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Corgentech’s E2F Decoy
technology is now in the final stages of its Phase III trials. It could be the first drug surgeons will be
able to use for prevention of vein graft failure in heart bypass (CABG) and leg bypass
(PBG) surgery.
Healthcare
Biotechnology & Drugs
(CGTK - Nasdaq)
Corgentech Inc.
650 Gateway Blvd.
South San Francisco, CA 94080
Phone: 650-624-9600
Richard P. Powers
Vice President and
Chief Financial Officer
Interview conducted by:
Lynn Fosse
Senior Editor
CEOCFOinterviews.com
November 2004
BIO:
Richard P. Powers, Vice President and Chief Financial Officer
Mr. Powers joined Corgentech as Vice President and Chief Financial Officer in October
2001.
Previously, Mr. Powers served as Executive Vice President and Chief Financial Officer at
Eclipse Surgical Technologies, where he led the effort to restructure the company
following its merger with CardioGenesis Corporation. In addition to his responsibilities
as CFO, he also managed all international sales and marketing operations. Prior to the
merger with Eclipse, he served as Executive Vice President and Chief Financial Officer at
CardioGenesis, where he was responsible for all administrative functions, international
operations and U.S. sales. He was also responsible for completing that company's
successful initial public offering in 1996.
Before joining CardioGenesis, Mr. Powers served as Senior Vice President and Chief
Financial Officer at Syntex Corporation. During his nearly 15 years at Syntex, he oversaw
Syntex's 700-person worldwide financial and administrative functions, and played an
integral role in negotiating the sale of Syntex to Roche in 1994.
He also currently serves on the Board of Directors of Airlease LTD and Mongonet
Corporation. Mr. Powers received a Master of Business Administration from University of
Rochester, New York. He earned a Bachelor's degree in Accounting at Canisius College in
Buffalo, New York.
Company Profile:
Corgentech is a biopharmaceutical company engaged in the discovery, development and
commercialization of a new class of therapeutics called transcription factor decoys, or TF
Decoys. They are creating a pipeline of novel therapeutics based on proprietary TF Decoy
technology, focused initially on the treatment of cardiovascular disease, inflammatory
disease, and cancer.
With a few exceptions, TFs have proven extremely difficult to target using traditional
approaches. Corgentech’s Transcription Factor Decoy (TF Decoy) technology, coupled
with their proprietary Decoy Trust technology enables them to rapidly engineer highly
specific and potent TF inhibitors, called TF Decoys, that effectively block, or “turn
off,” the TF activity that is causing the disease.
The TF Decoy approach has been validated in preclinical and clinical trials. This
technology already has yielded late-stage clinical trials, multiple preclinical projects
and a long list of additional targets. Corgentech’s lead product is a TF Decoy, E2F
Decoy (edifoligide) for prevention of vein graft failure following coronary artery or
peripheral (in the leg) bypass surgery and arterio-venous (AV) graft failure in patients
requiring hemodialysis. These indications have been granted Fast Track status by the FDA,
demonstrating significant unmet medical needs that Corgentech’s lead drug candidate
could address.
The Company entered into a validating partnership with Bristol-Myers Squibb on favorable
economic terms for co-development and commercialization of E2F Decoy. Corgentech and
Bristol-Myers Squibb have a 50/50 profit split in the U.S.
CEOCFOinterviews: Mr.
Powers, what initially attracted you to Corgentech?
Mr. Powers: “What
attracted me to Corgentech were several things, first of all the quality of the science at
Corgentech, next the president, CEO and director, John P. McLaughlin who has had extensive
experience in the biotech industry and finally the quality of the board. The venture
capital board was very impressive; at that time it included JP Morgan, Alta Partners and
InterWest Partners.”
CEOCFOinterviews: Tell us about the technology behind
Corgentech.
Mr. Powers: “Corgentech is a biopharmaceutical company
focused on discovering, developing and commercializing therapies that regulate gene
expression to treat serious diseases characterized by large unmet medical needs. Our
robust and versatile platform technology, ‘transcription factor decoys’ (TF
Decoys) is a potentially powerful new class of therapeutics that block the activity of
multiple functionally related genes linked to a disease. Because abnormal gene expression
is a fundamental cause of many diseases and because many diseases involve multiple genes,
controlling the regulators of functionally related genes, transcription factors, offer an
attractive therapeutic approach. In laymen’s terms, think of transcription factors as
sort of nature’s master switch for regulating multiple related genes. Normally what
occurs is there is a complex signaling pathway outside the nucleus of a cell that signals
a transcription factor inside a nucleus of a cell. That transcription factor is
nature’s way of determining what genes to activate of the 30,000 genes in the cell.
Transcription factors bind to the promoter region on one or more genes, in a sequence
specific manner, creating RNA and finally protein production."
CEOCFOinterviews: What are you able to do?
Mr. Powers: “We are
able to regulate those transcription factors inside the nucleus of a cell. For example,
our first drug candidate, E2F Decoy, is involved in cell proliferation or the explosion of
smooth muscle cells often associated with arterial disease as well as cancer. In some
cases, this is not something that we want to happen; for example, in cardiac surgery when
a thin walled vein is used to bypass a thick walled artery, as is the case in most heart
and leg bypass surgeries, the increased arterial pressure on the vein is perceived as an
injury and there is an explosion of smooth muscle cells. These smooth cells collect
cholesterol and plaque and over time cause the vein graft to fail. By blocking the
explosion of smooth muscle cells, we force the vein to remodel itself in a more favorable
way, in the end it looks more like the artery that it is intended to bypass, and the
result is fewer veins fail over time.”
CEOCFOinterviews: What
goes into the decision of what areas you are targeting first with this technology?
Mr. Powers: “First
of all transcription factor decoy technology is broadly applicable to many disease states.
Our scientific founders were cardiologists at Stanford and later at Harvard so it was
natural that they chose cardiovascular disease to start with. More importantly, for a
small company like Corgentech our lead product E2F Decoy for vein graft failure is
addressing a high unmet need where there are no competitive drugs in the marketplace.
Because it is hospital-based sale, we can reach this market with a relatively small sales
force of about 100 sales reps in the US. Despite the lower costs to reach this market,
analysts estimate the size of the market could be as much as $1.0 billion worldwide. To
summarize, we look for drug candidates where there are significant unmet medical needs, a
large market able to penetrate with relatively small investment is sales and marketing and
no competitive drugs."
CEOCFOinterviews: Is
this being used now?
Mr. Powers: “Our
drug is in the final development stage in two Phase III trials for a single indication of
‘prevention of vein graft failure’. Our first trial is in leg surgery.
Here the vascular surgeon will use the greater saphenous vein to bypass clogged
arteries in the leg, for patients who have leg pain at rest. That trial is fully enrolled
with 1,400 patients in over eighty centers in the United States and we expect the results
of that trial by the end of this year. The second trial is for cardiovascular arterial
bypass graft (CABG) surgery has also completely enrolled all 2400 patients treated in over
a hundred centers in the United States. The data from that trial will be available
in the first quarter of 2005. We have Fast Tack designation from the FDA for both
indications due to the high unmet medical need, compelling pre-clinical data, excellent
safety profile, and no other approved drugs. This designation could afford
Corgentech a shorter, six month, review cycle to approval.”
CEOCFOinterviews: What
comes next?
Mr. Powers: “We
recently started a clinical trial for another indication for our lead product E2F Decoy
for patients with end stage renal disease who are on dialysis and suffer arterio-venous
(AV) graft failure. AV grafts are how you connect a patient to a dialysis machine. In the
U.S., about a 100,000 of these patients annually require new or revised conduit for
dialysis. The surgeon inserts a plastic conduit between the vein and artery and into
that conduit they will attach the dialysis machine. At the juncture of the plastic conduit
and the vein there is often an explosion of smooth muscle cells, caused by the force of
the dialysis machine much the same as with arterial pressure in heart bypass and leg
bypass. In May 2004, we started a Phase 1/2 trial with approximately sixty patients in
twenty centers in the United States. We expect the results from that Phase 1/2 trial
sometime in the first half of 2005.
Recently, we had an analyst day in New York to
present our pre-clinical data on two other transcription factor decoys; one called
NF-kappaB decoy, which blocks the major transcription factor involved in inflammation. We
indicated that we would start a Phase 1 trial in the first half of 2005 for serious skin
diseases such as eczema. We have a third decoy called HIF-1 Decoy, which blocks the HIF
transcription factor that is implicated in many cancers."
CEOCFOinterviews: Does
experience with one project help you in your knowledge of the next ones to come along?
Mr. Powers: “Many
transcription factors have been well characterized. Aberrant gene expression is
responsible for many diseases including heart disease, cancer, inflammatory diseases such
as eczema, arthritis or inflammatory bowel disease. Every time we treat patients, we learn
more. When we developed our first drug it took 6 to 8 months. Now we are able
to develop drug candidates in a matter of several weeks and get them into pre-clinical
experiments quickly.”
CEOCFOinterviews: Tell us about your collaborations?
Mr. Powers: “Our
lead product called E2F Decoy, we have a worldwide collaboration with Bristol-Myers Squibb
(NYSE: BMY). Unlike many transactions, it is not a simple royalty deal; we actually will
participate in the commercialization of our lead product E2F Decoy. We will have a 50/50
marketing and sales partnership in the U.S. and split the profits down the middle.
In addition, there are milestone payments that could be as large as $570 million over
time. Bristol-Myers Squibb is paying the majority of our E2F Decoy expenses going forward,
and we will collect double-digit royalties on all sales outside the US.
Bristol-Myers Squibb has been a great partner and we look forward to continuing the
relationship as we move our lead product along the approval cycle.”
CEOCFOinterviews: Will you tell us about the financial
condition of the company?
Mr. Powers: “In 2004, we expect revenue from the
reimbursement of clinical expenses from Bristol-Myers Squibb will be between $25 million
and $30 million and a net loss projection for the year of around $40 million to $45
million. We expect to end this year with approximately $100 million of cash in the bank.
With the potential of milestone payments from BMS, should we be successful through the
FDA, we may not need to finance the company again before we commercialize our product in
late 2005 or early 2006.”
CEOCFOinterviews:
Because you have no competition, is it easier to become recognized?
Mr. Powers: “Yes
certainly having Bristol-Myers Squibb as a partner is a great advantage for us. Another
reason is that this is a surgical drug; cardiothoracic and vascular surgeons will use the
drug. There are only about 6300 of those surgeons in the United States. More importantly,
almost 90% of CABG operations in the US are done in just 700 hospitals. What that
means is that commercialization of this product will be less expensive. Normally for a
product that could be as much as a $1 billion in sales, you would spend a couple hundred
million dollars in marketing and sales, and require a sales force of many 100s, even a
thousand, people. Because it is a focused market, we will be able to commercialize at a
fraction of the cost and probably with the sales force of around 100 people. The
professional medical society, the Society for Thoracic Surgeons (STS) is actually
co-sponsoring this trial and finally, there is no competitive drug. This could be the
first drug surgeons will be able to use for vein graft failure.”
CEOCFOinterviews: Why is
it a good time for investors to be interested and what should they know that they might
not realize at first glance?
Mr. Powers: "It is
an opportunity for an investor to invest in a company that not only is in the final stages
of two Phase III trials with all the data due by early 2005 for a drug with a market
potential of $1.0 billion in sales and no competitive drug on the market. Unlike many
biotech companies, we have a platform technology called transcription factor decoys, for
which we have compelling pre-clinical data in serious medical indications such as cancer,
and inflammation."
CEOCFOinterviews: In
closing, tell us about your management team?
Mr. Powers: “We
have an experienced management team with over a hundred years experience from over twenty
biotech, medical device and pharmaceutical companies. And not just in research and
development where biotech companies are normally very strong, but also in marketing and
sales where we have people who have launched and sold billion-dollar drugs. We have
a strong management team, a versatile platform technology, our lead drug candidate in two
Phase III trials with data due soon, a pipeline that is entering the clinic and a major
corporate partner in Bristol Meyers Squibb.”
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