Sunday, October 19, 2014

Amicus Therapeutics (FOLD) Announces Additional Positive Phase 3 Data Late Sunday Night

Amicus (FOLD) announced additional positive phase 3 results from its Phase 3 trial in Fabry disease using its lead compound Migalastat late Sunday night. I've provided an insert of the release below and expect shares to move up Monday morning due to the additional positive data. Across All Subgroups, Patients Treated with Migalastat Compare Favorably to Natural History on Kidney Function (eGFR) Additional GL-3 Data Further Validate Assay for Identifying Patients with Amenable Mutations CRANBURY, N.J., and SAN DIEGO, Oct. 19, 2014 (GLOBE NEWSWIRE) -- Amicus Therapeutics (FOLD), a biopharmaceutical company at the forefront of therapies for rare and orphan diseases, today announced additional positive data from a Phase 3 study (Study 011) of the oral small molecule chaperone migalastat HCl ("migalastat") in Fabry disease patients with amenable mutations. In a poster at the American Society of Human Genetics (ASHG) Annual Meeting, Daniel G. Bichet, M.D., M.Sc., Professor, Department of Physiology, University of Montreal, presented results from patients in Study 011 including those who continued on migalastat in an open-label extension (Study 041). Assessment of kidney function by various measures of glomerular filtration rate (GFR) for patients receiving migalastat in Study 011 for at least 18 months and continuing migalastat treatment in Study 041 showed continued stability of kidney function for an average of 32 months. Decline in kidney function is a key cause of morbidity and mortality in patients with Fabry disease. Measured (iohexol) GFR (mGFR) showed stability over 18-24 months in Study 011 but was not collected in Study 041; mGFR was previously reported with topline Study 011 results. Mean Annualized Change in GFR (ml/min/m2/yr) (SEM) Over an Average of 32 Months with Migalastat in 011 and 041 Estimated GFR (eGFR) (CKD-EPI) (n=41) -0.20 (0.60) eGFR (MDRD) (n=41) +0.63 (0.08) Stratifying patients for gender and baseline proteinuria demonstrated that patients treated with migalastat experienced less decline in kidney function than untreated patients from a previously published natural history study1. Dr. Daniel Bichet, Full Professor and Section Head, Renal Function & Transport Physiology, University of Montreal, said, "Baseline proteinuria levels are among the most predictive indicators of disease prognosis and kidney function decline in Fabry patients. The data presented today show that when comparing patients with similar levels of proteinuria, patients treated with migalastat are more stable in their kidney function versus untreated patients. These results are very encouraging for migalastat as a treatment for Fabry patients with amenable mutations." Data from a subgroup analysis comparing the change in GL-3 substrate levels between amenable patients and non-amenable patients based on the GLP HEK cell assay provided additional validation of the sensitivity of the GLP HEK assay for identifying patients who will respond to migalastat monotherapy. Overall, patients with amenable mutations had declining levels of GL-3 when treated for six months with migalastat. In contrast, patients with non-amenable mutations had no change or increasing levels of GL-3 after six months of migalastat treatment. "We are pleased to present these additional Phase 3 results in a scientific forum. With 32 months of data, Fabry patients treated with migalastat exhibit long-term stability in their kidney function. These results contrast with the decline in kidney function reported in natural history studies. Decline in kidney function is one of the primary causes of morbidity and mortality in Fabry patients," stated Dr. Jay A. Barth, Chief Medical Officer of Amicus Therapeutics, Inc. "The additional data on substrate reduction show that we can accurately identify patients who may benefit from migalastat. We look forward to meeting with regulatory agencies starting this quarter as we work to make migalastat available for all amenable Fabry patients as quickly as possible."

Wednesday, October 15, 2014

How to Bargain Hunt for Hot Biotechs: Edison's Pooya Hemami

Source: Peter Byrne of The Life Sciences Report (10/15/14)

http://www.thelifesciencesreport.com/pub/na/how-to-bargain-hunt-for-hot-biotechs-edisons-pooya-hemami

Every business day, Edison Investment Research Analyst Pooya Hemami scours the global markets for life science companies with upside flowing through their product pipelines. In this interview with The Life Sciences Report, Dr. Hemami tells us where to look for biotech bargains, including a few top-fliers and a handful of companies that have experienced temporary setbacks but are poised for blue sky.

The Life Sciences Report: The stocks of many solid small biotech firms traveled a rocky road during the first half of 2014. Is now a good time for investors to return to the life sciences?

Pooya Hemami: The biotech sector tends to follow the movements of the stock market as a whole, with a bit more volatility. Investors should be mindful that the 2013 returns were very strong for life sciences. If the broad markets take a pause, the life sciences sector will follow, with a higher beta. Corrections in the broader equity markets tend to disproportionately affect biotech and development-stage firms.

Life science investors need to carefully select individual securities: Perhaps more than in any other sector, individual security selection is key. Making a nonspecific investment in a biotech fund, or in an exchange-traded fund, will not necessarily provide a strong return. Investors should focus on finding well-funded companies with strong assets and intellectual property in their targeted areas, preferably in areas that already enjoy a lot of investor interest. These types of companies are more likely to withstand temporary market gyrations, and to deliver long-term value. Right now could also be a good time for those biotechs that have had a good run over the past year and a half to raise capital to strengthen their cash war chests, by the way.

TLSR: What types of life science products are most in demand right now?

PH: The hottest spaces are orphan drugs and immunotherapies for cancer. In orphan drugs, we cover BELLUS Health Inc. (BLU:TSX; BLUSF:OTCPK). Investors like BELLUS' prospects for Kiacta, which is under development for treating AA amyloidosis, which can lead to kidney failure, dialysis and death. That orphan drug is in a Phase 3 trial, with top-line data expected in 2016. Data from an earlier Phase 3 trial showed some promise. The current study has a larger patient base with more statistical power. It is more likely to reach the threshold of developing a positive outcome; investors are showing optimism for this program.

In immunotherapy, we follow a Canadian company called Trillium Therapeutics Inc. (TR:TSX), which was previously called Stem Cell Therapeutics. In late 2013, Trillium raised more than $30 million ($30M), which is very impressive for a preclinical company. It is developing a novel immunotherapy approach for acute myeloid leukemia (AML), and potentially for other cancers. The product is called SIRPaFc. Trillium has funding in place for completing the Phase 1 studies, which should start in the back half of 2015.

TLSR: How does Trillium's drug work?

PH: Certain cancer cells have a high expression of CD47, a protein that sends a "do not eat signal" to inhibit macrophage phagocytosis (the eating of cancer cells by the immune system). SIRPaFc is an antibody-like fusion protein. It tends to bind to CD47 and block the "do not eat" signal. This increases the immune reaction via an increase in macrophage attacks on tumor cells.

Trillium is meeting later this year with the U.S. Food and Drug Administration (FDA) to discuss the design of the SIRPaFc Phase 1 study. With cancers, one does not always know in advance if the accepted study will be a solid tumor trial or a hematology trial. Trillium's lead focus right now is on hematology, but the accepted indication in the coming Phase 1 trial will be determined in the FDA's investigational new drug process.

Trillium also has to finalize exactly which molecule it will be working on. There are a couple of variants on the lead compound, SIRPaFc. One variant might work better with combination therapy, another form may be more suited for individual cancer therapy.

TLSR: How is Trillium Therapeutics' stock performing?

PH: Without much news flow of late, the stock has been range-bound between $0.20–0.35/share. It will take a couple of years for Trillium get through the Phase 1 trial, and complete a Phase 2. It generally takes at least six years for such a pre-investigational new drug (IND)-stage cancer candidate to reach commercialization. Trillium is well positioned to complete the Phase 1 study. It will need additional capital to move into Phase 2 and additional studies. There could be a partnership along the way.

TLSR: What do you like in the chemotherapy arena?

PH: We are watching CytRx Corp. (CYTR:NASDAQ). It has an interesting cancer product, aldoxorubicin, in Phase 3 trials as a second-line therapy for soft tissue sarcoma (STS). The data read-out is expected in 2016.

TLSR: How is the CytRx Corp. stock performing?

PH: Late last year some good data came out of a Phase 2b trial underway for aldoxorubicin as a first-line therapy for STS, which caused the stock to jump up to about $7/share. More recently, CytRx Corp. has pulled back a bit. The stock is where it was late last year, at about $2.50/share. The company has enough cash to reach the end of the Phase 3 study. As the visibility of the Phase 3 program increases, so will investor interest.

TLSR: Who else has promising products in the pipeline?

PH: We follow Can-Fite Biopharma (CANF: NYSE.MKT), which is an Israel-based company. Its CF101 product is an oral drug that targets the A3 adenosine receptor prevalent in autoimmune diseases. Mainly, CF101 will treat psoriasis and rheumatoid arthritis. Data on the current Phase 2/3 study in psoriasis are expected in 2015. Can-Fite has completed a rheumatoid Phase 2 study for the drug as well. The key near-term driver is the psoriasis results.

One of the encouraging things about this molecule is its safety profile. Safety data on this molecule is promising as it has been studied in 1,200 patients with low severe adverse events. Because the CF101 product is an oral drug with an acceptable safety profile, it will probably be targeted as a therapy for less severe cases of rheumatoid arthritis or psoriasis, which is still a very large market. A lot of the current oral drugs on the market, such as Xeljanz (tofacitinib citrate; Pfizer), and legacy drugs such as methotrexate, have adverse side effects. The biologics have similarly negative side effects. If Can-Fite's product can show decent efficacy, while maintaining the reasonable safety profile shown thus far, it is positioned to do well.

TLSR: Anything catalyzing the mental health product space?

PH: We are constructive on Alexza Pharmaceuticals Inc. (ALXA:NASDAQ). Its Adasuve product was approved in 2012, and was launched earlier this year by Alexza's U.S. partner, Teva Pharmaceutical Industries Ltd. (TEVA:NASDAQ). Adasuve treats agitation associated with schizophrenia and bipolar disorder. In July 2013, the product was launched in the major European markets by Grupo Ferrer Internacional S.A. (private). It is now being readied for a Latin American debut.

TSLR: Is Adasuve a technological advance?

PH: The legacy standard of care for psychotic agitation is based on injection. Needle injections act quickly, but that method of delivery is disruptive. Sharp objects alter the trust relationship between physician and patient. Oral anti-agitation drugs, like Zyprexa (olanzapine) or Abilify (aripiprazole), work, but they take a long time to take effect. The patient might pace for an hour before the oral drug can reach proper levels in the bloodstream. The delay can be dangerous to staff and other patients, and clearly, it makes patient management more complicated, especially in an emergency ward.

TLSR: How does Adasuve work?

PH: Adasuve is a rapid inhaler delivery mechanism for the generic antipsychotic drug loxapine. The patented Adasuve delivery platform is quite rapid. Its "Tmax," or time to maximum concentration, is only two minutes. That is as fast as the intravenous drugs, and even quicker than intramuscular injections, but the mode of administration is much more patient-friendly. Adasuve calms the patient down quickly; it reduces risks to staff, patient, and property.

TLSR: How well has Adasuve been selling?

PH: The product launched at a fair price. The U.S. cost is around $140 per dose; in Europe it sells for about €70/dose. Adasuve is a good high-value driver, even though its sales to date have been a little slower than what the market had hoped. Alexza Pharmaceuticals' Q2/14 results reported peaks and valleys in shipping inventory to its partners. The market interpreted the undersupply of product negatively; the stock is now under $2.50/share, down from close to $5/share in July.

The sharpness of the correction is undeserved, however. Alexza has a good balance sheet. It can fund its own operations for at least another year, even without including the revenue from Adasuve sales. This drug could peak at $400M in annual sales during the next 5–6 years. Alexza also has a couple of other products in the pipeline. It remains a value proposition for investors.

TLSR: Can you quantify any risk involved?

PH: There is always a bit of a risk. If sales are slower to reach peak sales than expected, Alexza will probably need to raise more capital at a less-than-ideal stock price. We assess that the firm is likely to have good sales growth, which will likely prompt investors to respond positively.

TLSR: Are you watching any other undervalued companies?

PH: iCo Therapeutics (ICO:TSX.V; ICO:CA) had an unsuccessful Phase 2 with iCo-007 in diabetic macular edema earlier this year. That has caused investor angst. The company is now trading below cash value. But its pipeline includes an oral formulation of an established antifungal, amphotericin B, for possible application in long-term HIV therapy. iCo Therapeutics also has the rights to bertilimumab, which is an antibody for anti-immune applications, specifically for ocular indications such as vernal keratoconjunctivitis.

In short, investors may want to take a second look at iCo Therapeutics. Once we do get more clarity on the firm's development strategy following the iCo-007 miss, there is likely to be more investor interest. It takes time for disappointments to settle, but iCo Therapeutics is funded for at least another year, which gives it time to exploit the latent value residing in its pipeline.

TSLR: Any other bargains?

PH: We watch Theratechnologies (THER:NASDAQ). The company has rights to Egrifta (tesamorelin for injection), the only U.S.-approved growth hormone releasing factor (GRF) for HIV-associated lipodystrophy. It regained full U.S. commercialization rights from EMD Serono, a division of Merck KGaA (MKGAY:OTCPK), in May 2014. It was having a few issues keeping the drug on its manufacturing track, but Theratechnologies resolved those issues and resumed shipping in September. There will be a lot of potential to increase the U.S. sales once stakeholders regain confidence in the supply chain.

We also like GLG Life Tech (GLG:TSX), which is not specifically a biotech company. It markets stevia leaf, which is used as a natural food sweetener. The company had a challenging 2011 and 2012, but it has entered turnaround territory. Investors are becoming more interested in natural foods, and lower calorie consumption trends are emerging in different markets in the U.S. and abroad. A company that can produce a healthy product at an economical price can benefit from the wellness mania expanding worldwide.

TLSR: Thank you for your time.

Pooya Hemami is a licensed optometrist with more than five years of experience in life sciences equity research. Prior to joining Edison Investment Research, he covered the Canadian healthcare sector as a research analyst at Desjardins Capital Markets. He holds a doctor of optometry degree from the University of Montreal, and a master's degree in business administration (finance concentration) from McGill University. He received his CFA charter in 2011.

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DISCLOSURE:
1) Peter Byrne conducted this interview for Streetwise Reports LLC, publisher of The Gold Report, The Energy Report, The Life Sciences Report and The Mining Report, and provides services to Streetwise Reports as an independent contractor. He owns, or his family owns, shares of the following companies mentioned in this interview: None.
2) The following companies mentioned in the interview are sponsors of Streetwise Reports: None. The companies mentioned in this interview were not involved in any aspect of the interview preparation or post-interview editing so the expert could speak independently about the sector. Streetwise Reports does not accept stock in exchange for its services.
3) Pooya Hemami: I own, or my family owns, shares of the following companies mentioned in this interview: Theratechnologies. I personally am, or my family is, paid by the following companies mentioned in this interview: None. My company has a financial relationship with the following companies mentioned in this interview: Alexza Pharmaceuticals Inc., BELLUS Health Inc., Can-Fite Biopharma, CytRx Corp., GLG Life Tech, iCo Therapeutics, Trillium Therapeutics. I was not paid by Streetwise Reports for participating in this interview. Comments and opinions expressed are my own comments and opinions. I determined and had final say over what companies would be included in the interview based on my research, understanding of the sector and interview theme. I had the opportunity to review the interview for accuracy as of the date of the interview and am responsible for the content of the interview.
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Friday, October 10, 2014

Griffin Securities' Keith Markey on the Promise of RNAi and Synthetic Biologics

Source: Michael Goodman of The Life Sciences Report (10/9/14)

http://www.thelifesciencesreport.com/pub/na/griffin-securities-keith-markey-on-the-promise-of-rnai-and-synthetic-biologics

Griffin Securities has assembled a biotech portfolio weighted toward companies pursuing high-science therapeutic approaches. However, as analyst Keith Markey explains, through a combination of pipeline diversification, positive clinical data and low-cost research and development strategies, many companies are able to mitigate the risk inherent in their technologies. In this interview with The Life Sciences Report, Markey discusses near-term catalysts for some of the names he follows.

The Life Sciences Report: Keith, Griffin Securities' portfolio seems weighted toward high-science, but high-risk, therapeutic ideas. How would you describe your investment philosophy?

Keith Markey: We look for truly innovative products. These products come with a certain level of risk, but we believe they offer the greatest potential returns on investments. The risks associated with the stocks we follow are somewhat mitigated by diversification within a company's portfolio, as is the case with Soligenix Inc. (SNGX:OTCBB), or by the nature of the products, such as Unilife Corp. (UNIS:NASDAQ) drug delivery platforms.

TLSR: How do you mitigate risk for those of your portfolio companies pursuing unprecedented therapeutic modalities, such as RNA interference (RNAi) and synthetic biology products?

KM: In the case of a company like RXi Pharmaceuticals Corp. (RXII:NASDAQ), for example, I think the risk is mitigated by the fact that the company has done extensive clinical trials and/or extensive research both at preclinical and clinical levels with its lead molecule, which targets a growth factor called connective tissue growth factor (CTGF) that plays a central role in the formation of scars.

The other thing that RXi Pharmaceuticals is doing, unlike many of the companies in the field of RNAi therapeutics, is developing products that are relatively easy to administer to the specific areas that need to be treated. By that I mean dermatological indications, which are very easily accessible, and also the eye, for ophthalmic diseases. That's the company's way of mitigating some of the risk from the delivery point of view. Its molecules also are designed specifically to facilitate the uptake of their therapeutic payload, so that's not an issue that has to be considered separately.

As for synthetic biology, I follow Intrexon Corp. (XON:NYSE), the leader in this field. The company happens to be associated, through collaborations, with a number of smaller companies that I follow as well, including Fibrocell Science Inc. (FCSC:OTCBB). I don't look at Intrexon as very risky for a couple of reasons. For one, the company's work is specifically applied to developing a rather wide range of products, including medicines, chemicals and energy-related molecules that have a genetic basis, or where a genetic basis has been worked out for them.

Synthetic biology has a long way to go to realize its full potential. But part of the story for Intrexon is that it can apply a number of different technologies to this specific field, to not only develop the right genetic basis for the therapies or the molecules it is creating, but also to develop the ability to work with various types of cells—to identify those cells and to harvest them specifically.

TLSR: Let's start with RNAi and RXi Pharmaceuticals. At a recent investor conference, the company reported what appeared to be lackluster interim Phase 2 results for its lead candidate, RXI-109, in the treatment of dermal scarring. Are you still bullish on the drug? Do you think that the interim look may have been premature, and that significant improvement in scarring could emerge over a greater period of time?

KM: It's quite possible that something would evolve that would show the benefit of its drug more. But I think what CEO Geert Cauwenbergh was trying to tell people was that these were results from early scars that the company had treated, and that RXi was still working out the opportune moment to administer the drug for this particular type of scarring. It had been following a protocol that had been worked out in a Phase 1 clinical trial. This is a Phase 2 clinical trial, and it was looking at patients prone to hypertrophic scars, which are nasty, rather large scars that don't form immediately after an insult, but in a delayed manner.

The company's pictures showed both a nontreated side and a treated side of a wound. But the pictures were shown prior to Geert's presentation, on the Internet, which was not expected. People who didn't have the benefit of listening to the presentation and looking at the slides at the same time may have seen no benefit, which isn't what the story was all about. The trial was designed to optimize the treatment regimen, and the one-month data did just that—the first interim analysis showed that a delayed administration of RXI-109 yielded better results than injection near the time of the surgery.

TLSR: What near-term catalysts do you think investors should be looking for in RXi's programs?

KM: We should learn more about its CTGF treatment by the middle of next year. In the meantime, the company is doing some work to prepare for clinical development of other dermatological drugs, one targeting tyrosinase and the second one targeting collagenase. Collagenase is known to break down the tissue as we age, so it's going to be of cosmetic benefit. The tyrosinase product could help in lightening dark spots that have formed, café au lait-type spots that occur with aging as well. Those are interesting opportunities to look at from a dermatological perspective, and the startup of those clinical trials will hopefully get investors' attention.

In addition, RXi has a number of different products under development for ophthalmic applications. Probably the furthest along, although it hasn't yet gone into a clinical trial, is its CTGF drug, formulated somewhat differently than for the dermatological applications. It could go into a clinical trial next year. The drug has promise against some back-of-the-eye diseases, but also for scarring that can occur in the cornea—in the front of the eye—following the removal of cataracts.

Another source of potential interest-generating events will be possibly partnering some of its drugs for areas, such as oncology and fibrotic diseases, outside of its primary areas of interest—dermatology and ophthalmology.

TLSR: In synthetic biology, you mentioned Fibrocell. Can you address this company?

KM: In the medical field, Intrexon is working with Fibrocell to develop a novel treatment for individuals born with a devastating dermatological condition called recessive dystrophic epidermolysis bullosa (RDEB). The therapy replaces a particular gene with one that is normal; it works by producing a type of collagen called collagen type VII, which binds the two layers of our skin together—the epidermis and the dermis. Without that, children—infants really—are born with skin so fragile that a slight abrasion will cause extremely painful blistering.

TLSR: Why might investors want to pay particular attention to this company's RDEB program?

KM: I think the RDEB program will give people a first glimpse at how effective genetic correction therapies might be, and how Intrexon's synthetic biology capabilities can be applied to that particular type of genetic disorder. We'll have to see what the duration of the response is, and how strong the response is to this particular gene correction therapy.

TLSR: Fibrocell specializes in autologous cell therapy—fibroblast therapy. There are a few competing products on the market. There is Carticel (autologous cultured chondrocytes/developed to restore knee function), a Genzyme product that was sold off to Aastrom Biosciences Inc. (ASTM:NASDAQ). It's had disappointing sales. And there's also Dendreon Corp. (DNDN:NASDAQ) Provenge (sipuleucel-T), which has had problems in the competitive market for metastatic castration-resistant prostate cancer. In addition, autologous therapy requires a lot of physician training, and there are issues with transportation, packaging and so forth. Do you think that puts autologous cell therapy at a disadvantage? Are investors looking at these issues and holding off on investing in companies like Fibrocell?

KM: I don't think so. Autologous cells do come with tradeoffs, yes. There has to be a tracking mechanism in place to ensure that the patient gets back the same cells that were taken from his/her body. But Fibrocell has worked out that tracking process, and talked about it with the U.S. Food and Drug Administration (FDA).

Do investors look at other alternative therapies? All the time, I would imagine. The benefits of an autologous cell therapy, though, are that you don't have to worry about side effects you might see with allogeneic cells, or the inability of the drug to reach the appropriate target.

In the cases of autologous cells being used for vocal cord therapy or burn therapy, which are also Fibrocell targets, I think administration of the cells will be fairly streamlined. I spoke with one of the experts involved with vocal cord scarring, who presented at the Fibrocell R&D Day recently. He said it wasn't a difficult procedure, and that a fairly large number of otolaryngologists either already perform that kind of procedure, or are at least familiar with the technique. He didn't think it would be a hurdle for the physician. In fact, cell therapy of the vocal cords could actually be carried out under localized anesthesia in an office visit. That makes it minimally stressful for the patient too, who might be an older person experiencing a loss of voice because of age.

TLSR: Can you talk about other Fibrocell products?

KM: Fibrocell has Laviv (azficel-T) on the market for cosmetic applications. However, the company is not actively marketing Laviv, because it is dedicating virtually all its capacity to the clinical trials to develop cellular therapies.

Laviv was originally produced and approved back in the late 1990s, and it was on the market for a number of years. Then the FDA changed its regulatory environment, and suddenly the company had a product that was no longer approved, according to the new guidelines. As a result, Fibrocell had to pull Laviv from the market and start clinical trials all over again. Those studies underpinned FDA approval in 2011.

TLSR: The company doesn't seem to talk about Laviv much. How is it performing on the market?

KM: It hasn't been generating much in the way of sales. But I wouldn't be surprised if we see an increase in sales of Laviv over the course of 2015. I'm not looking for major increases though.

In addition, Fibrocell has been working with Intrexon to improve its cell culture techniques and its ability to harvest fibroblasts from punch biopsies and from cell cultures. In addition, Dr. James Byrne of the University of California, Los Angeles, who has been affiliated with the company, presented at the R&D Day meeting on a new cell culture medium that Fibrocell now has the intellectual property around, which improves the growth of all kinds of cells—fibroblasts, hepatocytes and, interestingly, inducible pluripotent stem cells.

TLSR: How are the company's financials?

KM: Fibrocell has about $50 million ($50M) on hand as of June 30. It's pretty comfortable at this point. Fibrocell is still relatively small, and will have a burn rate of $5–6M per quarter. Its cash position should support operations well into 2016.

TLSR: You also follow Synthetic Biologics Inc. (SYN:NYSE.MKT). I heard CEO Jeff Riley, on a recent earnings call, say he's moving full steam ahead on multiple fronts—multiple sclerosis, anti-infectives, irritable bowel syndrome, pertussis. However, he only has $6–7M in cash on hand. With research and development (R&D) set to ramp up, how will Synthetic Biologics press ahead?

KM: I would imagine we'll see the company return to the capital markets at some point. I don't know exactly when, but Synthetic Biologics works pretty efficiently, and some of its work isn't going to be that expensive. The balance will be how expensive and how long the clinical trials are going to be versus the number of trials underway at any given time.

The company's pertussis product will soon begin clinical development. Both Phase 1 and Phase 2 clinical trials are expected to be conducted in 2015, and they won't require huge numbers of patients. The trials also will be—at least the Phase 2—conducted internationally, where the cost will probably be relatively low because there are far more patients with pertussis outside of the U.S. Here in the U.S., pertussis is actually an orphan indication.

TLSR: What is the specific population that the pertussis candidate is going after?

KM: It's actually a therapeutic, not a vaccine. The vaccine, diphtheria, tetanus and pertussis vaccine (DTaP), has been around for a long time. One of the problems that developed countries are experiencing is that the bug has been mutating over the years, partly in response to the introduction of vaccines. As a result, vaccines are less effective than 20 to 30 years ago.

The company is testing a combination of two monoclonal antibodies developed through a collaboration with Intrexon. The monoclonal antibodies both bind to the pertussis toxin, but in different locations, to ensure they're capable of knocking out the toxin as quickly as possible and to avoid the potential for a single mutation to render the therapies ineffective.

The number of individuals who get pertussis is significantly greater outside of the U.S. Worldwide, it killed about 195,000 individuals, largely infants, out of about 16M who were infected in 2013, according to the Centers for Disease Control. This disease really hits developing nations, but it's a disease that could, if left untreated, take the lives of a fairly high number of patients in more developed countries. Synthetic Biologics has a very interesting combination, with an orphan drug here in the U.S., and a major drug in other countries.

TLSR: Synthetic Biologics has top-line Phase 2 data in hand for its multiple sclerosis (MS) drug, Trimesta (oral estriol). Do you know whether it has begun partnering discussions?

KM: It's a very competitive market. Players in the MS market, which include Biogen Idec Inc. (BIIB:NASDAQ), Teva Pharmaceutical Industries Ltd. (TEVA:NASDAQ), and Merck KGaA (MKGAY:OTCPK), are the most likely to show an interest in any drug that's new for that particular disease.

But Synthetic Biologics has been talking lately about developing Trimesta internally through Phase 3, and then possibly out-licensing it to one of the major players for marketing purposes. I think it makes sense. It wouldn't take that much money to conduct the clinical trials, because Trimesta is not another drug for reducing the number of exacerbations that the MS patients suffer; it's a drug for protecting the positive function of patients who normally experience some decline in cognitive capabilities over time. That is one of the very interesting things that came out of the clinical trials.

TLSR: Keith, are there any other companies that you'd like to discuss?

KM: Soligenix is new to my coverage list, as of Sept. 15. The company is very interesting; it is doing some cutting-edge scientific work in the sense that it is developing a new drug that's an innate defense regulator. SGX94 (susquetide) alters the normal function of the innate immune system by dampening the inflammatory response of macrophages and slightly enhancing antimicrobial function.

Soligenix is developing that particular product for oral mucositis, because it's largely an inflammatory disease that starts with the innate immune system's response to either chemotherapy or to radiation. I like the company's approach to this particular problem because it is focused on one of the most difficult treatments for cancer, the combination of chemotherapy and radiation for head-and-neck cancer. Almost every single person treated for head-and-neck cancer has oral mucositis—which, by the way, can be a devastating condition because it can actually halt treatment, which lowers the opportunity for a favorable outcome.

Soligenix's particular molecule also has the ability to be used as an adjunct to chemotherapy or radiation, not just for preventing or addressing oral mucositis, but as a stimulant to enhance the activity of the anticancer therapy, since it does interact with the innate immune system and increase its activity.

In another side of its business, Soligenix has a simpler but interesting delivery technology for a tried-and-true steroid for pediatric Crohn's patients. That particular formulation, SGX203 (beclomethasone 17,21-dipropionate) delivers the steroid into the gut for local treatment. It's a type of steroid that is broken down very quickly by the liver once it's into the bloodstream. As a result, there are not as many systemic side effects as you see with other steroids. That particular drug, in that particular formulation, is also being developed for a biodefense application—gastrointestinal acute radiation syndrome.

That's the other part of the Soligenix story. It has vaccines, in addition to the steroid treatment, under development for biodefense applications. The two vaccines it is working on are RiVax, which is a ricin vaccine. As far as I know, it is the only corporate entity conducting trials of a ricin vaccine. And it has an anthrax vaccine. Both of those vaccines are formulated with a special adjuvant called ThermoVax, which is a heat-stabilizing form of aluminum that eliminates the need for the vaccine to be refrigerated. As such, vaccines formulated with this adjuvant may not only have biodefense applications, but also may be used for broad commercial uses, perhaps for preparing vaccines for Third World countries where thermal stability is more of a necessity.

TLSR: We covered a lot of ground. Thank you.

KM: It's been a pleasure.

Keith Markey has been an equities analyst for more than 25 years, specializing in the biotechnology, pharmaceutical, medical device and research tools sectors. He is currently the science director for Griffin Securities Inc., an investment bank where he follows emerging healthcare companies with novel technologies. He also works with privately owned companies, helping them restructure their operations, license products under development or near commercialization, and raise funds from venture capital and high net-worth investors. In addition, Markey serves on the board of directors of DS Healthcare Group, which specializes in products that address hair loss. Previously, he held various managerial positions in the Research Department of Value Line Inc., publisher of the Value Line Investment Survey andValue Line Select. Markey began his career as a biochemist, working in the fields of endocrinology and neuroscience at New York University Medical School and Weill Cornell Medical College. His research, which involved several international collaborations and resulted in more than 30 scientific publications, contributed to the understanding of regulatory biochemistry of the nervous system and stem cell plasticity. Markey received his doctorate in neurochemistry from the University of Connecticut and a master's degree in business administration and finance from the Leonard N. Stern School of Business at New York University.

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