Is San Diego’s Lpath (OTC: [[ticker:LPTN]]) on the right path? The answer will emerge over the next several weeks as the biotechnology company wraps up a key clinical test of its experimental cancer drug. A successful outcome will position the cash-starved company to receive $39 million from development partner Merck Serono of Switzerland, enabling Lpath to continue its research. A poor result most likely means the Merck Serono deal has reached a dead end, putting the very existence of Lpath in doubt.
“It is a bit binary,” CEO Scott Pancoast deadpanned during a phone conversation last week.
Lpath develops antibody drugs that target bioactive lipids, fatty substances that regulate key cellular functions. The company’s experimental drug neutralizes a lipid called sphingosine-1-phosphate, which cancer cells use to form new blood vessels. The theory is that cancer cells will die if they cannot access the blood supply.
The effect of the drug sonepcizumab, dubbed Asonep, is similar to that of Genentech’s bevacizumab (Avastin), a blockbuster cancer medicine that blocks a protein called vascular endothelial growth factor (VEGF). Pancoast said sonepcizumab is potentially more powerful than bevacizumab because the Lpath drug also causes certain cells to destroy themselves, a process called apoptosis. Even so, taking on bevacizumab would be a formidable challenge.
But that’s getting ahead of the game. For now all eyes are on the early-stage trial, which was designed to assess the safety and biological activity of sonepcizumab. Lpath stands to receive up to $8 million from Merck Serono for achieving performance targets related to the trial, and an additional $31 million if the Swiss company exercises an option to develop the drug. Lpath will know the outcome of the trial by the end of August, Pancoast said, and Merck Serono has until October 29 to weigh the results and make its decision.
“They will either pay us $31 million and take over the program, or say ‘No thanks’ and give us the keys back,” Pancoast said. “Obviously, there is a huge delta in terms of Lpath’s economics between scenarios.”
The deal with Merck Serono, announced last October, could be worth