Corrections or additions?

This article was prepared by Michele Alperin for the May 18, 2005

issue of U.S. 1 Newspaper. All rights reserved.

New Combo for Coronary Health

Twenty years ago, the standard surgery for blocked arteries was the

coronary bypass. In the 1980s a less invasive procedure was introduced

– angioplasty with stents – mesh tubes, inserted with a

balloon-tipped catheter into a narrowed artery to keep it open.

The long-term effectiveness of stents increased dramatically two years

ago when Miami-based Cordis Corporation added a drug to its stent. The

role of the drug is to stop the growth of muscle cells that can

paradoxically re-close the artery – called restenosis in the medical

jargon. These drug-eluting stents (DES) – so named because the drug

seeps out at a slow rate over a specified time period – are now the

standard for surgeons in the United States. The number of bypass

surgeries dropped 30 percent. Two years ago, according to trade

magazine Managed Care, there were fewer than 400,000 bypass surgeries

performed in the U.S. compared to 1.2 million angioplasty operations

involving stents.

X-Cell Medical, which moved its laboratory from a Columbia University

incubator to Deer Park Drive last November, is a small "combination

product" company, which "combines" a medical device, the stent, with

new antirestenotic drugs, including a form of estrogen that it

believes will improve the healing process. X-Cell was founded in May,

2002, by Accelerated Technologies Inc., a company formed by

high-ranking cardiologists to locate and take over or form new

companies in interventional cardiology. With six employees at

Princeton Corporate Plaza on Deer Park Drive, the nearly

three-year-old company is hoping to break into a market dominated by

large medical device firms.

Here’s how a drug eluting stent works. Metal stents are coated with a

polymer that slowly releases an antirestenotic drug into the artery.

The perfect drug will accomplish two goals: The first is to prevent

re-closure of the artery by blocking the growth and migration of

smooth muscle cells. These cells may grow and move in response to

inflammation caused when the balloon stretches the artery. The second

purpose is to either promote the growth of the cells that line the

artery or, at the very least, not affect these cells.

The drugs currently on the market accomplish the first purpose, but

X-Cell has hopes that its estrogen drug, Estradiol, will accomplish

both. Estradiol had already been tested in humans once by the original

company, and, although the formulation was not optimal, the promise in

that early trial inspired X-Cell to license the drug.

X-Cell also hopes its DES will reduce the incidence of late

thrombosis, a rarer, but often fatal side effect of a stent, where a

blood clot forms at the site of the stent.

Drug-eluting stents entered the market in October 2002 when the FDA

approved, with recommended conditions, the Cypher Sirolimus-eluting

stent of Cordis Corporation, a Johnson & Johnson company. Clinical

results showed dramatic reductions in restenosis with drug-eluting

stents – 10 percent as compared to 30 percent with bare metal stents.

As a result, DES took over the market to such a degree that bare metal

stents have vanished from medical practice in the United States, and

randomized trials comparing stents with and without drugs are no

longer feasible here.

X-Cell has no intention of manufacturing either stents or the polymer

coatings that release the drug. Both are "commodities" that can be

purchased relatively cheaply from partners. "At X-Cell Medical the

drug side is the focus," says Oded Ben-Joseph, who came aboard as CEO

in May, 2003. "We offer an integrated full product through our

relationships with companies with good products. We don’t want to

reinvent the wheel, only to introduce innovation to the field."

The antirestenotic drugs on the market today, including Cordis’s

Rapamycin and its analogs and Boston Scientific’s Paclitaxel, focus

primarily on blocking the growth of smooth muscle cells. Although both

of these drugs are potent in terms of blocking restenosis, according

to CEO Ben-Joseph, both are fairly toxic and do not encourage the

healing process as much as possible. X-Cell, however, is moving toward

a second-generation DES with drugs that take a pro-healing approach.

To avoid infringing on Rapamycin’s patent area, X-Cell is looking at

drugs that attach to a different target than existing drugs.

Ben-Joseph believes that companies developing Rapamycin analogs are at

risk for legal action.

Although Ben-Joseph does expect to hire a few more people in the

coming months, he says his goal is "to keep the company lean and

mean." Two pivotal employees at X-Cell Medical are molecular biologist

William Baumbach, executive director of drug research and development,

and materials scientist and polymer expert Hari Shankar, executive

director of drug delivery and formulation.

Baumbach is responsible for screening compounds that have already

shown potential as antirestenotics. X-Cell typically licenses these

drugs from universities or from other companies.

During the drug discovery stage, X-Cell grows human coronary artery

cells in petri dishes, treats them with drugs, and then uses two

primary techniques to test these drugs’ antirestenotic properties. The

first approach is to analyze the drug’s effects with Cellomics. This

high content imaging system uses trays with 96 index-card-sized wells,

each containing about 10,000 cells. The system takes microscopic

pictures of the cells in each well, providing data on each individual

cell. The second approach is to put 100,000 cells in a fluorescence

reader that provides a single signal based on whatever property is

being measured. X-Cell has bolstered its competitive position, says

Baumbach, by having available these sophisticated technologies for

evaluating drug candidates.

One of X-Cell’s two lead candidates is XC-121, a form of Estradiol

that will commence human trials in the second half of this year.

X-Cell is currently optimizing formulations of XC-121 that will allow

it to be released from the stent into artery tissue in a controlled

manner. "The amount of drug per stent and the release characteristics

(fast/slow) are being analyzed initially in ongoing animal trials,"

explains Baumbach. "Our goal is to have the drug stay about one month,

but we are testing different formulations that would release the drugs

at different rates."

Shankar’s job is to get the product ready for preclinical and clinical

testing. He works closely with Orbus Medical Technologies Inc. in

Florida, which provides X-Cell with stents, catheters, and balloons,

and with SurModics in Minnesota, which supplies the polymer. More than

a million patients have been exposed to this polymer, in stents and

elsewhere, without serious side effects. Shankar formulates the drug

in the polymer so that it is delivered at the desired rate. Once the

drug and polymer mixture is applied to the stent, it is sent back to

Orbus where it is balloon-mounted, packaged, and sterilized for use in

vivo.

Shankar got his bachelor’s degree in chemical engineering from the

University of Madras in 1975, and stayed in India three more years,

working in industry. Then he moved to Texas Tech University, where he

got a master’s degree and then a Ph.D in chemical engineering,

finishing in 1985. For an additional five years, he did academic

research at Texas Tech on vascular grafts used in bypass surgery – the

predecessors of stents. He moved to Enzon, a biotech, where he stayed

2 years, and then to J&J and Becton Dickinson in Franklin Lakes for 10

years before joining X-Cell in 2002.

Once the formulations are set, the drug candidates are tested in pigs,

which have hearts and arteries the same size as humans. Medical staff,

operating rooms, and other support items are also identical to those

that will be used in human trials. The disadvantage of the pig system

is that it is not very predictive of how the stent will work in

humans. "Once we have proved that a drug is safe in, typically, a

three-month study in pigs," concludes Baumbach, "it is routinely

tested in a small human trial."

X-Cell is currently preparing the first human trial to compare

formulated Estradiol stents with bare metal stents. To take place in

Brazil and Germany, its goal will be registration in the European

Union. Baumbach explains that it is standard practice for

interventionist, catheter-based cardiology to run the first trials

internationally: excellent heart centers are available where human

trials can move faster than in the United States, and the cost is

less. After a successful international trial, a major U.S. clinical

trial would compare Estradiol stents with those using Rapamycin and

Paclitaxel.

The second lead candidate is XC-441, a platelet-derived growth factor

inhibitor that blocks smooth muscle cells but has no effect on the

cells lining the blood vessels. The drug has proven its feasibility in

an animal trial. A second large animal trial is scheduled in March for

optimization.

Baumbach says that several other drugs are planned, but at too early a

stage to discuss in detail.

Baumbach graduated from Princeton University in 1975 with a degree in

biochemistry, but then spent several years working in ceramics and

pottery under Princeton artist Toshiku Takaezu. Shortly after he got

married in 1981, he returned to science at Princeton, graduating in

1987 with a Ph.D. in molecular biology. After 13 years in a large

pharmaceutical environment, at American Cyanamid, then Wyeth, in the

animal health area, he eventually moved to a smaller company,

Morphochem, as director of biology. With about 30 people in the U.S.

and 100 in Germany, he says, Morphochem "had a startup atmosphere and

a very interesting technology that they were trying to use in a

transatlantic scenario – in which most of the chemistry was in Germany

and the biology in New Jersey." When financial problems forced the

company to cut back at its U.S. site, with only a couple of people

remaining, he joined X-Cell.

Baumbach and his wife, an artist, live in Hopewell with their three

sons. He completely renovated their house, still does a little work in

Japanese-influenced stoneware, and is the chair for the Princeton

Class of 1975’s upcoming 30th reunion.

X-Cell moved to its new 2,000 square foot laboratory at Princeton

Corporate Plaza, says Ben-Joseph, "because we needed more space and

wanted to be part of a biotech complex," citing about 50 other such

companies at the new location. All of X-Cell’s employees live within a

half hour of the new site, except for Ben-Joseph, who spends two days

a week in Princeton and the rest in the Boston offices of X-Cell’s

lead investor, Oxford Bioscience Partners. In addition to Oxford and

ATI, X-Cell’s investors include ABN AMRO Capital/Life Sciences and

Giza Venture Capital.

Just as X-Cell Medical is a combination company, Ben-Joseph sees

himself as something of a mixed breed – someone who integrates science

and management. He started his career as a pure scientist, with a

degree in biochemistry from the Imperial College of Science and

Technology in London and then a Ph.D. in neurochemistry at the

University of Cambridge in 1988. His focus was on neurodegenerative

diseases, which he continued to study as an assistant professor at the

University of Michigan, Ann Arbor. "I’ve always been drawn to the most

intellectually challenging questions," he says. "As far as medicine, I

think the brain is still the final frontier, and the most interesting

side of biotechnology is neuroscience."

While in Ann Arbor he was a visiting scientist at Parke-Davis’s (now

Pfizer) R&D headquarters. "This was my first exposure to the more

industrial aspect of pharmaceuticals and biotechs," he says, adding

that he "always had an affinity for that sort of thing. I have a great

deal of respect for pure science, but at the end of the day I like to

see these things reach the patient."

Yet mundane corporate work was not what really excited him. He was

drawn to the complexities of the biotech world. "You have to be

multidisciplinary to be involved in biotech. It involves clinical,

legal, patent, financing, and strategic issues, which are extremely

gratifying and interesting," he says. "I thought that biotech

management was a convergence of many areas and disciplines, and I

wanted to be at that point."

But first he needed to move beyond his "scientific identity," break

into industry, and gain management experience. While consulting for

AMCOR, a large Israeli manufacturer of electrical appliances, he

developed a relationship with its "interesting CEO." When this man

decided to enter the healthcare arena via phototherapeutic medical

devices, Ben-Joseph saw an opening. He told the CEO that he would

"only help if you will spin off the company." That’s what happened,

and Ben-Joseph was cofounder and CEO of Biolight Phototherapy.

While at Biolight, he took the company to clinical trials and at the

same time completed an MBA at a branch of the University of Bradford

in Tel Aviv. But when Biolight was ready to start generating revenue,

Ben-Joseph was ready to move on. "To start a marketing infrastructure,

etc., is interesting, but not the field where I see myself," he

realized. "It was time to get a different personality type for CEO."

He says he is an entrepreneurial type, "best in the first two to three

years" of a new business. He also wanted to be close to the basic

science and was ready to go back to his first love, "biotech and

medical devices proper."

Ben-Joseph joined an Israeli venture capital firm, Medica Venture

Partners, and managed one of their portfolio companies, Ester

Neurosciences, from its inception. The company developed novel drugs

for neurodegenerative diseases like Alzheimer’s and Parkinson’s. After

about four years, the company had moved to Phase II testing in humans

of lead drug candidates, says Ben-Joseph, and "I was ready to move

back home, to the States."

Through Ester, he got to know Oxford Bioscience Partners, which he

dubs an American "Ivy League" healthcare venture-capital firm. Oxford

asked him to take the leadership of X-Cell Medical, where he has been

for about two years. He says he is pretty happy and optimistic – "as

much as one can be in this high-risk industry."

Ben-Joseph’s wife, Elana, is a pediatrician, and they have a preschool

daughter.

"The market penetration of DES is 90 percent," continues Ben-Joseph.

"It is an amazing example in the history of medicine – a drug that has

penetrated so aggressively since it got FDA approval in April, 2003."

Some cardiac surgeons, nevertheless, point to the lack of data on the

success of using drug-eluting stents versus doing bypass surgery, and

they caution that procedures involving DES can actually cost more than

bypass surgery. "Patients with stents must be constantly restudied to

track the progression of the disease, and many must have repeat

procedures," says Bruno Cole, who has an office on Alexander Road and

is a cardiothoracic surgeon at RWJ University Hospital in New

Brunswick. "The cost for angioplasty plus stents works out to be the

same or more than the cost for bypass surgery," he claims.

Stents now cost about $2,500 each. At present the major players in the

DES market are Boston Scientific and Cordis; with little competition

there is no incentive to reduce prices.

Financially and scientifically, X-Cell Medical believes it is well

placed to enter the fray. Although now in the research and development

stage, the company projects that sometime between the beginning and

middle of next year, it will have generated data in humans and will be

ready to ally with a major company to take the product to market.

Ben-Joseph observes, "We are unlikely to do that on our own, although

we are open to that possibility in Europe, if we get the European

approval." He adds that many "pharmaceutical companies are very

interested in this highly lucrative market, which is now $7 billion

and still growing."

It is also in good shape, moneywise, to do what needs to be done. "We

are fully funded for the next couple of years," says Ben-Joseph, "and

through this funding we believe we can reach at least two first-in-man

clinical trials of our lead candidates."

– Michele Alperin

X-Cell Medical Inc., 11 Deer Park Drive, Suite 208,

Monmouth Junction 08852. William R. Baumbach PhD, director, drug

research & development. 732-329-0297; fax, 732-329-0298.

www.x-cellmedical.com


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