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The Pathway Is the Target


By John Russell

Oct. 10, 2007 |  What if instead of worrying about hitting a specific target to modulate a pathway, you skipped the target part, and aimed directly at the pathway? In essence that’s what seven-year-old Avalon Pharmaceuticals does. Instead of screening compounds against individual targets, it screens them against pathway signatures. Mimic the desirable pathway signature and you have a hit.

Actually, there’s a fair bit more to it than that. Avalon, based in Germantown, Maryland, spent five years and $50-million building a proprietary experimental platform — AvalonRX — to perform high-throughput cell assays and transcriptional profiling. In theory the approach is straightforward and being used by others: treat cells with compounds; collect RNA; and perform qPCR-based transcriptional analysis to identify compounds that reproduce desirable pathway signatures.

The secret sauce is scale, says CEO Kenneth Carter. “There are companies, BioSeek being one, that in one form or another have created a signature database. If you give them one compound or 10 compounds or 30 compounds, they can run it in some sort of a cellular system and compare it to what they have in their database and give you some information about how those compounds are working.”

Citing Avalon’s collaboration with Novartis, Carters says, “The very big difference is the ability to screen 215,000 compounds [for Novartis] and look for signatures you have determined proactively to be signatures that you’re trying to generate with a new drug candidate. This isn’t about taking somebody’s single compound or maybe 20 or 30 compounds and profiling them; it’s about screening for new drugs where people have been unsuccessful in identifying drug candidates.”

Cost reduction is another critical key. “If you wanted to look at, say, even as few as 10 or 20 genes, you’re talking about $100 to $200 per compound that you’re going to try and screen. What we did over about five years is to develop a system in which we made a large number of proprietary modifications, which we hold as trade secrets, in which we have the ability at literally less than fractions of a penny to gain the same information for a large number of genes,” says the Avalon CEO.

“So we don’t look at the whole genome, but we use the whole genome to create a signature. We do studies on the whole genome, we reduce that to a smaller number of genes which can vary, and then we use this proprietary system that costs fractions of what it would cost the average company to start trying to screen 100 or 1,000 or 10,000 or 100,000 or a million compounds. So that’s what the real proprietary advantage is.”

Pipeline Progress
Pursuing this strategy, Avalon mounted an IPO, has raised more than $135 million, moved two cancer programs into early trials, and struck collaborations with Merck, Novartis, MedImmune, ChemDev, and Medarex. The company’s impressive scientific advisory board is chaired by Todd Golub, respected cancer microarray pioneer and founding director of the cancer program at the Broad Institute.

Avalon’s most advanced candidate, AVN944, is an IMPHD (inositol-monophosphate dehydrogenase) inhibitor for hematologic and solid tumor cancers. IMPDH catalyzes a key rate limiting step in de novo purine biosynthesis. AVN944 is reported to be progressing well in a large Phase I clinical trial for the treatment of hematological malignancies and a Phase II trial for the treatment of pancreatic cancer. Phase II trials for AVN944 in hematological malignancies are expected to start in 2008.

Avalon’s pipeline also has a program targeting the Beta Catenin pathway, another well-studied pathway that’s difficult to target. Compounds in this program are undergoing optimization with selection of a lead candidate expected in the coming year. Other pathways being investigated include Aurora/Centrosome, Myc, and Survivin pathways.

“In the beginning we started out to do a combination of going after already well-established but very difficult to address pathways and identifying completely new pathways. We have shifted now because as it turns out, there is so much rich, fertile soil, if you will, in pathways that are already very well validated, but difficult to drug,” says Carter.

Carter has high hopes for his biomarker-based discovery engine. “It would be surprising to me if there is a database of signatures for known cancer drugs and known mechanisms of action that is broader than the AvalonRx database. I can’t emphasize this enough; it is not our business model either to reposition known drugs or to do fee-for-service activities where we take somebody’s drug or compound and tell them some more information. It is our business model to discover new first-in-class drugs, against pathways that everybody agrees are very important.”

Still, Avalon hasn’t shied away from collaborations. A Merck deal, signed this spring, includes $200 million in milestones, “very substantial” royalties, plus the ability for Avalon to move forward on any program that Merck does not. Avalon will screen compounds from Merck’s library to identify and develop inhibitors against an undisclosed target in oncology. Avalon is responsible for the selection of compound families and optimization of those compounds to a preclinical candidate stage. Merck will handle clinical development, regulatory approval, and commercialization.

In July 2006, Avalon struck a drug discovery, development, and commercialization agreement with ChemDiv for small molecule oncology therapeutics. The goal is to discover new active compounds in screens against selected targets and target pathways, which have historically been considered “undruggable.” ChemDiv will provide its discovery outsource services platform, as well as medicinal and synthetic chemistry for the development of new active compounds.

Of the partnerships, Carter says, “Merck can bring a tremendous amount to us in terms of helping us learn the development process and so forth. ChemDiv is the largest source of commercial chemistry libraries. They’ve got a 2 million compound library or so, and they’re going to bring both reagents in the way of existing chemistry and also chemistry support all the way through development process. We’re going to bring all the biology and some of our development expertise and then Avalon will take the lead in actually developing the products out of those.”

The MedImmune collaboration, begun in June 2005, sounds a little more industry standard. Avalon is to identify lead compounds for the discovery of small molecule therapeutics against inflammatory diseases. MedImmune is responsible for preclinical and clinical testing of resulting candidates, and all future development, sales, and marketing activities.

Of Avalon’s four major partnerships, three have substantial downstream opportunity, says Carter. The fourth, with Novartis, is “a very large pilot study in which essentially they paid research support in near-term milestones to the tune of $2.5 to $3 million for a very large experiment to make sure that the technology we have would be able to do some things that they want to consider for a much broader scale potential partnership,” he says.

Publicly Hopeful
Given the high capacity of the Avalon platform, you’d think the temptation to add fee-for-service offerings would be strong. Indeed, Carter agrees that Avalon has the capacity “to do a lot more screening and unique development work.” Nevertheless, he insists, “it would be hard to imagine us ever having more than five or six partners. Frankly, it’ll probably end up being fewer than that, but it’ll be hopefully two or three partners in which we have a very deep and very intellectual property and product-rich partnership.”

So far, investors seem patient. A recent analyst call lasted 28 minutes with barely a snarl. Avalon raised $20 million in a private placement last spring, presumably to help fund its ramping clinical trial activity. Its stock had a rocky first year. The stock price plunged from $10.50 at the September 2005 IPO to under the $3 by September of 2006. It has since climbed back somewhat and was recently trading between $5 and $6.

Carter says, “I think way too much is made of the hassles of being a public company. The opportunities both in terms of the stability the public markets bring at the end of the day, and the ability to create stable financial structures are many times greater in the public markets than they are in the private markets. It also brings a level of sophistication and respect that puts you in a much stronger position in partnering discussions with the larger companies.

“So yeah, the stock is doing fine. We just raised pretty significant capital, and there seems to be a lot of enthusiasm among the major institutional investors for the company,” he says. “I think people understand that the development process takes awhile. I think one thing we have going for us among many of the more platform-oriented companies is that even though we’ve developed a unique proprietary technology, from the beginning we have also understood that at the end of the day, the cash flows from a very successful therapeutic product.”

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