Worcester Business Journal

www.wbjournal.com July 20, 2015 • Worcester Business Journal 13 get as far as modeling its therapies in mice before it can find a company willing to take a risk on them. Other researchers are looking at different pieces of the puzzle. Another team of researchers at WPI led by Patrick Flaherty, an assistant professor of biomedical engineering, has developed a big-data tool to allow for more accurate biopsy results. Instead of determining just the dominant type of cancer cell in a tumor, the statisti- cal model can identify multiple subtypes that often exist within a single tumor. That means more opportunities to determine exactly what type of treatment is appropriate for a given patient. Meanwhile, Worcester-based Nemucore Medical Innovations Inc. is developing therapies that target ovar- ian, uterine and breast cancers. CEO Timothy Coleman said each drug it's working on goes with a diagnostic technology that can determine whether it's appropriate for any given patient. "When we look a patient population, we really want to stratify them into patients that are going to be respond- ers versus those that are not going to be," he said. It's best to know ahead of time, to avoid exposing patients to treatments that won't work and have toxic side-effects. Nemucore has one promising molecular therapy set to start a second-phase trial and two others that will be in initial-phase trials over the next year. Like Duffy's work at WPI, Nemucore's drug develop- ment so far has been funded largely with government money, from the National Institutes of Health, as well as foundation dollars. Now, though, Coleman said, the company is bringing on investors, and it aims to go pub- lic in 12 to 15 months. UMass research drawing interest At the University of Massachusetts Medical School, molecular biologist Dale Greiner and Giles Whalen, director of the Cancer Center of Excellence, are taking a different tack in pursuing personalized cancer treat- ments. Together, they helped found the multi-campus UMass Cancer Avatar Institute, which is developing mice that can act as "avatars" of specific cancer patients, with immune systems and tumors engineered to mir- ror a patient's specific situation. Greiner said that, within a couple of years, their technology may allow a doc- tor to send a patient's tumor sample to a lab and have potential therapies tested on 100 avatar mice before starting treat- ment for the real patient. Already, the institute is using the mouse models to grow tumors taken from patient biopsies, letting research- ers study specific types of cancer. Greiner said this is the result of a com- plex collaboration among clinical oncol- ogists and basic researchers. Patients sign universal consent forms allowing for their biopsy samples to be used in research. A tumor bank assigns num- bers to the samples to protect patient privacy, and the researchers tailor their mice for colleagues' use. "This is starting to get a lot of atten- tion from pharmaceuticals," Greiner said. "What they are looking for (are) ways to test drugs in development pre- clinically on patient tumors … so we are now talking to and actually working with some companies, major play- ers in cancer drug development." That's just one more layer in the complex web of rela- tionships that is moving personalized cancer research forward in Central Massachusetts and elsewhere. n >> LIFE SCIENCES Analysts brush off BSX settlements in product lawsuits I n May, Marlborough-based Boston Scientific Corp. lost a $100 million verdict in a case over its trans- vaginal mesh products. A month before that, it set- tled nearly 3,000 similar suits for $119 million. More cases over the defective devices, women's health prod- ucts that were intended to support internal organs and treat incontinence, are still pending. But the suits represent only a blip on a course that analysts say is likely to trend upward for several years to come. "In general, we have a bullish outlook for the compa- ny," said Joshua Jennings, a managing director with financial services firm Cowen & Co. Jennings said Boston Scientific has one of the best growth trajectories in the medical device industry, with 5 percent annual revenue growth and expanding mar- gins. One of the company's big strengths today is its new and soon-to-come products. That includes a new kind of implantable defibrillator, a stroke-prevention device and a coronary stent using bioabsorbable poly- mer coating that avoids subjecting patients to long- term contact with polymers. "They're running on all cylinders, and there's more to come," Jennings said. The company's stock price suffered a bit in June, fall- ing about 4 percent while the medical device industry as a whole held fairly steady. But the decline came after a huge jump in Boston Scientific's performance following its settlement of a longstanding legal dispute with Johnson & Johnson in February. The rival company had sought $7.2 billion in damages over a conflict related to Boston Scientific's acquisition of cardiovascular equip- ment maker Guidant Corp. in 2006, but the companies ultimately settled for $600 million. Jennings said the big dollar signs attached to the case had kept investors a bit skittish about the company's stock. "Seven billion seemed outlandish," he said, "But you never know." With that suit no longer hanging over Boston Scientific's head, its stock price rose by a third from the start of the year before it leveled off in April. In early May, before the $100 million verdict in the transvaginal mesh case, Matthew Taylor, an analyst with Barclays Capital Inc., noted that Boston Scientific had moved toward offering settlements in cases sur- rounding the mesh product rather than going to court. He wrote that there were about 23,000 cases left. If they were settled at about $40,000 — the aver- age settlement level so far — that would imply anoth- er $290 million in liabilities. Boston Scientific did not respond to a request to comment for this story. In an earnings call earlier this year, President and CEO Mike Mahoney said the com- pany's total legal reserves stood at $1.453 billion at the end of March, though that included $300 million that was later paid as the second half of the Johnson & Johnson settlement. Forecast: Larger growth than peers Like Jennings, Taylor expressed a fairly bullish view of Boston Scientific, writing that, between its core business and new products, it should grow by "mid single digits" or more for the next two to three years. Along with developing new products, the company has announced some acquisitions. In March, it said it would acquire the urology division of American Medical Systems for $1.6 billion. In April, it announced a much smaller deal to buy endoscopic ultrasound device maker Xlumena Inc. for at least $62.5 million. Beyond the Johnson & Johnson case, Boston Scientific is digging out from years of tough times. It reported a net loss for the past three years running. But as of the first quarter of the year, it predicted a profitable year in 2015, with earnings per share of 32 to 38 cents. Taylor wrote that the company has emerged from a turnaround phase. Mahoney, who became CEO in 2012, has led a management reorganization effort, switching from a system based on country-specific leaders to one in which global business leaders are responsible for increasing sales and profits in various product areas. Jennings puts it another way, praising Boston Scientific's "operational excellence initiatives" as a depar- ture from missteps made in earlier years, particularly within the company's cardiac division. The company will reveal its results for the second quarter of the year on July 23, providing a new window into its progress toward better sales and greater profit- ability. But analysts say what we really need to look at to gauge its progress are the products it's rolling out. n $10 $12 $14 $16 $18 $20 8/1/14 7/1/15 $12.59 $17.80 Watchers of company say Marlborough firm has strong product line to fuel more growth BY LIVIA GERSHON Special to the Worcester Business Journal Spending on cancer research National Institutes of Health spending — in millions of dollars — on research for different types of cancer since the 2011 federal fiscal year (October through September). * Estimated ** New category of funding starting in FY 2014 Source: National Institutes of Health Brain $280 $281 $280 $289 $290 $299 Breast $715 $800 $657 $682 $685 $704 Cervical $119 $112 $98 $116 $116 $119 Colo-rectal $313 $302 $281 $271 $272 $280 HPV and/or cervical vaccines $24 $26 $25 $38 $38 $39 Liver $74 $73 $71 $74 $74 $76 Lung $221 $233 $208 $254 $255 $263 Ovarian $138 $147 $133 $131 $131 $135 Pancreatic $112 $127 $125 $123 $123 $127 Pediatric* $276 $277 $285 Prostate $284 $257 $286 $254 $255 $262 Uterine $40 $42 $39 $57 $57 $59 2011 2012 2013 2014 2015 * 2016 * Boston Scientific stock Over the last year, Boston Scientific stock has performed well, particularly since a legal dispute with Johnson & Johnson was settled in February. Source: Nasdaq >> Continued from previous page

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