A decade ago, Mark Pruzanski was running Intercept Pharmaceuticals Inc. ICPT +10.25% alone out of his West Village apartment and was $100,000 in debt. At one point, the company had $4.41 in its checking account.
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Mark Pruzanski operated Intercept out of his apartment until 2006. Friends and family urged him to find a 'real job.' Joe Walker/The Wall Street Journal
By last Friday, the 45-person firm was the hottest company in the biotechnology sector, its market capitalization having soared more than sixfold over the course of one week, to $8.6 billion from $1.4 billion, after its liver-disease drug performed surprisingly well in a clinical trial funded by the National Institutes of Health.
This week, investor enthusiasm for the unprofitable company waned. By the close of trading on Tuesday, Intercept had shed $3.7 billion in market value and its shares had fallen 43% since Friday's close, as investors priced in the risk that safety issues or competition from larger industry players could limit the company's future upside. But even still, the stock remains 252% above its price before the liver trial news.

Earlier

From cash-starved startup to stock-market success story, Intercept is an example of the sudden twists and turns that can occur in the biotechnology industry, where fortunes are made—and lost—overnight on the basis of small clinical studies of drugs still years away from coming to market.
"It's been an interesting roller-coaster ride," said Dr. Pruzanski, 46 years old, in a recent interview.
Nora White, the first employee Dr. Pruzanski hired in 2006, sat in a cubicle in the company's new offices in Manhattan's Meatpacking District on Friday afternoon, answering a steady stream of queries from investors and media curious about the little-known company. Ms. White said she had kept most of her Intercept stock, though she had never expected its value to rise so much.
"It's life-changing," said Ms. White, 42 years old. "I told my husband, 'We can afford to have kids now!" she joked.
Achieving lasting success in biotech is tough. Many firms run out of cash and go bust before they can see their research through, and very few manage to win regulatory approval for their drugs. Even when a drug appears to work well, side effects often prevent it from reaching the market. Intercept's drug may still fail in further study.
On Friday, the National Institutes of Health issued a statement saying that patients taking Intercept's drug, called obeticholic acid, or OCA, experienced cholesterol problems—higher "bad" cholesterol and lower "good" cholesterol—at a higher rate than those taking a placebo in the trial. The study tested the drug's efficacy against a liver disease known as nonalcoholic steatohepatitis, or NASH, which affects 2% to 5% of Americans.
Abnormal cholesterol levels could be problematic because they increase the risk of heart disease, a leading cause of death for NASH patients, said Mary Eugenia Rinella, a liver-disease specialist at Northwestern University's Feinberg School of Medicine in Chicago.
Dr. Pruzanski said Intercept has been aware of the drug's effects on cholesterol levels, and that the company continues to study the impact in patients.
In an interview, Dr. Pruzanski said he was having a glass of wine with a colleague at Manhattan's Standard Grill last week when the company's chief medical officer called to report the good news: OCA had proved so effective in the NASH study that the trial was being stopped early—a rare event in drug development that suggests a treatment has the potential to be a breakthrough.
"I was speechless," Dr. Pruzanski said Friday afternoon from the company's offices. "We immediately recognized that our game-changing event had happened sooner than we had expected," said the CEO, whose shares and options in the company were valued at $202.55 million at the end of Tuesday.
Until 2006, Dr. Pruzanski was operating Intercept alone out of his apartment. Friends and family, he says, urged him to find a "real job" after early financing for his fledgling company fell through. "My sister dressed me down because I was never going to be an entrepreneur," Dr. Pruzanski said.
In the early 2000s, Dr. Pruzanski had sought out an Italian chemist and medical professor at the University of Perugia in Italy after learning that he had developed drugs capable of jump-starting the liver repair process. Dr. Pruzanski, who speaks Italian and five other languages, had dinner with the chemist, Roberto Pellicciari, while in Italy for a friend's wedding in 2002.
The two hit it off and agreed to start Intercept, but the company quickly ran into trouble. A venture-capital investment of $15 million fell through at the last minute, and Dr. Pruzanski said he invested his savings and maxed out his credit cards until an old friend and roommate from his hometown of Toronto, Michael Aberman —currently a vice president at Regeneron Pharmaceuticals Inc. REGN -4.27% —introduced Dr. Pruzanski to Garo H. Armen, a New York-based biotech entrepreneur who invested $50,000 of what became a roughly $3 million financing round composed of other individual investors.
By the time Intercept raised $41 million from companies including Italy's Genextra SpA in 2006, Intercept had $4.41 left in its checking account, Dr. Pruzanski says.
Intercept went public in 2012, and by last year was experiencing greater success, thanks to an overall boom in biotech stocks and some positive clinical-trial data for OCA's use in a different liver disease called primary biliary cirrhosis. Last year the company's stock price doubled.
Genextra was Intercept's largest shareholder as of late last week, with about a third of the company. SAC Capital Advisors LP, the embattled hedge fund that pleaded guilty to insider trading last year, and its Sigma Capital Management LLC arm owned 5.3% of shares outstanding as of Nov. 7.
Just before Intercept learned of the positive NASH trial results last week, the company moved into new office space in the Meatpacking District, next door to a lumber warehouse and down the street from Google Inc. GOOG -0.07% 's New York headquarters. On Friday, after the company's stock-market leap, Intercept's conference rooms were still filled with unpacked boxes, and wall paintings wrapped in protective plastic, while the building's maintenance men, carrying ladders and buckets of spackling compound, put finishing touches on the office.No one had yet hung a company sign on the office door.
"This is a stupid, risky business," Dr. Pruzanski said. "Most biotechs fail, and most drugs fail along the way," he said.
The Intercept story is generating buzz at the annual J.P. Morgan Healthcare Conference in San Francisco, which began Monday and draws thousands of health-care investors and executives. After the study results were announced last week, the company became a late addition to the roster of drug developers giving presentations to investors at the meeting. Dr. Pruzanski is scheduled to give the presentation Wednesday morning.
"People are trying to pick the next big medicine," Chris Viehbacher, chief executive of French drug giant Sanofi SA, SAN.FR +1.05% said Monday. He called the stock market reaction to the Intercept news "remarkable."
—Peter Loftus and Rob Copeland contributed to this article.
Write to Joseph Walker at joseph.walker@wsj.com


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Neurology. 2014 Jan 7;82(1):41-8. doi: 10.1212/01.wnl.0000438216.93319.ab. Epub 2013 Dec 4.

Effects of Bacille Calmette-Guerin after the first demyelinating event in the CNS.

Ristori G, Romano S, Cannoni S, Visconti A, Tinelli E, Mendozzi L, Cecconi P, Lanzillo R, Quarantelli M, Buttinelli C, Gasperini C, Frontoni M, Coarelli G, Caputo D, Bresciamorra V, Vanacore N, Pozzilli C, Salvetti M.

Author information

Abstract

OBJECTIVE:

To evaluate Bacille Calmette-Guérin (BCG) effects after clinically isolated syndromes (CIS).

METHODS:

In a double-blind, placebo-controlled trial, participants were randomly assigned to receive BCG or placebo and monitored monthly with brain MRI (6 scans). Both groups then entered a preplanned phase with IM interferon-β-1a for 12 months. From month 18 onward, the patients took the disease-modifying therapies (DMTs) that their neurologist considered indicated in an open-label extension phase lasting up to 60 months.

RESULTS:

Of 82 randomized subjects, 73 completed the study (33 vaccinated and 40 placebo). During the initial 6 months, the number of cumulative lesions was significantly lower in vaccinated people. The relative risks were 0.541 (95% confidence interval [CI] 0.308-0.956; p = 0.03) for gadolinium-enhancing lesions (the primary endpoint), 0.364 (95% CI 0.207-0.639; p = 0.001) for new and enlarging T2-hyperintense lesions, and 0.149 (95% CI 0.046-0.416; p = 0.001) for new T1-hypointense lesions. The number of total T1-hypointense lesions was lower in the BCG group at months 6, 12, and 18: mean changes from baseline were -0.09 ± 0.72 vs 0.75 ± 1.81 (p = 0.01), 0.0 ± 0.83 vs 0.88 ± 2.21 (p = 0.08), and -0.21 ± 1.03 vs 1.00 ± 2.49 (p = 0.02). After 60 months, the cumulative probability of clinically definite multiple sclerosis was lower in the BCG + DMT arm (hazard ratio = 0.52, 95% CI 0.27-0.99; p < 0.05), and more vaccinated people remained DMT-free (odds ratio = 0.20, 95% CI 0.04-0.93; p = 0.04).

CONCLUSIONS:

Early BCG may benefit CIS and affect its long-term course.

CLASSIFICATION OF EVIDENCE:

BCG, as compared to placebo, was associated with significantly reduced development of gadolinium-enhancing lesions in people with CIS for a 6-month period before starting immunomodulating therapy (Class I evidence).
PMID:
24306002
[PubMed - in process]

PMCID:
PMC3873620
[Available on 2015/1/7]