Public companies in Los Angeles that tumbled into penny stock territory during the recession can look to CytRx Corp. as an example of how there can be light at the end of the tunnel.
The West L.A. biotech, which has found new uses for so-called “orphan drugs” abandoned by other companies, started the year at 30 cents a share but is now trading above $1 after a spate of good news.
The U.S. Food and Drug Administration earlier this month lifted a nearly two-year hold on midstage clinical trials for CytRx’s lead drug candidate, arimoclomol, after being presented with new safety data.
Arimoclomol is a potential treatment for Lou Gehrig’s disease, or amyotrophic lateral sclerosis, which causes paralysis and death. After the midstage clinical trial results are presented to the FDA, the agency will decide whether the company can move on to the last set of trials needed before final approval of the drug.
In addition, the company last week released positive preliminary findings from a midstage clinical trial for its leukemia drug tamibarotene; it so far appears to be less toxic as other blood cancer drugs on the market. CytRx Chief Executive Steven Kriegsman hopes to apply to the FDA by 2011 for permission to market the drug as a first-line treatment in combination with other cancer drugs. Most new drugs start out as more conservative second- or third-line treatment after other drugs fail.
“We’re in some of the most deadly diseases that a lot of other companies were staying away from, but the rewards can be astronomical if one works out,” Kriegsman said.
The company also is in human clinical trials with two other cancer drugs and a pill called iroxanadine, which is intended to prevent atherosclerosis, or hardening of the arteries.
Shifting Gears
Addiction treatment provider Hythiam Inc. is adapting to the uncertain economy by significantly shifting its business model and expanding services.
The West L.A. company initially focused on providing a proprietary therapy called Prometra via a network of company-owned or -licensed clinics. But with no insurance contracts, Hythiam had to rely on patients or their families to pay the average $15,000 cost of a course of treatment for alcohol or drug addiction. Now, the struggling company is looking to tap deeper pockets to grow the business.
The company’s new Catasys treatment program is aimed at large companies and managed care providers looking to boost their behavioral health management services.
In September, the company signed its first big deal with Ford Motor Co., and Chief Operating Officer Rick Anderson said several other companies are close to signing on.
Under such contracts, the company gets paid a base rate tied to a target population in a company’s work force or an HMO’s members. It also is paid for each patient enrolled for treatment. Hythiam maintains that adding its services can lower overall health care costs, since drug or alcohol addiction can add significantly add to the cost of treating employees who have expensive chronic diseases, such as diabetes.
The Catasys program adds contracted psychologists to the Prometra treatment regimen, which includes some in-house counseling and the use of drugs and nutritional supplements to lower cravings for abused substances.
“It’s really a more efficient way for us to help the greatest number of people,” Anderson said of the new program.
It will take a while to turn around the company’s finances. Hythiam last month reported a third quarter net loss of $8.8 million (-16 cents per share), nearly 40 percent wider than a year ago. Nasdaq regulators have given the company, which as of Dec. 9 had a share price of 29 cents and a $19.2 million market cap, until Feb. 24 to achieve a market cap of at least $50 million or stockholders’ equity of at least $10 million.
Licensing Agreement
San Marino biotech Viral Genetics Inc. last week entered into an exclusive license agreement with the University of Colorado to develop cancer therapies based on the work of professor M. Karen Newell.
The biologist has been investigating a new way of killing drug-resistant cancer cells through a process called metabolic disruption technology that can starve cancer cells. The method, which is expected to be combined with traditional chemotherapy and radiation treatments, has been demonstrated in the laboratory and in animal studies.
“This agreement enables us to pursue new lines of research with Dr. Newell,” Chief Executive Haig Keledjian said. “Her latest discoveries have tremendous potential to help patients with drug-resistant tumors.”
The work will be done by MetaCytolytics Inc., a subsidiary Viral Genetic.
Staff reporter Deborah Crowe can be reached at [email protected] or at (323) 549-5225, ext. 232.
