One of the distinctions that we at BTA look for in analyzing biotechnology firms is between pipelines (as a reminder, a pipeline is a series of proposed drug candidates) that are all based off of a single system created by the company, and pipelines that involves a variety of different drugs based on entirely different technologies. ChemoCentryx (CCXI) fits into this former category, with an intriguing pipeline that, while jarring at first in its breadth, ultimately offers some interesting possibilities. An eye scan of their pipeline would make one assume that their plan is to tackle as many diseases as possible and solve them all. There is, however, a method behind what at first glance appears to be a chaotic pipeline: the chemoattractant system.
The science
ChemoCentryx focuses its science on a single system or “discovery,” and they have developed numerous drug therapies around this discovery/system. Their targets are autoimmune and inflammatory diseases, the types of conditions that are the result of the immune system misdiagnosing the healthy cells of the body as foreign, unhealthy invaders. The body comes to “attack itself,” in a sense, and the symptoms of autoimmune diseases can be significant, ranging from chronic pain and inflammation to fatality in rare and/or “orphan” diseases (diseases that affect relatively few individuals and for which there is not a large market to create drug solutions). ChemoCentryx believes that a key to solving these diseases is to work on the chemoattractant system through the use of specially-designed chemokines.
What is the chemoattractant system?
The chemoattractant system is a form of chemotaxis, which is defined as the way an organism (like the human body) reacts to chemicals in its system. Chemokines are protein parts of the chemoattractant system that signal the immune system (white bloods cells and T-cells) to the source of an attack on the body. In instances of autoimmune disease, the body wrongly perceives healthy cells to be the source of the attack, and white blood cells follow the chemical direction of chemokines to attack these healthy cells, leading to the chronic pain, inflammation and other systems that are the hallmarks of various autoimmune disorders. While there are a number of diseases present on the ChemoCentryx pipelines, they all have in common this base in that they are autoimmune disorders.
Creating a diversion in the body
How, then, is it possible to tell the body not to attack itself? ChemoCentryx’s proposed solution is to create drugs that will alter the function of specific chemokines in the body so that the immune system is not led to attack healthy cells. This involves two steps: first, the identification, via the company’s drug program, of the specific chemokine receptors that are related to specific autoimmune disorders and diseases. Once these are identified, the company will then use its chemokine drug process to formulate the solution to stop these specific chemokines from identifying healthy cells as chemical “invaders” without hampering the immune system’s ability, as a whole, to counter actual pathogens.
The market
ChemoCentryx is, admittedly, tackling an interesting challenge: to create solutions to a number of orphan and rare diseases that, ordinarily, would be difficult to tackle all at once. Part of the reason why these orphan diseases are so difficult to treat is because companies that pursue solutions may not survive financially to reach FDA approval, given that the market they are trying to tackle is not large relative to the population. What may prove the difference to ChemoCentryx’s probability of success, however, is the fact that the orphan diseases they are tackling are related in their solutions through the chemoattractant system. If the company can survive to formulate its entire process, the relative costs of addressing “the next” disease are reduced from those involved with having to formulate an entirely new process for each new disease the firm tackles. The fact that the firm has on its pipeline proposed solutions to some diseases than are not “orphan” (and thus have larger markets) may prove beneficial in helping the company reach that point of success.
The focus here is on the pipeline as a whole. ChemoCentryx is focusing on a specific science of chemokines/receptors and the chemoattractant system and on the creation of drugs to help solve or mitigate a number autoimmune diseases. Their pipeline consists of drugs mostly between phases 2 and 3, which increases probability of success (as opposed to a pipeline that might consist of only pre-clinical drugs), and we at BTA are excited to see how they turn out.
That’s it for this week’s biotech digest analysis. Remember that, apart from probability of success and marketplace analysis, a key component of any biotech study is an examination of the chance that a company such as ChemoCentryx (CCXI) has enough funds to survive through FDA testing without having to significantly dilute its stock (meaning create more stock to raise money, which makes current stock less valuable). For examples of this type of additional analysis, which we at BTA do for our Monthly Biotech Focus subscription newsletter, you can visit our sample page by visiting http://belltowerassoc.com/biotech-monthly/.
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