Norway Oil Money Boosts Health as Biotechs Dig Up Cancer Cures

Norway, which built its wealth on salmon and oil, is emerging as a force in biotechnology as companies around Oslo discover new ways to fight cancer.

PCI Biotech Holding ASA, whose product attempts to blast tumors with a drug charged by light, surged eight-fold on the Oslo stock exchange in the past year. Algeta ASA, working on a way to destroy cancer cells and spare healthy tissue, doubled over 12 months, while Clavis Pharma ASA, whose experimental pancreatic cancer treatment won U.S. orphan drug designation in January, almost tripled. In June, PCI’s share sale lured local billionaire Erik Must and financier Erik Engebretsen.

“We subscribed to the new shares at 40 kroner, and we wouldn’t do that unless we expected to triple our investment in three years,” Engebretsen, who runs the Oslo investment fund Gezina AS, said in a telephone interview. The stock closed at 59 kroner yesterday.

Ernst & Young Global Ltd., which publishes an annual report on global biotechnology trends, began tracking Norway for the first time last month after two deals attracted attention to drug development in the world’s second-wealthiest nation.

Germany’s Bayer AG agreed last September to pay Algeta as much as $800 million for rights to the experimental cancer treatment Alpharadin. Two months later, U.S.-based Clovis Oncology Inc. said it would pay Clavis as much as $380 million for its experimental cancer drug.

Fishy Start

Helped by government funds from North Sea oil sales, the number of biotech companies in Norway almost doubled in a decade, according to the Norwegian Research Council. Some, like Clavis, originated in Norsk Hydro ASA’s early discoveries about the health benefits of fish oil.

“That’s the way things start in Norway, with fish,” says Knut Sogner, director of the Norwegian School of Management’s Centre for Business History in Oslo.

PCI, the Nordic region’s best performing health-care stock in the past 12 months, came from the Norwegian Radium Hospital, northern Europe’s largest cancer center.

Kristian Berg, a senior scientist at the hospital’s Institute for Cancer Research, was studying light in 1985 when he noticed it exploded living cells. After researchers elsewhere discovered the bubbles in which cancer cells envelop and disable drugs, he sought to harness that effect, he said in an interview.

Tumors Vanish

Berg spent the next two decades working on the drug. The first time it was tested on humans, patients were given a generic form of chemotherapy and a single dose of the medicine, Amphinex. In a procedure that took about 10 minutes, the light triggered a chemical reaction in Amphinex that destroyed the bubble-like enclosures before the chemotherapy was released.

“We didn’t expect any response at all because of the low dose,” Berg said. Instead, the tumors disappeared in the first 11 patients treated at London’s University College Hospital, according to data released in April. Among the test subjects, one had cancer of the bone, seven in the head and neck, and three in the breast.

Light-sensitive chemicals, including Axcan Pharma Inc.’s Photofrin, Dusa Pharmaceuticals Inc.’s Levulan and QLT Inc.’s Visudyne, are already used to combat skin and bladder cancer, pre-cancerous skin cells and blindness. But the doses needed to penetrate deep tumors can kill healthy cells.

Amphinex is more reactive, so a lower dose coupled with the same amount of light has a greater effect, according to Berg.

‘Believe in the People’

If the promising results are repeated in more advanced tests, PCI’s therapy may render older drugs more effective, according to Chief Executive Officer Per Walday.

Erik Must, whose fortune was estimated by Kapital magazine at 2.8 billion kroner ($470 million) last year, bought PCI shares in the June stock sale to increase his stake to almost 6 percent.

“I believe in the technology and I believe in the people,” Must said in a June interview from the Oslo office of Fondsavanse AS, the fund through which he holds PCI.

Norwegian scientists have led the pack before. In 1907, Axel Holst and Theodore Frolich proved scurvy resulted from a lack of vitamin C. Thirty years later, Nycomed ASA of Oslo was among the first to develop contrasting agents so doctors could see X-rayed images clearly.

Last year, Pronova BioPharma ASA, spun off from Norsk Hydro like Clavis, became the first company to gain U.S. and European approval for a heart treatment derived from fish oil.

New Approaches

Algeta, based in Oslo, may have found what many more established drugmakers are seeking: a cancer medicine known as a “first in class.” The compound, Alpharadin, sends out targeted radioactivity to attack cancer that has spread to the bone without hurting healthy surrounding tissue.

The company estimates the medicine, currently in the last phase of clinical testing on patients with prostate cancer that has spread to the bone, may garner annual revenue of as much as $1.9 billion in the U.S. and Europe. Algeta shares doubled since Bayer, Germany’s largest drugmaker, agreed to pay as much as $800 million for rights to the drug.

At Oslo-based Clavis, scientists are developing an experimental cancer treatment to improve on Eli Lilly & Co.’s chemotherapy drug Gemzar, which is typically prescribed for tumors of the pancreas. Clavis’s technology attaches a so-called lipid tail to the medicine, enabling it to enter the cell membrane and transport the drug in a more targeted way. The treatment also is designed to help patients with low levels of a protein known as hENT1, which transports Gemzar.

Oil Money for Drugs

Norway’s government concluded in 1999, as it sought industries to propel economic growth when oil reserves dry up, that the country wasn’t doing enough to promote research.

Oil and gas made up 22 percent of Norway’s economy last year, though oil production has dropped 40 percent in a decade.

In the past five years, the state-owned Research Council has provided 207.6 million kroner in funding to 22 health-care companies, including PCI. State-owned Innovation Norway, which promotes industrial development, has distributed another 125.8 million kroner in funding and loans to 19 companies.

The Oslo Cancer Cluster, a hub of public and private research set up in 1996 to spur drug development, and the Radium Hospital, where Berg works, have been recipients of government grants. The government also introduced tax incentives.

PCI has received 25 million kroner of government support since 2005. “It has been very important in the development of the company,” CEO Walday said.

To contact the reporters for this story: Frances Schwartzkopff at fschwartzko1@bloomberg.net; Meera Bhatia at mbhatia2@bloomberg.net

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