Bloomberg News

Can-Fite Sees Eye-Drug Spinoff Getting Drugmakers’ Interest

January 23, 2012

(Updates with closing share price in sixth paragraph.)

Jan. 22 (Bloomberg) -- Can-Fite Biopharma Ltd.’s oral treatment for dry eye is drawing interest from drugmakers after the Israeli biopharmaceutical company spun off the product into a U.S. business, the chief executive officer said.

The spinoff will bring Petach Tikva, Israel-based Can-Fite closer to entering the potential multibillion-dollar market for eye treatments with the experimental CF101 medicine, CEO Pnina Fishman said in an interview. The drug is being developed for use on dry-eye syndrome, glaucoma and uveitis.

“The aim of the spinoff was to establish a specialized ophthalmology company which will raise money outside Israel and give us exposure to the U.S. biotechnology market,” Fishman said at Can-Fite’s offices on Jan. 12. “We are getting a lot of interest from big pharmaceutical companies and we are looking for the right groom.” She declined to give names of drugmakers that are interested in licensing the product.

Can-Fite in November gave CF101 to Denali Concrete Management Inc., a defunct Carson City, Nevada-based construction company, receiving in return an 82 percent stake in Denali. At the same time, Denali raised more than $6 million from investors to fund the eye drug’s development. Denali, a publicly traded company that isn’t listed on a stock exchange, is changing its name to OphthaliX Inc., Denali said in a regulatory filing.

The stake in Denali is valued at $75.1 million, almost two and half times Can-Fite’s market value of $31 million.

Financing Studies

Can-Fite declined 0.8 percent to 0.483 shekel in Tel Aviv today, trimming gains this year to 7.8 percent. The stock declined 40 percent in 2011. The Tel Aviv Biomed index has gained 12 percent this year and dropped 24 percent in 2011.

Fishman and a partner founded Can-Fite 10 years ago. The company develops drugs that target receptors present in inflamed or cancer cells. Its revenue has come from partnership deals through which it received milestone and upfront payments.

“The spinoff allowed us to raise money to develop our drug in the ophthalmology field without diluting our existing shareholders,” said Fishman. “The money will be enough to finance the ongoing studies.”

Denali is beginning a clinical trial -- the third and final stage of studies typically needed for regulatory approval -- of CF101 in dry-eye syndrome, the company said in December. The company also is conducting a mid-stage trial in glaucoma, and is preparing for a mid-stage study in uveitis, a swelling and irritation of the uvea, the middle layer of the eye.

Patients with dry eye may not easily adapt to the concept of an oral medication as an alternative to the standard eye-drop treatment, said Yoav Kedar, a biotechnology consultant for Clal Finance Brokerage Ltd.

Oral Treatment

“We see the dry-eyes market as a difficult market to penetrate,” said Kedar. “Most moderate patients do well with eye drops.” Patients with severe cases of dry eyes are successfully treated with Allergan Inc.’s Restasis, he said.

Fishman said the oral treatment ensures the full dose of the medication is taken and is often a relief to patients with severe cases of the disease, who sometimes have to use eye drops every hour.

Can-Fite has licensed CF101 in Japan and South Korea as a treatment for autoimmune and inflammatory conditions such as psoriasis and rheumatoid arthritis. The company has received $8 million dollars in upfront and milestone payments, Fishman said.

The company is also developing a treatment for primary liver cancer. Can-Fite said Jan. 18 that 85 percent of patients in a Phase I/II clinical trial of its CF102 drug to treat liver cancer reacted positively to the treatment.

--Editors: Phil Serafino, Robert Valpuesta

To contact the reporter on this story: Shoshanna Solomon in Tel Aviv at ssolomon22@bloomberg.net

To contact the editor responsible for this story: Claudia Maedler at cmaedler@bloomberg.net


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