That’s how it goes – you turn your back for a long weekend and something crazy happens. Like Phylogica (ASX: PYC). I bemoan the loss of the rare opportunity to own stock in a company that rocketed about 90% on the announcement of a successful pilot (more on that milestone in a minute). Perhaps the punters are right, I should stop writing about these equities and instead start owning them. I think I am beginning to understand what makes more money (and generates less abuse)!
On the face of it, Phylogica isn’t a completely stupid story. Drug developers have long looked for “repertoires”, that is sequences of amino acids (or for all you punters out there, “life’s building blocks”) that might be especially stable. This is because we like drugs that don’t fall apart in the body … or require heroic formulation to be delivered into a patient … or have a decent shelf-life … or require dazzling feats of manufacturing finesse to make a product. Stable is good. Think Marvel comics. In fact, even more “Marvel” is the idea that Phylogica’s library of peptides are derived from micro-organisms that live in harsh environments (like the bottom of the ocean, or even a volcanic vent) and therefore are intrinsically more stable because of natural selection.
Phylogica focuses on peptides that are between about 15 and 50 amino acid sequences long. If you do the math on this, assuming combinations and permutations of 23 different amino acids (though since Phylogica’s libraries are based on organisms like certain bacteria, which have some “special” additional amino acids) you literally end up with a library of billions of possible molecules. The problem is with modern drug screening we have more or less stopped caring about smart ways of managing this kind of a library, today it is all rather humdrum. “We” routinely do massive scale screening, we use bioinformatics and smart fluid handling systems, we have technologies to rapidly synthesise peptides of virtually any (commercially useful) length and while there may be intellectual property in a “platform” or “library” the only thing that really matters at the end of the day is a particular molecule that works against a rational target.
The second problem with Phylogica’s science, from a commercial perspective, is that cell penetrating peptides (CPPs) have been studied for over 20 years and still haven’t delivered much. That might be changing a little with some new “intra-cellular” targets for cancer and other important diseases – that is a target that is inside the cell and cannot be simply “hit” on the surface by a big engineered protein molecule or even an antibody. In that sort of situation, a small peptide of Phylogica ilk might be very nice to stealthily sneak into the cell and enable a potent molecule “cargo” to do its business. The target they are hoping to mess around with called “Myc” (not to be confused with your favorite Irish bar fly) is also a promising cancer target with a lot of research interest. There are even a handful of clinical trials already running with novel targeting agents for Myc (for example, Dicerna’s DCR-MYC RNAi drug).
The challenge is optimising a drug that contains both the agent that is able to penetrate the cancer call and the component that is the actual therapeutic (in this case, it is not a Phylogica molecule but an academic research project called Omomyc). Phylogica has done this by essentially bolting one of their peptides onto Omomyc, enabling a molecule that wouldn’t normally enter the cell to sneak in. This kind of approach, incidentally, is nothing new. But kudos to the Phylogica team for making it happen. I guess.
There are basically 3 issues with Phylogica’s announcement:
1) Mostly, who cares. Unless it is a clinical candidate, it should never have been called a pilot. It should have been called a “proof-of-concept” at best. A graduate student in a semi-decent university molecular biology lab could have done what Phylogica did. It’s not rocket science. To be clear, this is not a product candidate.
2) The thing that actually does the tumor killing is not a Phylogica molecule. This isn’t adequately explained to the market. It’s bad enough that this announcement is almost scientifically irrelevant but to claim that the anti-cancer effect observed comes from Phylogica technology is almost misleading.
3) PLEASE don’t make announcements about an animal study you did. Not only was the study possibly (probably?) not statistically significant (even as implied by the press release). But it was not made on the back end of a peer-reviewed publication of the data. At least not that I am aware, or that I have been able to find. So, quite honestly – who gives a shit?
But what should really upset you is that this is a company that has produced basically nothing for the last 5 years. It has burned through about $40m in financing and hasn’t even delivered some basic clinical data. It spends about $5m a year on R&D / operations to deliver what value to shareholders? In fact, all that it has delivered recently is an announcement that it has completed an unvalidated, unpublished academic study … in mice. A study that would have cost – at most – $100,000. I’m not saying that this is market manipulation, but what really is going on here and what is the point of this announcement?
Of course, I am the idiot. I don’t own the stock, and I promise you, I never will.
Awesome Photo Credit: Ryan McGuire. http://www.gratisography.com/