Meanwhile in Canada: Biomira Looking to Repeat QLT's Feat
November 26, 1999 4:48 PM EST
By Bob Beaty
Columnist
This could be rags to riches, part II.
Once upon a time, a Canadian biotech stock called QLT Therapeutics (QLT: CC, QLTI: Nasdaq) languished in relative obscurity around $8-$10 dollars per share.
Then, almost exactly one year ago, its cancer therapy, Photofrin, received various global medical clearances and the stock rocketed to the US$45-47 level. Although the company still loses money, enthusiasm for its prospects have accelerated the investor love-in.
Now another cancer therapy stock, Edmonton-based Biomira (BRA: CC, BIOM: Nasdaq), exhibiting many of the same qualities of the early QLT, looks like it could cause history to repeat itself.
Biomira markets itself as "The Cancer Therapy People." The company currently has, among others drugs, a metastatic breast cancer therapy called Theratope which is in Phase III trials, the final step prior to public approval by the Food and Drug Administration. While not a cure for breast cancer, one of the leading killers of women, the therapy is touted to significantly improve long-term management of the disease. With no side effects, it allows those with late stages of the disease to improve both their quality of life and length of survival.
The Therotope vaccine works by inducing the body to mount an effective immune response against cancerous cells. The current trial, the company says, follows earlier clinical studies suggesting significant survival benefits for patients with metastatic breast cancer. In one part of two parallel trials, patients who received the vaccine had a median survival of 26.6 months compared with 9.2 months for matched patients in a retrospective control group. The Phase III trial will ultimately involve 900 patients in approximately 75 sites worldwide.
Theratope and another Biomira drug for lung cancer are part of a portfolio of synthetic therapies the company has under development. Anyone can see the potential for these types of products. Investors' due diligence, though, means they'll have to decide whether the business model is appropriate, where the working capital and revenues come from and just how long this promising company can continue to lose money.
Biomira lost 34 cents a share for 1998. Analysts project it could lose 47 cents this year and 61 cents for 2000, according to Zacks. By way of comparison, QLT lost 31 cents in 1998, is forecast to lose 37 cents this year and to see a profit of 4 cents in 2000. Biomira had sales of $6 million last year, vs. $7.5 million for QLT.
Stock Looking Stronger
Still, a couple of events should move Biomira's stock higher over the next couple of quarters. First, the company is actively seeking and speaking to a number of potential international and US partners. Chiron (CHIR: NASDAQ) still has exclusive US rights to Theratope, but that relationship has been put on hold due to new management and new priorities, and the agreement will end once a new partner is found.
Second, the Theratope Phase III trial will fills up by next summer, and that tends to be positive for these types of stocks. That's because the first interim analysis of data comes out about six months after the trial fills; if all goes as anticipated, the drug moves closer to coveted FDA and international approvals.
An example is the rise of Progenics Pharmaceutical (PGNX: Nasdaq from $13 in July to $26 today, corresponding to the release of initial Phase III results came out for one of its HIV therapies.
Biomira trades for about $3.50, down by more than half from its peak in 1996. The company has US$27 million in cash, no debt, and it has just secured a US$36 million equity line. When a partner is found, it will probably be too late to buy the stock. If one isn't found, the stock will continue to grind around this level and investors will have to wait for trial results.
The risk with any small biotech company is substantial. So many variables can cause these companies to toil for years before their products see the green light-- if they indeed ever do. If Biomira hits with Theratope, or other therapies in the pipeline, it will most likely surpass the price action of its peers. If it doesn't find a partner, then patience will be the virtue an investor must possess to wade in.
At a lackluster US$3.50 but with an abundance of potential, Biomira may well reward the risk-oriented investor handsomely. |
