Investing in biodefense companies, II

(HP) Antibodies that utilize complement receptor 1 (CR1) to enhance pathogen clearance and destruction. Its Anthim anthrax anti-toxin is geared towards pre-exposure and post-exposure prophylaxis, as well as active treatment of disease, both as a stand-alone therapy and in conjunction with antibiotics. An IND was filed on 24 February 2005, and Anthim has received Fast-Track and Orphan Drug status at FDA. The first in human safety study was completed in April 2006. An Emergency Use Authorization application was filed on October 5, 2005, and supplemental information was submitted to that application in August 2006. Elusys also has a pipeline of antibodies to Staph Aureaus (preclinical stage, in collaboration with Pfizer), Staph non-MRSA (preclinical stage, with MedImmune), and Candida (pre-clinical, with MedImmune). 

Advanced Life Sciences Holdings (ADLS) is developing cethromycin, a once-a-day antibiotic that recently disclosed phase III results in 5400 subjects for the treatment of community acquired pneumonia (CAP). ADLS is in the final stages of compiling a New Drug Application for cethromycin to treat CAP, which it anticipates submitting to the FDA in the third quarter of 2008. ADLS is also evaluating cethromycin for the prophylactic treatment of patients exposed to bioterror pathogens such as Bacillus anthracis, Fransicella tularensis, Yersinia pestis and Burkholderia pseudomallei. In May of 2007, cethromycin completed a non-human primate study in which it was determined that a 30-day course of oral cethromycin was 100% protective against a lethal dose of inhaled anthrax as compared to the standard of care, Cipro (ciprofloxacin), which demonstrated 90 percent protection. The FDA has designated cethromycin as an orphan drug for the prophylactic treatment of inhalation anthrax post exposure, but has not yet approved the drug for marketing in this or any other indication.

In the process of evaluating cethromycin as a broad-spectrum countermeasure for biodefense, ADLS has established collaborations with the United States Army Medical Research Institute for Infectious Diseases (USAMRIID), the National Institute of Allergy and Infectious Diseases (NIAID), the United Kingdom ‘s Defence Science and Technology Laboratory (DSTL), and Colorado State University.  Through these collaborations, data has been generated to show that, in addition to protecting against inhalation anthrax, cethromycin may be a promising candidate for the treatment of additional CDC category A and B threat agents including tularemia, plague and melioidosis. Other than cethromycin, it is developing drugs for melanoma and ARDS (respiratory distress syndrome). It trades under ADLS at Nasdaq.  Present value is around $0.98, with the low earlier this year at $0.67 and high of $5.75 in 9/05. 

Here is Desai’s investment advice based on his discussion of smallpox and anthrax companies:

while bioterrorism remains a threat, where and when an attack may take place is anyone’s guess. Therefore, it is better to invest in a company that has a broad portfolio and is not dependent on the benevolence of the U.S. government or the malevolence of terrorists. While picking a company to invest in, pay particular attention to the management team — perhaps more than in any other industry, an experienced team is critical. The underlying technology is also very important — a good team can’t do a whole lot with bad products. Ask how unique is the technology, what is the competitive edge? For example, but what is the edge of one company’s antibody over the others? Equally important, check out the financial situation. Is the company running out of cash? Last thing one wants to do is to throw good money after bad.