Zalicus has a second important project that they partnered with Fovea, which was bought by Sanofi-Aventis primary for this program. It is Prednisporin for ophthalmic indications, beginning with allergic conjunctivitis. Sanofi has completed a large Phase II study, and we are waiting for them to announce the results. I expect the data to be very positive, and then Sanofi will spell out its plans to advance to Phase III trials. This is the second reason to buy ZLCS now.
Their third and fourth partnered programs are drug discovery collaborations with Novartis, which exercised an option to continue for a second year, and an early program with Amgen. Zalicus owns a high-throughput drug discovery technology focused on testing combinations of existing approved drugs, and any new combination drugs that come out of these relationships will earn royalties for Zalicus. The Novartis relationship alone calls for $4 million upfront, up to three years of research funding, and up to $58 million in milestone payments per combination drug.
On their own nickel, Zalicus has developed Synavive for immuno-inflammatory diseases, where they have completed multiple Phase II studies. It is essentially a patented, low-dose steroid that avoids the usual side effects, but with an amplified anti-inflammatory effect. The first application is rheumatoid arthritis, where patients eventually advance from oral drugs to expensive injected biologics. Synavive can delay the need to put a patient on a $2,000 a month injectable, with a once-a-day oral drug (much preferred by patients) that has lower toxicity that common steroids.
Synavive has been through many Phase II studies and shown high and sustained efficacy without a single adverse event. The company has planned a Phase IIb study of 250 patients, each dosed for 12 weeks at one of 60 treatment centers around the world. It won’t take long to get the efficacy data, and the company will follow with the one-year safety study that eventually will be required for approval. Zalicus is waiting for FDA feedback on their Phase IIb study design any day, and expects to begin enrolling patients in June. This is a third reason to buy ZLCS today.
The focus of the company today is on ion channel blockers, both calcium and sodium channels, to control pain, a $14 billion market. Z160 is an N-type ion channel blocker for chronic pain that Merck developed under a 2006 license, including Phase I and Phase II trials. Merck discontinued the program and gave the drug back to Zalicus. Zalicus scientists reformulated the drug to dramatically increase bioavailability, and it will be in human clinical trials again by year-end.
Z944 is a T-Type ion channel blocker for chronic and acute pain now in animal toxicology studies, which should be in a Phase I human trial by year-end. The company has numerous other T-type and sodium channel blocker candidates for chronic pain in development.
Zalicus has a very experienced management team. The CEO and EVP-R&D have their names on 14 approved drugs between them. Most biotech managements are lucky to be able to name one drug they developed that made it to market. The company raised $19.2 million in March and April, and had $52.8 million in cash at the end of March, plus $4.1 million raised in April, plus a $20.0 million secured credit facility. They burn about $9 million in cash each quarter, but they think they can fund their operations from cash, royalties and milestone payments into 2014.
I am still confident that between the quarterly announcements of the Exalgo royalty payments, the Sanofi data and Phase III plans for Prednisporin, the Synavive Phase IIb trial commencement, the early clinical trials for their ion channel pain medications, and additional partner announcements for their drug discovery platform that ZLCS will be at $7 a share by the end of 2011.
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