Cytos climbs on allergy data and takeout fantasies

News

Cytos Biotechnology shares surged 23% today after reporting positive results from two phase II allergy trials, raising hopes a licensing partner will be found for the compound, and giving a boost to confidence in the Swiss group's underlying technology.

Some reports suggested that Novartis’ takeout of Speedel contributed to the advance, as the markets took bets on who might be next, with Arpida and Addex Pharmaceuticals also notching up gains. If big pharma is in the market for a biotech at bargain basement prices, now is certainly time to shop around. However, although Cytos holds great potential, its pipeline is still early stage and probably needs to deliver more validating results before potential buyers get their cheque books out.

The results the company announced today confirmed that CYT003-QbG10 is active as a monotherapy, and that that addition of an allergen extract is not necessary for it to be effective in reducing symptoms. The trials were conducted in cat and house dust mite allergies.

Advantages

Encouragingly, in one of the trials CYT003-QbG10 combined with an allergen extract had a worse side effect profile than the monotherapy, which had a side effect profile similar to placebo.

If the drug continues to be successful, it could lead to a product with major advantages over immunotherapy approaches currently on the market, which are based on allergen components and can cause severe side effects. For this reason many products cannot be taken by patients who would benefit most from them, for example those with severe allergies and asthma. A product that can be used in a larger patient population has clear value.

CYT003-QbG10 was developed using Cytos’ Immunodrug platform, which applies immunostimulatory DNA sequences to induce targeted T-cell responses. The company believes it has an allergen independent
mechanism of action, without the need for an adjuvant, whilst holding the potential as a treatment for a broad range of different allergies.

Potential partners

Cytos is now planning a phase IIb study in 300 patients with perennial allergies for the fourth quarter, which should complete a year from now, and a phase IIb in hayfever sufferers next year. It is also developing a QbG10 nasal spray.

Because of the novelty of the product, and its unique mode of action, potential partners are likely to want to see full phase II results before signing up. Novartis, which has already partnered with the company on its nicotine addiction and Alzheimer’s disease projects, is a key name in the frame, although others are likely to take a look if results continue to be promising.

As for a full take out, none of the group’s projects have yet entered phase III, so potential acquisitors will probably be happy to bide their time. Today’s news helped the stock bounce from a two-and-a-half year low, leaving the group with a market value of SFr250m ($245m). Still small fry for supposedly predatory big pharma.

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