Event – Emisphere drinking in last chance saloon

Analysis

Emisphere Technologies, a company searching long and hard for the holy grail of drug delivery by attempting to develop oral formulations of injectable agents such as insulin and GLP1s, is fast running out of time and money.

After much initial excitement and expectation over Emisphere’s oral technology, its star is on the wane and the last few years have seen a number of clinical setbacks, forcing the company to live hand-to-mouth in terms of financial resources. By the end of the year results from two phase III trials with an oral version of Novartis’ calcitonin agent, Miacalcic, should be released. Given that one phase III study in osteoarthritis with this formulation has already failed, anything less than stellar results will put the Emisphere in a precarious position indeed with only enough cash to last until April 2012.

Tough ask

Emisphere’s Eligen technology has so far been applied to a number of small and large molecule products, including large peptides and proteins, but with limited success, particularly in late-stage clinical trials.

Using inert carrying agents, the main goal is to protect the active molecule from the damaging effects of acid and enzymes in the digestive tract, allowing enough time for the therapeutic agent to be absorbed across the epithelium of the tract.

Emisphere’s own oral formulations of insulin and heparin have been investigated but abandoned due to what Emisphere calls the ‘significant challenges’ in delivering such products via the oral route.

The latest high profile setback occurred in June when long-term partner Novartis informed Emisphere that PTH 1-34, an oral formulation of Eli Lilly’s recombinant osteoporosis drug Forteo (teriparatide), failed to meet several clinical endpoints from a proof-of-concept study, which enrolled post-menopausal women with osteoporosis or osteopaenia.

Emisphere shares fell more than 40% on the news, to $0.96 and close to record low levels.

Shot at redemption

Emisphere and Novartis have been working since 1997 to develop an oral formulation of Novartis’ calcitonin agent, Miacalcic, although the Swiss pharma giant has since passed on the baton of responsibility to Nordic Bioscience.

Referred to as SMC021, results from two phase III trials in osteoarthritis and osteoporosis are due to be release in the fourth quarter. The osteoporosis trial is a three-year study which enrolled 4,500 post-menopausal women and encouragingly the study passed a two-year interim analysis almost a year ago.

In contrast the omens for the osteoarthritis study are less positive. In July 2010 the first trial was halted after a one-year interim analysis of the two-year proposed study showed further treatment would be futile due to a lack of efficacy.

Emisphere shares fell 64% on the day the osteoarthritis trial failure was announced. However, a second study continued in over 1,000 patients with osteoarthritis of the knee, final results from which are also due in the fourth quarter.

Aside from Novartis, Emisphere has another marquee partner in Novo Nordisk, working on oral formulations of Novo’s franchise of insulin products and GLP-1 agonists for diabetes (Novel delivery of GLP-1s a challenge but alternatives lining up, January 13, 2010).

However, these agents represent massive challenges and development of these products is still at a very early stage – an oral GLP-1 candidate, NN9924, is the most advanced in phase I.

Rock and hard place

Emisphere shares have recovered somewhat since the setback in June with oral PTH 1-34, currently trading at $1.50, valuing the New Jersey company at $89m. A respectable market capitalisation in some respects, but not when set against the amount of money Emisphere has ploughed in to developing its Eligen technology.

In the eight years up to and including 2008, Emisphere spent over $210m on R&D, accumulating net losses of over $310m. The clinical setbacks have seen a significant reining in of those costs in the last couple of years, the company spending just $6.5m on R&D in 2009 and 2010 combined.

Having recently raised $7m through a private placement with MHR Fund Management, Emisphere estimates this will only last until April 2012. As such the imminent data from SMC021 is clearly in the ‘make-or-break’ category for Emisphere.

Positive results and new financing opportunities should arise on the back of likely share price gains and milestone payments from its partners Novartis and Nordic Bioscience. Negative results, however, would leave Emisphere teetering on the edge and unlikely to succeed in the quest for its holy grail.

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