without greater toxicity. No patient has died on birinapant, something that cannot be said for CUDC-427. SMAC mimetics other than birinapant appear to cause profound fatigue and anergia, and are also significant emesis triggers. Avoiding these ugly aspects of chemotherapy is the whole object of the exercise in fighting cancer by novel pathways.

I’d not mark Curis off the list as an eventual investment. It has one agent marketed under license to Genentech for basal cell carcinoma, and a combined phosphatidylinositol-3 kinase and histone deacetylase inhibitor (CUDC-907) being phase 1-trialled in lymphoma and multiple myeloma. Chatter is that CUDC-907 is promising, and PI3K inhibition promises to have a role in many forms of cancer therapeutics. $CRIS shares appear slightly undervalued here. CEO Ali Fattaey is well-regarded and bought nearly 63,000 $CRIS shares on the open market in August 2014.

This brings us around to another valuation matter, namely that of TetraLogic shares. These shares have traded in a parabolic range since their December 2013 debut. The company lay low through much of 2014, but has now emerged muscular and on steroids with data in cancer and a solid foray into hepatitis B. I review companies constantly for my own portfolio and for Gumshoe readers, and always pay attention to market capitalizations. It’s a subject, intuitive business, but companies that have achieved certain stages in growth and development incur increments in market cap much as houses can be market-valued based on number of bathrooms and presence of a breakfast nook and garage. Shares closed on Friday, 5 December, at $5.95 after a recent run-up brought on by data release, insider buying, the initiation of the HBV study, and perhaps a small rally from buying by Irregulars. Even so, when one thinks of comparable companies, quality of the agent, novelty of the agent, market potential for the agent, and genuine exceptionalism of TetraLogic’s management team, I regard TetraLogic’s market cap as being at no more than 55 percent of where it “should” be.

Before you become a TLOGlodyte, listen to the company’s 10 December 2014 webcast at this link[25]. Investing in companies this size entails risks, and TetraLogic is working in new areas of oncology and infectious disease that should both excite tremendously but also lead to some caution in that no one knows fully what data 2015 will bring for the company. At the company’s present valuation, I regard it as having asymmetrical upside potential: that there is more money to be made being long TetraLogic in the event of good data than there is to be lost if data do not impress. I have deliberately left out presenting the company’s topical agent for cutaneous T-cell lymphoma, which is promising and novel, so as to give you something to do on your own. It works by inhibiting histone deacetylase, a hot corner in biotech for  both neuropsychiatry and oncology. My view  is that it has a good chance of success and that its presence here merely ices the cake for $TLOG.

TLOG has me hopelessly free-associating and remembering a lurid Cheez-Whiz horror film that came to theaters when I was in elementary school, Trog (watch the trailer here[26]). While I’d later realize it was just a schlocky riff on Dan Richter playing “Moonwatcher” in Kubrick’s 2001: A Space Odyssey, I told my parents that I was sure that I’d seen trog(lodytes)s hiding in the hills back in the woods where I rode my banana-seat Schwinn. Now I am grown up enough to know that troglodytes are people who read Seeking Alpha and fritter away money on biotech can’t-lose bamboozles (folks, that’s at least four-fifths of them), while TLOGlodytes are Stock Gumshoe Irregulars who profit by participating and paying attention.

Disclosures: My columns are journalism, not personal investing advice. I have neither sought nor received anything of pecuniary value from any company I have ever discussed or presented in Stock Gumshoe or other media. Of companies mentioned in this column, I have long positions in (alphabetically) Agios $AGIO, Arrowhead $ARWR, Benitec $BTEBY, Cellceutix $CTIX, Celgene $CELG, Gilead $GILD, Pfizer $PFE, TetraLogic $TLOG. I have no short positions or options. In the course of evaluating biotechnology companies for discussion at Stock Gumshoe, I uncover enormous information, and make strenuous efforts to impart all that seems relevant to making an investing decision. However, space considerations and technical complexity mean that not all I know can be presented.

Endnotes:
  1. Watch this: https://www.youtube.com/watch?v=NU0M3uqGCuw
  2. [Image]: http://www.stockgumshoe.com/wp-content/uploads/2014/12/Apoptosis-cartoon.jpg
  3. fine full-text paper: http://www.ncbi.nlm.nih.gov/pmc/articles/PMC2008650/
  4. [Image]: http://www.stockgumshoe.com/wp-content/uploads/2014/12/TimesArrow.jpg
  5. full-text review: http://www.hindawi.com/journals/isrn/2013/740149/
  6. full-text paper: http://www.nature.com/cdd/journal/v20/n3/full/cdd2012140a.html
  7. Antibiotics Don’t Get No Respect: http://www.stockgumshoe.com/2014/04/microblog-antibiotics-dont-get-no-respect-but-you-can-still-profit-from-them/
  8. broadcast interview: https://www.youtube.com/watch?v=jnWgDTf6KEs
  9. [Image]: http://www.stockgumshoe.com/wp-content/uploads/2014/12/HBV-global-distribution.jpg
  10. [Image]: http://www.stockgumshoe.com/wp-content/uploads/2014/12/genghis-khan.jpg
  11. rrible episode: http://www.dailymail.co.uk/health/article-2017332/Woman-dies-300-patients-risk-Hepatitis-B-outbreak-NHS-hospital.html
  12. paper from a Madrid group: http://www.ncbi.nlm.nih.gov/pubmed/12794719
  13. Ebola outbreak: http://www.stockgumshoe.com/2014/10/microblog-ebola-to-parse-perchance-to-parlay/
  14. Tekmira: http://www.stockgumshoe.com/2014/09/microblog-tetchy-on-tekmira-time-to-short-this-rnai-play/
  15. 2011 paper: http://www.plosone.org/article/info%3Adoi%2F10.1371%2Fjournal.pone.0022572
  16. [Image]: http://www.stockgumshoe.com/wp-content/uploads/2014/12/mitochondria-in-cell.jpg
  17. protocol: http://www.clinicaltrials.gov/ct2/show/NCT02288208?term=tetralogic&rank=5
  18. first study: https://ash.confex.com/ash/2014/webprogram/Paper75637.html
  19. second study: https://ash.confex.com/ash/2014/webprogram/Paper68257.html
  20. major study: https://www.clinicaltrials.gov/ct2/show/NCT01940172?term=tetralogic&rank=1
  21. this 2013 poster: http://tetralogicpharma.com/wp-content/wbuploads/wb_publications/Phase%202a%20Birinapant%20+%20Irinotecan%20-%20ASCO%202013%20Poster%20-%20Final.pdf
  22. 2008 paper: http://www.nature.com/onc/journal/v27/n48/full/onc2008298a.html
  23. trialling in phase 1: https://www.clinicaltrials.gov/ct2/show/NCT01955434?term=SMAC&rank=1
  24. 2014 paper: http://jco.ascopubs.org/content/early/2014/08/11/JCO.2013.52.3993.abstract
  25. this link: http://www.veracast.com/webcasts/opco/healthcare2014/88101274489.cfm
  26. here: https://www.youtube.com/watch?v=QEswYNdBR1Y

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