A Danish biotech company has moved one step closer to the holy grail of drug development – to market its own drug.

In the recently disclosed financial statement for 2012 for small biotech outfit, ACE Biosciences, the management reveals that initial results from a phase III study with the company’s main asset are expected in the fall of 2013.

“The group’s development of Lamazym (rhLaman) for the treatment of the lysosomal storage disorder, alpha-mannosidosis, is in pivotal phase III tests, and the first results are expected in the fall of 2013. Depending on the results of these tests, the company’s capital owners will confer with the management to decide on the future activity level of the company,” the management writes in the yearly statement.

Huge potential

ACE Biosciences is owned entirely by Zymenex Holding, in which venture capital fund, Sunstone Capital, is by far the largest investor. So the fund has a lot to weigh in with in terms of the future activity level.

Partner in Sunstone Capital, Sten Verland, is Chairman of the board in Zymenex Holding and member of the board in ACE, and his expectations for the candidate drug are huge.

“I still think there is a huge potential in lysosomal storage disorders. There are still indications that are untreatable today, because there is no medicine for them whatsoever. One of those are alpha-mannosidosis, which is the indication that Zymenex has a project – Lamazym – aimed at,” Sten Verland explains and adds:

“That project is currently in phase III and we should have interim data in the fall, but with an option to extend the study for an additional six months. We expect it to lead to approval of the drug - and thus marketing - relatively soon after that, meaning within a couple of years more or less.”

The indication in question is very narrow, but the rarer the disease, the more expensive the medicine, the Chairman points out.

“Because it takes a lot of money to develop a drug like that, and if there are only 800-1000 patients – which is probably the case here – it is bound to be expensive, if the drug industry is to recuperate the expenses of a pricey development,” he says, adding:

“We expect the market potential to be between 300 and 500m Euros. But it all depends on the prices that can be negotiated, which I cannot comment on at the moment of course. But you have only to look at what similar drugs for similar indications have achieved, and here, it costs between 200,000 and 600,000 Euros to treat a single patient for a year.”

Adding needed capital

Sunstone Capital is by far the biggest shareholder in the company with an ownership share of more than 90 %. The venture capital fund has invested in Zymenex from the beginning and expanded its ownership share after assuming control of the former funds of BankInvest in January 2010.

“We are very active in the development of the company, and we are able to react quickly and post extra capital, when needed. But it is not like we make huge financing rounds in the company. We keep an eye on it and add the needed capital – depending on the results of course.”

If the phase III studies lead to positive results will you add a significant amount of fresh capital, or will a sale of the entire project or entire company be on the cards instead?

“We haven’t considered that yet. It is highly dependant on the results and potential interest from buyers – both options are still possible.”

Did you speak to potential partners following the phase II studies?

“We did. We always do. It is an on-going process and an on-going dialogue.”

Going longer for less money

Compared to more traditional indications like diabetes or cardiovascular diseases, smaller biotechs like Zymenex can go longer in clinical development with orphan diseases, such as lysosomal storage disorders.

“When it comes to orphan diseases, the authorities consider risks and needs carefully, which helps to advance the development of new drugs for these diseases. The regulatory process is viewed in a different light, when it comes to orphan diseases. It makes them attractive to smaller biotech companies, who can often go longer in the development process for less money,” Sten Verland explains.

And the rules of the game are also different when it comes to marketing of finished products, the Chairman reveals.

Can market it alone

“Many orphan diseases have strong patient associations and often also patient registers. So in many cases the marketing of an orphan drug is markedly different from the marketing of an ordinary drug for, say, cardiovascular diseases. The patients know about their disease and keep an eye on the websites of the patient associations and the news, so the moment you win approval for a new drug for the disease, you don’t have to roll out the entire sales corps.”

“There is a bigger pull in the market – a desire to gain access to the medicine, once approved. Zymenex will probably be able to market the Lamazym product alone, if it wins approval. I am convinced of that. It will require some capital until sales get going, but that is a different matter.”

Moreover, the company has the option of finding other investors, the Chairman says.

“Once you have a drug ready for launch, the situation is a bit different, and it doesn’t necessarily have to be pure venture capital.”

- translated by Martin Havtorn Petersen