To all: emailslob posted the following (Post #4580667) over on stockhouse.ca. It is a good discussion of the patent situation and ends with some revenue projections for StressGen.
Stressgen Issued Core Patent For Its Lead Immunotherapeutic, HspE7
EVENT: Stressgen announced that its core patent pertaining to the use of heat shock protein (Hsp) fusions as immunotherapeutics, originally filed in 1994, has now been issued (U.S. Patent #6,335,183). Although the principal inventor named on the patent is Whitehead Institute Professor R.A. Young, Stressgen has an exclusive worldwide license to commercialize products pertaining to the patent's claims. The invention described in the patent relates to compositions comprising a stress protein (a heat shock protein is often up-regulated in response to stress) joined to another component such as a disease-associated antigen. The company's lead immunotherapeutic fusion protein, HspE7, is such a molecule, in that it covalently links a bacterial-derived heat shock protein to a human papillomavirus (HPV)-derived protein called E7.
COMMENT: While we view the ultimate issuance of this patent as positive for Stressgen, we acknowledged both the contents of the patent (the PCT holding patent was designated WO 94/29459) and the company's strategy for delaying final issuance of the patent in our original report on the company in July 2001. Since this patent was originally filed before June 8, 1995, it will be subject to conditions for global patent protection that were recognized prior to the General Agreement on Tariffs and Trade (GATT). Consequently, this patent will protect Stressgen's core technology for 17 years from the data of patent issuance, which will be January 1, 2019, rather than 20 years from the date of original filing (which would have been sometime in 2013). Stressgen management has candidly recognized that the company intentionally delayed refiling the patent on two occasions where the indicated claims were modified slightly to maximally extend the patent protection that Stressgen will now enjoy.
We note that Stressgen has also filed a patent (where the principal inventor is Stressgen senior scientist, Dr. L. Mizzen) that specifically describes HspE7 and HPV antigens, rather than Hsps and antigens in general (this patent filing was designated WO 99/07860 in our full report). The issuance of this patent (probably, but not definitely, later this year) will further extend the patent protection to which Stressgen and its eventual distribution partners will be entitled beyond January 1, 2019. Importantly, the aforementioned patents specifically describe the therapeutic benefit and use of stress proteins covalently linked to antigens, whereas a competing firm, Antigenics (AGEN, NASDAQ), has an extensive portfolio describing the use of patient-specific stress proteins non-covalently bound to tumour-specific antigens. The nature of the stress proteinantigen interaction is seemingly trivial, but important for both firms. We maintain that the intellectual property position for both firms is strong, but that positive clinical data from either firm is positive for the general use of both Hsp-based platforms. Antigenics' lead product, Oncophage, is in Phase III clinical trials for treating renal cell carcinoma. There is minimal overlap in the diseases for which the respective companies are initially seeking U.S. FDA approval (Stressgen is focused on HPV-related conditions and later on hepatitis B, while Antigenics is focused on various cancers).
CONCLUSION: We continue to be optimistic about the prospects for the use of HspE7 for treating several HPVassociated diseases, including genital warts, various epithelial-derived cancers and precancerous conditions, as well as the respiratory HPV infection, RRP. Phase II data disclosed to date have been encouraging, as has the tendency for treated patients to exhibit improved response to HspE7 therapy over time, as we would expect for an immunotherapeutic drug. Notwithstanding the company's recent equity issue, we are no longer considering fiscal 2001 (negative) earnings in our net present value for the firm. Moreover, we have always assumed that Stressgen would be granted the patent described above and hence the announcement has no impact on our revenue projections for HspE7. Our model assumes that HspE7-derived revenue for treating anal intraepithelial neoplasia will be US$35.1 million in 2005, increasing to US$73.0 million by 2006. We expect HspE7 will be approved for treating genital warts in 2006 and forecast HspE7 sales will increase to US$151.8 million by 2007. We are maintaining our 2-Buy recommendation and 12-month target price of $10.00 on Stressgen.
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