Failure of biotech drug company, Telik, is striking

December 27, 2006 | Matt Marshall | Comments | |

teliklogo.bmpTelik, the Palo Alto biotech company, is a striking example of the sort of monstrous results our ecosystem in Silicon Valley can produce.

Just three years ago, Telik was hailed as one of the country’s most promising biotech stocks. But Tuesday, it lost nearly 71 percent of its market value when studies show its anti-cancer drug offers little benefit. See Mercury News story for summary.

How could this company, founded in 1988, have worked so long, gone public in 2000 and reached a stock value of more than $1 billion based only on promises? How could the company justify paying its chief executive a million dollars a year in the meantime? Why do public investors invest in a company losing $76 million a year, and getting deeper in red each year, when there is still no proof a drug actually works? Well, the answer is because our system is built on risk and faith, and that if investors are willing to bet on these companies — which presumably are bringing promising products to market — then they should have a right to do so. The logic: For every failure, there is supposedly a success.

It’s too early, however, to tell whether the stock gains from successful biotech companies will outweigh the losses of those that fail. We do know that investors had become more trusting. We looked at the reasons why in our report on Threshold Pharma, which saw its stock plunge when something similar happened. If there are more cases like Telik, younger biotech companies may have a harder time going public.

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About the Author, Matt Marshall

Matt Marshall is editor and CEO of VentureBeat. Follow him on Twitter at @mmarshall, and follow VentureBeat on Twitter at @venturebeat.

  • It's probably due to the side effects of the Web 2.0 bubble

    http://online.wsj.com/public/article/SB11667984...

    :)
  • I'll say it again.

    Adherex Technology in Durham NC (spin off of McGill University and initially in Ottawa) is sitting on the cusp of TWO large advances in cancer therapy improvements.

    1 - is based on the application of novel cadherin(cell adhesion) antagonists, which seem to take care of the cancer tissue normal chemo does not get to (ie combo therapy is so promising that there was evidence of notable reversal against the otherwise intractable Melanoma, aside from defeating cancers of esophegous and lung and pancreas to name a few, that seem to succumb to its powers.

    Data was of ADH-1 in preclinical combo trials, after no side effects of note were seen with no upper dose limit in Phase 1 of monotherapy of ADH-1 cadherin antagonist + unusual promising tumor shrinkage results seen in P2 monotherapy)

    Plus the firm inlicensed a P3 failed GSK combo that was trying to make the common 5FU chemo orally administerable, but was screwed up at GSK in P3 by their marketing team's insistence in reversing proper ratios of 5FU to Eniluracil.
    (GDK did not understand the technical significance of their decision obviously)

    Adherex's brilliant experienced pharma medical team (Duke and Dana Farber) ID'd a probable cause in the negotiations (to themselves) and proved their theory in 4 months to demonstrate a fix to GSK's 5FU/Eniluracil combo failure (in a mouse model).

    Both combo drugs - ADH combo and 5FU/ Eniluracil represent large potential advances in cancer prognosis -

    1] ADH-1 combo takes tumor destruction beyond the typical failures/ limits of more conventional chemo by attacking the n-cadherin marked soft tumor tissue that conventional chemo misses. YES MISSES. ADH-1 kills n-cad market tumor tissue DEAD.

    ADH-1 selectively melts the n-cadherin marked tumor vasculature by selectively and safely destroying the n-cad.. marked tumor blood vessel cell adhesion with no adverse effects on the rest of the body. NONE. Safely matabolized in 4 hours and yes the n-cad vasculature melts in ~30 minutes...

    Properly optimized 5FU/Eniluracil will provide both IP protection of the combo of an older effective conventional chemo, simplify chemo treatment with migration of IV 5FU migrated to orally administerable 5FU/ Eniluracil and improve effectiveness of 5FU overall by modifying the lifetime of 5FU in the body with fewer side effects.

    The real promise of Adherex is in ADH-1 and cadherin cell adhesion chemistry applied to cancer pharmaceuticals.

    Not that Adherex is a flash in the pan but the firm has over 40 issued patents in the area of cadherin related treatments. The real sleeper is an Adherex cadherin chemistry that may well inhibit tumor metastasis, the real killer of cancer disease.

    Folks can moan about failures in pharma efforts, and point to the need of more complicated technology to discover new pharamaceuticals.

    I'll point out that ADH-1 n-cadherin antagonist is normally produced in human tissue, and the observation of the significance it might hold was found by a careful methodical and curious experimental biologist. Hardly a high cost research effort in the basic science of ADH-1.

    I will also point out that similar careful experiment has recently led a very modestly funded research group in Toronto to discover a means to REVERSE diabetes with some rather simple chemistry, and again found by careful observation, no high falutin overkill automated lab junk. Just great science.

    The best innovations come from experts who still remain curious experimenters and retain brilliant skills of observation and inference.

    And persistent wide reading.

    You can hardly buy this kind of scientific expertise ever....you have to look carefully for it. more money does not equal better results as we can observe from time to time. With the right expertise and team more money helps, but money alone cures no ailments ( in business or in health ).

    Best Regards,

    Mark Wendman
  • Don
    Look at the market value of all the biotech companies today vs. the amount of cash consumed by them. On the whole very few have actually returned money. Most have been value destroying. That said, when you have a hit, you can have a very big hit. So people keep investing.

    D
  • and for a more recent perspective, Adherex just raised another $25m, and has had about 5m share volume sales in the last week alone.
  • MuratCan01