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If the dreaded bird flu really has arrived in Britain, threatening to trigger a pandemic of catastrophic proportions, Cambridge-based Medical Marketing International (MMI) ‘could develop vaccines within five to six weeks’, claims the company’s chairman David Best. He argues that MMI’s ‘51 per cent owned Genvax’ technology, developed with Professor Freda Stevenson and scientists at Southampton University, could be applied to produce an effective vaccine about a year sooner than conventional methods.

For MMI, being in the front line against bird flu would enhance the credibility of its technology and attract good publicity for the company. But, argues Best, the big potential pay-off for Genvax’s technology would come from its application to the multi-billion dollar cancer market.

Small, but perfectly formed
AIM-quoted MMI is one of a group of smaller drug companies developing treatments for some of today’s prevalent ailments, from cancer to obesity, some using biotechnology. Their ranks could be swollen soon by a £40 million Full List flotation for anti-scar biotech play Renovo.

The company tried to float last year but a then weak stock market thwarted it. Renovo’s Juvista product, based on a healing protein observed in alligator embryos, should begin Phase III clinical trials in 2007.

Most of these companies are tiny compared with multinational pharmaceutical giants such as AstraZeneca and Glaxo SmithKline. Investment group Investec’s analyst Ibrahim Mahmoud says the annual research spending of all UK biotech companies together is no more than Glaxo’s. But they are working to fill the gaps in ‘big pharma’ portfolios. Usually, the objective is to win eventual licencing deals for their products with the big groups.

Looking for new treatments for illness can be like prospecting for oil or minerals. It takes a knowledgeable person with a clear goal and enough credibility to find backers to initiate the search, which can involve a long period of expenditure with little or nothing to show for it.

When and if the compound is proved, its medical features have to be tested at some expense to establish how well it works, if at all, with what side effects, and whether regulators in key markets such as the USA will allow it. Then the company must establish whether crucial customers, such as the UK National Health Service or US medical insurers, will pay for it.

That is not all. If all goes well, the discoverer will need to raise more money, find a joint venture partner or do a licencing deal to take it into production and marketing.

A marathon to market
Oxford Biomedica, the gene therapy group spun out of Oxford University in 1996 and headed by chief executive officer Professor Alan Kingsman, was still losing £9 million last year and ‘burning’ £7.7 million cash. But the fully-listed company was again able to tap the market for £29 million, on the strength of perceived potential for its products.
These include Oxford’s TroVax colorectal cancer and renal carcinoma treatment. It had some encouraging US Phase II clinical trial results in 2005. With claimed applications to other cancer fields, it is beginning Phase III trials this year.

Fully-listed drug investor Alizyme is celebrating ten years as a quoted company and £75 million spent on its product pipeline, with successful European Phase IIb and US Phase I trials for its Cetilistat obesity and diabetes treatment. It has licenced it in Japan to the Takeda pharmaceutical group in exchange for access payments and royalties totalling £27 million so far. The company is soon to embark on crucial US Phase III trials for its Renzapride irritable bowel syndrome treatment.

Chief executive Richard Palmer says the company has no partner yet for Renzapride, but is talking about potential deals for all the elements in its portfolio. He maintains Alizyme does not go for any particular medical sector apart from ‘late-stage’ ventures seeking to meet ‘unmet medical need’ – preferably chronic conditions such as obesity, which also imply sustained long-term demand for treatments.

No less well regarded in the sector is fully-listed Protherics. Late last year it clinched a licencing deal with AstraZeneca for the global development of its anti-sepsis (blood poisoning) product, CytoFab. Under the deal, AstraZeneca paid Protherics an initial £16.3 million and further milestone payments could reach £171 million, plus a 20 per cent royalty to Protherics on net global sales of the drug.

Also on the main board, Ark Therapeutics reports progress with its wide portfolio of projects. These include brain cancer treatment Cerepro; Vitor for muscle wasting cancer; Kerraboot, a device for lower leg ulcers; and EG005 for various HIV-associated problems.

AIM counter Allergy Therapeutics has cheered its followers with a ‘positive outcome’ for a key clinical efficacy and safety study on its Pollinex Quattro short-course allergy vaccines, targeted at the 30 million Americans who are allergic to ragweed pollen.

Elsewhere on the junior market, shares in EiRx, the Cork-based developer of a biotech treatment for colorectal cancer, have perked up on progress towards the award of a European Union patent. Chief operating officer Colin Telfer says ‘EiRx’s technology platform is now well established, but our future competitiveness will come from our exploitation of that platform to create new and better medicines for cancer patients.’

Henderson Morley, out of favour with investors for years, received a sudden fillip with news of a potential licencing deal with an American dermatological group for its ionic contra viral therapy (ICVT) platform for herpes and non-genital warts. ‘This deal transforms Henderson Morley,’ claims chairman Andrew Knight.

ICVT is to be licenced for non-genital skin warts in the USA, Canada and Mexico. But, argues Knight, since it is a platform with ‘far wider’ potential applications, it could pave the way for others.

That must have given hope to the numerous drug developers still out in the cold, such as ReGen Therapeutics, floated at 28p six years ago to develop Colostrinin from sheeps’ milk, to combat ageing and Alzheimer’s disease. The company has diversified somewhat since then but its shares still languish below 2p.

More exotic is OFEX-traded China Biotech, where specialist AIM-quoted investment group LondonAsia Capital has nearly 40 per cent. The company has developed a treatment for diabetes (a disease that is spreading fast among the People’s Republic’s 1.3 billion citizens) blending traditional herbal medicines with chromium from brewer’s yeast. It plans to launch a cancer tumour treatment next year.

Finding the money
Funding the long gap between initial discovery and ultimate commercialisation is the big challenge for most of these companies and, as with junior resources companies, recourse to shareholders is frequent. Oxford Biomedica has been able to do it on the strength of proven progress towards that goal.

Similarly, Alizyme lost a quadrupled £16 million last year, but was able to tap the market for £32 million and, says Palmer, has enough cash to take it ‘well into 2007-08’.
But he insists ‘the market is waiting for deals, and, by then, ‘something will happen.’

Institutions recently subscribed £10.45 million to fund AIM-quoted genomic concern VASTox’s development of a new treatment for muscular dystrophy. MMI has used charitable grants and National Health Service funding so far. Best says the company still has £10 million cash and has now attracted an institutional following.

On bird flu, the US government has already said it will suspend the normal prolonged process of regulatory testing and authorisation and the British authorities have said they will consider doing likewise. But most of MMI’s portfolio will have to follow the regulatory route and Best insists ‘we do not intend to become a fully-integrated drug company’.

That means partners or licencing deals for Genvax which, he says, deceives the body, normally unresistant to cancer cells, into thinking they are tetanus toxins and therefore fighting them. It is being used to develop treatments for lymphoma, myeloma, prostate and other cancers, moving from Phase I to Phase IIa in the pipeline.

The same alternative routes will be sought for Oncosense, MMI’s ruthenium-based platform technology also achieving encouraging results in cancer fields. Arguing that ruthenium is proving more effective than traditional platinum in cancer drugs, Best says it could even overtake Genvax in the race to wide market acceptance.

Devices and desires
Medical equipment can offer no less lucrative possibilities than drugs. AIM-quoted Deltex Medical Group, whose CardioQ device enables doctors and surgeons to monitor blood flow in patients and thus improve treatment and reduce costly time spent in hospital, lost £1.3 million last year but says it has enough cash to see it through to profitability.

Another loss-maker, Lombard Medical Technologies, is working to commercialise its Aorfix stent graft and other products used in treating vascular diseases. A key application is for aortic aneurisms, enlargements of the aorta which, untreated, can be fatal.

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