Cancer Coup

How do you get a shot at simultaneously pursuing corporate success and finding a cure for cancer? For Carol Gallagher,CEO of the Seattle biotech company Calistoga Pharma, the path to a post that may enable her to achieve both in one fell swoop began, poetically enough, on a Kentucky farm.

The youngest of four, Gallagher grew up on a 1,000-acre farm where her family had been living for five generations. An early interest in science led her to major in chemistry and go on to get a doctor of pharmacy degree—a background that won Gallagher the Eli Lilly internship that launched her pharmaceutical industry career. Over the next 20 years she racked up marketing and management commercial experience at companies ranging from small startups to pharmaceutical giant Pfizer and biotech powerhouse Idec (now Biogen Idec).

But it was Gallagher’s tenure at Biogen Idec, heading the team that took the blockbuster oncology drug Rituxan past the $1 billion sales mark, that readied her for a CEO role. “I realized how much I liked having one foot in the science and one foot in thinking about value creation, not just focusing on the sales and marketing component,” she recounts. “It’s about seeing the total picture and communicating that, which is important to be able to translate—particularly in biotech and for the CEO role in biotech.”

Unfortunately, the total picture that she saw, and had to translate, in her first CEO role was gloomy. Soon after joining private oncology company Metastatix Gallagher discovered that promising early data was not holding up in the Phase I clinical trials of the company’s only real prospective drug—news she, as CEO, had to convey to investors and the company’s board. “It was the main asset of the company, so we all agreed that the best thing to do was stop the program and basically shut down the company,” she explains. “That was an interesting first experience as a CEO, but not exactly a success.”

Still, the experience proved positive for Gallagher, whose unflinching management of an unpleasant situation won the respect of partners at Frazier Healthcare, a lead venture investor in Metastatix and, later, Calistoga. In September 2008, Gallagher joined Seattle, Wash.-based Calistoga as CEO, signing on for another run at nurturing a potential blockbuster cancer drug through clinical trials and into the marketplace. This time, however, the outlook still seems to be more promising.

Calistoga, along with several biotech and Big Pharma companies—reportedly including the likes of GlaxoSmithKline, Novartis and Genentech—is working in one of the hottest areas of cancer research: development of a drug that blocks phosphoinositide-3 kinase, or PI3K, a pathway that drives cellular proliferation and survival as well as immune cell trafficking, which can play a role in diseases like blood cancers and autoimmune diseases like asthma and rheumatoid arthritis. The tricky part is that those functions are also essential for healthy, normal cells, which means drugs that target certain types of PI3Kmay have serious detrimental side effects. That’s where Calistoga’s entry, CAL-101, stands out.

CAL-101 seeks to block a specific type of PI3K, the delta isoform, and, as a result, deliver therapeutic benefits without the side effects attributed to drugs that block a broader spectrum of PI3K. “We have a very different approach in that we’re very selective for certain isoforms,” Gallagher explains. “When I joined the company we didn’t know if that meant results would be better, but the clinical data since then is very encouraging.” In fact, CAL-101’s early clinical trial showed a 50 percent response rate across a range of different blood cancers, including chronic lymphocytic leukemia, acute myeloid leukemia, non-Hodgkin’s lymphoma and multiple myeloma.

Calistoga plans to start Phase II clinical trials next year and could bemarketingCAL-101 as early as 2013. However, bringing a drug through the more intensive final stages of clinical trials and introducing it to the market place requires deeper pockets than the company currently has, admits Gallagher, who notes that Calistoga completed a $30 million Series B financing in May 2009. “Collecting the data alone would cost around $100million, then to launch it you would probably need another $50million,” she says.

“But the challenge goes beyond funding. Scaling the company getting the people we would need to run a lot of parallel clinical trials and handle market development, building awareness among physicians—is an even bigger issue.”

Calistoga is also planning to explore another compound, CAL-263, in patients with asthma. The company has a third candidate that will enter clinical trials, using flow cytometry techniques next year for patients with solid tumor malignancies.

A few years ago, an IPO would have provided ample funding for the next leg of Calistoga’s growth journey. But unless the IPO market heats up soon, the company will need to look elsewhere for the funding, clinical trial and promotional resources it needs—which is Gallagher’s current challenge. She’s already talking with Big Pharma companies about potential partnerships or a straight acquisition—or even licensing a different version ofCAL-101 geared toward treatment of asthma, COPD and rheumatoid arthritis and using the proceeds to self-fund Calistoga’s cancer program.

 “We probably can’t get where we need to be totally lone,” asserts Gallagher, who says CAL-101 has the potential to be a “multibillion-dollar” drug. “We have a lot of options, though.”