This article claims that ID Biomed's FluNsure may be superior to FluMist.
June 7, 2002
Up your nose with a… vaccine?
siliconinvestor.com
David Miller, President of NymbleInvestor Biotech Monthly, publisher of the monthly NIBM Newsletter on the biotech market sector, provides the following article. His web site address is biotechmonthly.com. He welcomes your comments and questions at ddmiller@BiotechMonthly.com
For those old enough to remember, today's column headline hearkens back to an immortal line in the TV show "Welcome Back Kotter." Vinnie Barbarino (aka John Travolta) was fond of telling people who were giving him a hard time "Up your nose with a rubber hose!" This saying launched a small T-shirt empire and was the bane K-12 teachers everywhere.
While biotech investors have been enduring the market equivalent of a rubber hose recently, there are bright spots - especially outside of the oncology segment. One such bright spot is Id Biomedical (NASDAQ:IDBE $4.76), developer of a nasal flu vaccine.
Id Biomedical is a Canadian company with significant operations in the US. It trades on the NASDAQ under ticker symbol IDBE and on the Toronto Stock Exchange under symbol IDB. The company concentrates, for now, on making preventative vaccines. It has two products in Phase II trials and a potential blockbuster still in preclinical development.
A better flu vaccine
FluINsure is the company's nasally administered influenza vaccine. Likely to be the first of Id's products to market, we estimate annual potential revenues in the range of $150 to $600 million depending on a number of factors we described in our May 2002 NIBM Newsletter but are too long to address but briefly in this article.
FluINsure has competition from standard injected vaccines and another nasally administered product, FluMist, currently awaiting FDA approval. FluMist was advanced by Aviron, who was purchased earlier this year by MedImmune (MEDI). There are significant differences between FluINsure and FluMist, not the least of which is the fact FluMist uses a live flu virus. There are also significant differences in immune response, indicating FluINsure may be the superior product.
FluINsure's ultimate market success depends primarily on how many people will prefer a nasal vaccine to an injected vaccine. Wall Street analysts are generally at the high end of the revenue range quoted above. Where revenues fall within that range depends on how many people switch from injected vaccines to nasal vaccines. It depends even more on how many totally new vaccine customers are attracted because they don't have to get a shot.
An aside on FluMist
We believe FluMist will be approved - or at least be deemed approvable - in early July. Unless MedImmune and its partners completely botched the data submission, the safety questions that prevented immediate approval should be adequately addressed.
Id probably wins either way. If FluMist is approved, it creates a definable pathway to FDA approval for FluINsure. If FluMist is denied, Id's FluINsure inherits the lead position for a nasal vaccine and all the Wall Street attention that comes with it. Our conversations with clinical professionals lead us to believe FluINsure will steal most of FluMist's market share in the adult market upon its approval (and the pediatric market if Id's management seeks pediatric approval).
No more strep infections?
StreptAvax is Id's injectable vaccine targeted towards preventing Group A streptococcus (GrAS) infections in the pediatric population. People are most familiar with GrAS infections as "strep throat" - that burning, completely uncomfortable throat condition striking many children and some adults in the winter months. In its more serious stages, GrAS is also responsible for rheumatic fever, scarlet fever, a kidney inflammation called glomerular nephritis, impetigo, toxic shock syndrome, and necrotizing fascitis (otherwise known as "flesh eating disease").
Children suffer the most from GrAS infections. According to the company, some 20M kids are afflicted each year. Vaccines were available in the 1970's, but due to side effects the FDA removed them from the market in 1979 and banned all clinical trials until Id won approval to test StreptAvax.
StreptAvax is a particularly fascinating story that receives more than a little attention in the scientific press. The fact it was the first (and only) to break a nearly 20-year FDA ban on GrAS vaccine products is part of it. The completely novel way it addresses the GrAS problem also fascinates scientists.
Pipeline cure for allergies
The company's Proteosome technology is the power behind FluINsure and the company's preclinical pipeline. The company's most promising preclinical candidate is a cure for allergies. This nasally administered drug converts allergen responses from the Type II response loathed by allergy sufferers to the normal Type I response. This happens in a matter of weeks instead of the five years of weekly and monthly injections comprising the current "cure."
The rest of the story
The company also owns a product called Cyclic Probe Technology (CPT). CPT is a fast, cost-effective method of detecting DNA, viruses, or bacteria in a solution. Superior to the more widely used PCR technology, Id issues non-exclusive licenses to this technology in exchange for upfront cash, royalty payments, and milestone payments.
Id's financial situation is such that without any additional revenue from CPT the company should be able to make it almost through Phase II in both FluINsure and StreptAvax. With a "normal" stream of CPT revenue, the company should not have significant cash issues before they are able to partner their two lead drugs at the end of their Phase II timelines. Id actually made money Q1-2002. Biotech investors know that's rather unusual for a development stage biotech company.
Risk Profile
Id's risk profile represents something rare for a development-stage biotechnology company. Given the results of its early trials in StreptAvax and FluINsure, most of the science risk is removed. While some science risk in the form of efficacy risk is still present, the early trials closely resemble standardized approval pathways. Don't misinterpret me here - we're cognizant of the effect of Murphy's Law on generalizing from early stage clinical results. We're just pointing out the biggest scientific hurdles are past the company.
The remaining execution risk is also fairly well defined. Cash/income appears to be stable and sufficient to fund trials for the next several quarters. The company's forthright plan to partner once Phase II data is in hand reduces risks associated with a management team that has never led a product to approval. We'd expect the first of the partnerships to be announced mid-2003.
To get The Internet Financial Connection Newsletter e-mailed to you for FREE, send a blank e-mail to ifc-subscribe@topica.com. In 1998, 225 different specific stock ideas appeared in the IFC. As of July 5, 1999, the return of the group of stocks that appeared in the IFC in 1998 rose an astounding 51%. What is even more amazing is that in 1999, 185 stocks appeared in this column and as of July 3, of 2000, that group of stocks was up 56%. In 2000, 125 stock ideas appeared in this column. As of July 2, 2001, that group of stocks was up 1.94% versus a 47% loss for the NASDAQ Composite during the same period of time. |
