BOTHELL — Alex Tustian slips while talking about his research for Sonus Pharmaceuticals Inc. and refers to his employer as a "start-up."
It’s an unusual term for Sonus. The Bothell biotechnology company is 12 years old, and as a public company has a market value hovering above $90 million.
But even Michael Martino, Sonus’ chief executive officer, sometimes mentions the start-up mentality at his company. He sees it as one of the keys to keeping the company focused on productive research while being careful with its finances.
"I think that’s definitely a characteristic in this organization," agreed Tustian, the company’s manager of product development.
It’s a characteristic that might be key in the company’s rebound over the past few years. After flirting with disaster, Sonus Pharmaceuticals is generating renewed buzz among investors.
Sonus’ lead product, Tocosol paclitaxel, continues to show promising results as it progresses through phase 2 clinical studies.
Tocosol paclitaxel has the potential to improve cancer therapy by delivering less toxic but more effective doses of paclitaxel to patients. It uses the same active ingredient as Taxol, the world’s largest-selling drug to fight cancer. But Sonus’ formula makes the drug easier to dissolve in the circulatory system. Thus, Tocosol paclitaxel could be delivered to a patient in a 15-minute dose compared to the three-hour infusion required with Taxol.
"We think the data is second to none in this category," Martino said. "We’re treating very sick patients and we’re seeing regression of their tumors."
In one of the latest studies on paclitaxel, the drug produced partial or complete tumor reductions in 26 percent of tested patients with ovarian cancer, 21 percent with nonsmall-cell lung cancer, and 29 percent with bladder cancer. Those results are better than those produced by similar chemotherapy drugs, Martino said.
"The phase 2 data keeps getting better," said Matt Kaplan, an analyst with Punk Ziegel &Co. who tracks Sonus and owns the company’s stock.
Next month, Sonus passes a dubious anniversary. It was on Oct. 12, 2000, that the company announced it had withdrawn its drug application for EchoGen, an ultrasound contrast technology that got stuck in the last phase of the Food and Drug Administration’s approval process.
It marked a sharp change in direction, and the initial reaction wasn’t encouraging. The company’s stock price plummeted nearly 75 percent after the announcement, and Sonus laid off one-quarter of its staff.
"It was a tough time, of course," said Tustian, who joined Sonus in 1998 to develop Tocosol, which was an offshoot of the EchoGen research. "But it was a smart decision, especially in hindsight."
No one’s writing off the biotech firm anymore, including investors. In July, Sonus raised more than $13 million in net proceeds through the private placement of 3.9 million newly issued shares of stock.
In addition to receiving new financing, the company’s stock is climbing. At this time last year, Sonus’ share price was below $2. This month, it’s been trading above $5 a share, or about 140 percent higher than the stock price at the beginning of 2003. The company’s market value exceeds $90 million these days.
Kaplan points out that much of the run-up in the stock price is due to renewed enthusiasm for biotech stocks. As he put it, the two-year-long "nuclear winter" for biotech stocks seems to have ended.
That said, he’s impressed with the clinical study results, Sonus’ addition of more expertise in the management ranks and the company’s strategy for getting the drug to market.
"I think, in the near term, things look very good," Kaplan said.
Martino’s clear on his next goal, to finalize a deal with a larger company that can help Sonus bring paclitaxel the rest of the way through the expensive FDA review process and beyond.
"It’s very clear from a strategic view that we want to partner in order to commercialize this product," he said.
The company could announce a partnership deal by year’s end. Martino’s longer-term vision sees Sonus partnering on its potential follow-up drug to paclitaxel. That drug, also based on the Tocosol formula, is aimed at treating colorectal, ovarian and small-cell lung cancer.
Sonus also has several other potential candidates based on the Tocosol platform. By the time Sonus is ready to launch tests on its third or fourth drug, the company may have the resources to bring it to the market itself, Martino said.
That’s years ahead, however. In the meantime, Martino is keeping Sonus "lean" to limit the speed at which the biotech burns through its cash. Right now, it’s spending about $1 million each month.
That could increase to $1.2 or $1.3 million soon as the clinical trials go into the final stage. Sonus also may add up to 10 people to its existing staff of about 40 in the 12 to 18 months, Martino said.
While he has no desire to see the company repeat what happened in 2000, Martino said the lessons in resilience and reinvention that came out of it continue to be valuable.
"We’re getting further away from the reinvention point, but we’re going forward with that spirit," Martino said.
Reporter Eric Fetters: 425-339-3453 or fetters@heraldnet.com.
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