BUSINESS WEEK ONLINE
December 5, 1997


THE HOT PURSUIT OF NONINSULIN DIABETES DRUGS


Edited by Douglas Harbrecht

Shares of drug giant Warner-Lambert plunged more than 15% in early December, after news that the diabetes drug Rezulin, which it began selling in the U.S. this year, is prompting a dangerous liver condition in some patients, and is being pulled from the market in Britain. The condition is still rare, and Warner-Lambert and the Food & Drug Administration have said that while doctors have been alerted there are no plans to recall the drug here.

Nonetheless, the Rezulin episode spotlights a critical medical need that drug companies are scrambling to fill: Noninsulin therapies for diabetes. Rezulin is one of the new "TZD" class of drugs -- or thiazolidinediones -- that appear to diminish a patient's need for insulin. Researchers are still optimistic that with careful monitoring, the side effects can be controlled and the majority of patients will be helped by Rezulin.

But diabetics also have reason to cheer about another promising research path as well -- an approach marrying cutting-edge biotechnology with a cousin of plain old vitamin A. If work on these new agents, called retinoids, pays off for diabetes, it could create a billion-dollar drug category for several companies that are aggressively pursuing it. And it will be another surprising use for vitamin A, an agent already linked to such disparate benefits as treating night blindness, acne, wrinkles, and cancer.

Insulin: No Cure

There's a widespread misconception that insulin injections "cure" diabetes, an illness characterized by excess sugar in the bloodstream caused by the inefficient metabolizing of insulin the body manufactures. Diabetes afflicts roughly 16 million Americans, at least half of them undiagnosed, and it remains incurable. The complications of diabetics' long-term fluctuations in blood sugar can include blindness and heart disease, making diabetes the fourth-leading cause of death in the U.S.

Insulin, whether purified from animals or genetically engineered, helps smooth out the fluctuations. It can only be injected, however, because it's a protein that would be broken down in the gut if taken orally. And insulin causes problems of its own, including weight gain or, when improperly administered, severe complications including coma. "It's not injecting insulin that's such a big deal," explains Dr. Simeon I. Taylor, chief of the diabetes branch of the National Institutes of Diabetes & Digestive Disorders & Kidney Diseases. Rather, explains Taylor, the problem is that the disease often progresses despite the use of insulin and leads to diabetes' serious problems.

That's one reason why a several heavy-hitting drug companies, including Warner-Lambert, Hoechst Marion Roussel, Bristol-Myers Squibb, and Bayer, have been developing noninsulin, orally active drugs, Today's roughly $2 billion market for those pills is expected to more than double by 2005 to about $5 billion, predict health-care marketing consultants at Front Line Strategic Management Consulting Inc. Much of that jump was based on hopes for TZDs. But even if TZDs have more limited success, new scientific data is pointing to retinoids as a potentially powerful new member of the noninsulin drug group. One eye-opening endorsement: Insulin market leader Eli Lilly has inked a major deal with San Diego's Ligand Pharmaceuticals to pursue retinoids.

Vitamin Roots

Since ancient times, cultures have recognized some of the medicinal powers of vitamin A, which were discovered indirectly from eating liver. The liver is a rich source of vitamin A, which, like all vitamins, is a chemical that's necessary for healthy metabolic function (particularly healthy skin and vision). But the body doesn't make it, so it must be ingested.

Since the 1970s, doctors have prescribed several kinds of retinoids, or chemically synthesized variants of vitamin A, including topical creams for acne and psoriasis and also potent pills for very severe acne. In the 1980s, Johnson & Johnson drew the ire of the FDA for promoting its acne cream, Retin-A, as a wrinkle smoother as well, although the drug was eventually approved for that use. Roche, meanwhile, has another retinoid on the market as an anticancer agent against a form of leukemia.

Then last March, scientists at Ligand Pharmaceuticals burst onto the diabetes scene with a paper in the journal Nature, showing that two retinoids they had initially developed as anticancer agents had dramatic effects in a strain of diabetic mice: The retinoids reduced levels of three key measures of disease in these mice, including glucose, insulin, and triglycerides. Ligand saw no serious side effects in the trial, and because the company had already tested its compounds extensively in cancer patients, "the data suggests these compounds will be very very well tolerated," explains Richard A. Heyman, who directs retinoid research at Ligand. He adds that more recent studies have shown that "if we treat the animals early, we can block the progression of the disease." The company is shooting to get the drug into human clinical trials in the U.S. in 1998.

Pimples to Diabetes

One of the most interesting factors in all this is how and why researchers made the leap from acne to diabetes. Credit biotechnology. Throughout the 1980s, as J&J fought marketing battles over wrinkles, researchers deep in labs were intrigued with the complex side-effects profile of retinoids, which ranged from skin inflammation for topical versions, to dry mouth, mood swings, and even severe birth defects in babies born to women who had taken the ingested forms of retinoids. Biotech was providing more and more clues about cells and how chemicals interact with them through docking stations called "receptors," and scientists at the Salk Institute in San Diego led by Ronald Evans (a Ligand co-founder) zeroed in on a group of retinoid receptors.

Evans eventually learned that many retinoid compounds are closely related to certain hormones in the body and work on the same pairs of receptors. Depending on the pair being activated, retinoids can spark different beneficial effects -- among them, programming cancer cells to self-destruct, turning off the over-proliferation of skin cells that leads to severe acne and psoriasis, and, in the case of the diabetes work, increasing cells' sensitivity to circulating insulin and making them process the energy from glucose more efficiently. "It has been exciting, and it's moved incredibly fast," explains Heyman.

Indeed, work in this area has moved so fast that it created a minor corporate upheaval for Ligand. Previously, the company was focused on cancer and women's health. But about a year ago it added metabolic diseases to its product research areas, after Heyman began seeing the results in the diabetic mice. Ligand had been working with Allergan in Irvine, Calif., on retinoid research aimed at skin, vision, and cancer uses. Results continue to be promising in those areas, too, but Allergan is mainly a dermatology and vision company with no experience in metabolic diseases such as diabetes. So, this year the companies moved to dissolve their partnership and divide the more than 2,000 retinoid compounds they developed together.

In September, meanwhile, Ligand anounced it had joined with Eli Lilly & Co. to pursue metabolic diseases in a deal that is worth about $50 million in cash and equity up front to Ligand but could be worth more than $200 million over the next five years -- not including royalties from any drugs that result. "Orally active compounds are where the [diabetes] business is going to go," says Andres Negro-Vilar, chief scientific officer at Ligand. "Lilly was very perceptive about the science, and they have a strong business base in insulin."

Indeed, Lilly is currently the nation's leading manufacturer of insulin and a long-time leader in the diabetes field. The deal with Lilly is "a compelling validation of the technology" for Ligand, believes biotech analyst Richard van den Broek of Hambrecht & Quist. Interestingly, Allergan has announced that it is shopping for a partner for some of the retinoid compounds it got from its relationship with Ligand, including some retinoid analogs also thought to have promise in treating diabetes. That sets up a horse race between the two former partners, Ligand and Allergan, who presumably start with exactly the same research data about how these compounds work.

The Outlook

Although it's way too early to declare victory against diabetes, the work so far is a source of optimism for diabetics and the physicians who treat them. Advances with molecular targets mean that "the state of the art has dramatically increased and [will] lead to an explosion of interest" in treatments for diabetes and obesity, says the NIH's Taylor. In fact, Taylor is working with Sugen in Redwood City, Calif., which is also using a receptor-target approach to try to develop noninsulin oral drugs that would reduce diabetics' need for insulin.

In fact, the dream of early biotech pioneers is slowly but surely coming true: Rather than relying on serendipity and mass screening to find breakthrough drugs, they are deciphering the intricate chemical dance between cells and chemicals that governs our lives and health. And they're finding clues about how to precisely correct the flaws that, in the human body, can sometimes stop the music.

By Joan O'C. Hamilton in San Mateo, Calif.

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