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ID BIOMEDICAL
Introduction:
ID Biomedical's mission is the: identification, acquisition, and development, of breakthrough technologies with large unmet needs. Its' current portfolio includes assets in two distinct, and promising sectors, of biotechnology: gene-detection, and sub unit vaccines. Within the field of gene-detection ID Biomedical has licensed its' patents to leading companies such as, Applied Biosystems. In the field of vaccines, ID Biomedical has secured NIH sponsorship, and funding, for its' phase I, Group A Strep vaccine trials, and has licensed its' TB vaccine to the world's foremost vaccine company. As an investment ID Biomedical can be summarized as follows: it is diversified, internally financed, and in pursuit of blockbusters.
I) Blockbuster Potential:
Gene-based Testing:
ID Biomedical controls the pioneering patents in the field of signal amplification. In essence, signal amplification is a genetic testing system that can detect a target DNA in a given sample. This technology is anticipated to lead to the mass industrialization of genetic information as humanity seeks to turn the on-slaught of genetic information from: bacteria, viruses, plants, animals, and humans to practical purposes. It solves the problems of Nobel Prize winning PCR, and opens up tremendous new horizons. PCR, for comparative purposes, has had in excess of one-and-a-half billion dollars invested in it. Given PCR never achieved mass industrialization, the value of CPT could be phenomenal.
Sub Unit Vaccines:
Because of their ability to prevent disease, and thereby associated downstream costs of: diagnosis, treatment, and lost work, ect., vaccines are a potential gold standard in health care. Moreover; due to scientific developments, and the rise of antibiotic resistant illnesses, their place in the future appears increasingly important. Targeted illnesses for ID Biomedical include:
- Group A Strep: There is no vaccine available for this common illness. It includes: 'strep' throat, the 'flesh eating' disease, rheumatic fever, and scarlet fever, ect. As one of the last, and frequent, paediatric illnesses without a vaccine, if successful this vaccine could become universally mandated in children. This could make it a billion dollar blockbuster for ID Biomedical. Reasons motivating the need for this vaccine include: the rise of antibiotic resistant microbes, and the direct, and indirect costs, of treating 'strep' throat and other illnesses. Direct costs alone are estimated at $2 billion per year, in the US. A study by the prestigious Institute of Medicine has ranked the development of a universal Group A Strep vaccine for children as 'favorable'.
- TB: This vaccine is licensed to the leading vaccine house world wide. The current TB vaccine(ie. BCG) is generally recognized as ineffective, yet has been administered to three billion individuals world wide suggesting the tremendous potential for this vaccine. TB has been declared by the World Health Organization a 'global emergency' and is increasingly antibiotic resistent.
- AIDS: Financed in part by the NIH, this vaccine is being tested as a potential adjunct therapy with current AIDS drugs. Limited, yet promising, human trial data already exists. One of the goals of this vaccine is the reduction of the HIV mutation rate to thereby enhance the longevity of current therapies.
- E coli: This vaccine is based upon a breakthrough in the understanding of this illness. The science has been published in leading scientific journals including Nature. The mechanism underlying this vaccine could also potentially be used to create a pipeline of products for ID Biomedical.
- With the above portfolio, ID Biomedical has an increasingly proven, and respected, vaccine development infrastructure, that should allow it to secure further promising opportunities. It's goal is to acquire opportunities with $500 million in revenue potential, or more, per year.
II) Diversified:
While the major determinant of future value is currently believed to be its' vaccine assets, ID Biomedical's interest in gene based testing provides some diversification. Given its' vaccine portfolio is increasingly diversified, further diversification is accorded. Further clinical stage acquisitions are anticipated. As a final note, it is important to recognize that vaccine development has less risk than pharmaceutical development. Moreover, due to the knowledge about the Group A Strep vaccine, and results to date, ID Biomedical's risk profile appears even more solid.
III) Internally Financed:
By licensing its' gene-detection patents, ID Biomedical is currently able to finance itself internally. This helps reduce the number of shares issued, in the pursuit of potential blockbusters. This past year, fiscal 2000, ID Biomedical earned a profit of $.20 per share, on an unaudited basis. Further revenues are anticipated in the coming year, chiefly from the licensing of its' gene-detection technology. ID Biomedical also has one diagnostic test on the market currently, and another anticipated to be on the market shortly for common hospital acquired 'superbugs'. Lastly, development of ID Biomedical's TB vaccine is paid for by the company that has licensed it. Phase I, Group A Strep trails, are paid for by the NIH. ID Biomedical also has in excess of two years cash, given its' current burn rate.
GENOMIC's REVOLUTION:
The mapping of the human genome, as well as those of other: species, plants, and microbes, is resulting in what many believe is one of the most substantial business opportunities in history, for with this increasing knowledge, we will gain increasing proportional 'control' over the basis of life itself. One of the most exciting near-term opportunities in this new era, is that of gene-detection, via DNA probes.
DNA PROBE MARKET:
The DNA probe market is forecast to be one of the fastest growing sectors in the rapidly rising field of genomics. Its' revenue potential is immediate, and not significantly constrained by lengthy FDA approval processes, as are drugs. In essense it seeks to identify a specific biological target at its' DNA base. In dollar terms, the DNA probe market is expected to reach US$1.4 billion in the US alone, by 2003, according to Frost & Sullivan, a leading US market research firm. Assuming a 20% annual growth rate per year, the US market could reach over US$5 billion by 2010; and perhaps, US$10 billion globally. Potential applications include:
1) Infectious disease, environmental, and food testing, as well as blood screening. Bacterial, and even viral testing, could also be used to sub type strains, such as for the testing of antibiotic resistance, to improve patient treatment, and outcome.
2) Genetic disease testing for diagnosis, and disease prevention. There are an estimated 4000 different genetic diseases, according to Frost & Sullivan. Identification of those susceptible to a genetic disease, before the disease state, is viewed as one of the fundamental elements of the new medicine, and is called predictive medicine. This is expected to allow for improved monitoring, lifestyle counselling, and/or drug therapy, in advance of the disease state, and is recognized as perhaps the most important shift ahead for medicine, as we move from a model based upon treating disease, to preventing, or delaying it from ever happening. An example would be cancer testing to determine susceptibility, combined with better monitoring, lifestyle counciling, and preventitive treatment.
3) Matching the appropriate drug with an individual's genetic make-up so as to minimize side-effects, and maximize therapeutic benefit. This newly emerging field is called pharmacogenomics, and has been dubbed the coming age of 'personalized' medicine. By matching a drug treatment, to the individual's genetic make-up, medicine is expected to be able to more quickly match, and better treat patients, with the most appropriate drug. According to the Journal of the American Medical Association, adverse drug reactions represent a leading cause of hospitalization and mortality in the U.S., resulting in over 1.5 million hospitalizations and 100,000 deaths per year. The costs associated with the trial and error use of drugs, as doctors try to discover the most appropriate treatment for a patient, should also be significantly reduced. In the short-term, genetic information, is expected to help optimize clinical trials by stratifying populations for purposes of creating targeted drugs. To give you an idea of the size of this potential market, please read the following(SNP's are small genetic alterations in our DNA that determine things like disease predisposition, and a patients drug response.)
"Paul Kelly of ING BARING Furman Selz LLC (1) breaks down the market opportunity for SNP information in clinical trials with these estimates: About 300 compounds reach Phase II clinical trials every year for each of the top 10 pharmaceutical companies. Every year, 30 billion SNP genotypes would be performed for positioning these compounds into appropriate market segments (stratified population). Since one in 100 SNPs is a cSNP (a SNP present in the genes, rather than in intergenic regions), 300 million cSNP genotypes would be performed in targeted analysis by each major pharmaceutical company every year." (Modern Drug Discovery, 2000, 3(5) 40–42; American Chemical Society.)
The above figures suggesting the requirement of more than 30 billion tests, per year, make the clinical trial process alone a market worth potential billions. Given the 10-fold explosion in new drug targets anticipated due to the discoveries in genomics, and science, a coming drug boom could also strengthen these numbers considerably.
4) Disease progression, and treatment monitoring, by the analysis of the quantity of disease related DNA material in the blood.
5) Identity testing, as for forensics, and paternity testing, as well as tissue and organ typing for transplant.
Again, it is important to note that humanity appears set upon discovering the genetic roots of all living forms, including: bacteria, viruses, fungi, plants, insects, and animals. Moreover, it is doing this at an increasingly rapid rate. This makes the possible market for gene-detection much broader than that strictly pertaining to humans. Such applications in the animal market include gene-detection for purposes of breeding, veterinary, or research purposes, in the pet, livestock, and lab research markets. 'Personalized' drugs could also be made for some animal conditions. Plant testing could be used for purposes of agricultural management.
The basis of much of the above genetic-testing comes from the fact that, for instance, we as humans share approximately 99.9% of our genetic make-up, leaving about 3,000,000 to 10,000,000 genetic variations between us, or SNP's. These differences result in everything from differences in eye color to hair color, and our differing responses to treatments, as well as odds of acquiring a given genetically based disease.
ID BIOMEDICAL & GENE DETECTION:
ID Biomedical's gene-detection technology, CPT, or Cycling Probe Technology, is increasingly well positioned to take advantage of the genomic's revolution. Not only does it already have one FDA approved product licensed, and proving itself on the market; but, it also has another test currently in FDA trials. These tests are based upon the CPT derived platform Velogene. It's designed as a culture confirmation test for the identification of antibiotic resistant 'superbugs'. A further factor causing excitement about CPT is that the most powerful genomics company in the world, Applied Biosystems(formerly PE Biosystems)/Celera, has recently licensed CPT technology for genomic applications. Moreover, within about the last year, two other licensing agreements have been executed, a corporate agreement, plus an option agreement:
1) Mitsubishi, for the develop direct blood based tests for infectious disease,
2) Sybron(NYSE:SYB) for the development of gastrointestinal applications,
3) DiscoveRx, a private company, has also purchased an option for genomics.
4) Third Wave Technologies: corporate agreement.
THE CPT ADVANTAGE:
Given the tremendous amount of genetic information required to be detected in the future, issues of: speed, accuracy, and cost, are paramount when it comes to a gene-based detection system. IDB's system potentially meets these requirements:
1) SPEED: results are rapid, and are typically completed within one hour.
2) ACCURACY: the CPT reaction does not depend upon an amplification step, and is therefore not prone to the contamination issues that plague some other systems. ID Biomedical's FDA approved MRSA culture confirmation test has proven 100% accurate against PCR. Accuracy is increasingly important since multiple tests may have to be performed upon a given individual, or specimen, making an even small error rate potentialy compound.
3) COST: from the companies prospectus, "the company expects it to be much simpler than target amplification, or signal amplification as CPT is based upon a single probe, single enzyme, isothermal reaction" This should help keep CPT's relative costs down. Again, given the amount of genomic data to be processed, cost will prove paramount." Another benefit of CPT's simple, or elegant nature, is the lack of need for specialized training, or equipment. This helps make it a potential ideal product for routine hospital use. (On the side: because the CPT reaction is linear, results can also quantify the amount of genetic material being tested, this can be important for such things as treatment monitoring; plus, with the addition of the enzyme reverse transcriptase, even viral detection can be achieved.
NOTES:
1) For comparative value purposes, Nobel prize winning PCR, which is recognized by many as the current gold standard for DNA testing, was purchased by Roche, from Cetus, for US$300 million in 1991. It subsequently had an estimated US$1,000,000,000 invested into it. Total investment in PCR is therefore estimated at US$1,300,000,000 as of 1998. While PCR can perform DNA amplification and CPT can't, note also that, in the time period just mentioned, genomics was not nearly as advanced as it is today, and the explosion of new information wasn't nearly as fast. Lastly, PCR's limitations restricted its' much broader acceptance in places like hospitals, which is a market CPT promises to open. Put simply, the ability to detect a known target DNA has potentially never been so: simple, fast, accurate, cost effective, and as practical as today, and the amount of information now, and in the future, has never been so vast. Competition is expected to be an increasing, and difficult, challenge however.
2) The US$300 million deal between Third Wave by PEB included no FDA approved test for the Invader system. CPT however does have an FDA approved test, albeit a culture confirmation test. Furthermore, IDB has another CPT test currently in FDA clinical trials.
3) From the Scientist "Rather than licensing Third Wave's proprietary Invader technology, a series of high-throughput assays for genotyping and gene expression applications, PE Biosystems wants control of the technology, says Winton Gibbons, a senior analyst at William Blair & Co. "[PE] acquired Third Wave rather than licensing its technology because of PE's interest in medical diagnostic systems," he says. "Though I don't believe PE Biosystems will be in the medical diagnostic arena beyond HIV genotyping, they have reason to believe that the Invader platform from Third Wave will be the 'next gen' technology after PCR, so they want to own the technology rather than licensing it. This is a fundamental technology play; it's really an acquisition."
THE GOLDEN AGE OF VACCINES:
"There is no more important goal of medical research than to prevent disease...." Anthony S. Fauci, M.D., Director of NIAID, NIH.
The 200 year history of the vaccine has demonstrated beyond doubt the power of prevention. Disease after disease from polio to small pox have been eradicated, or diminished. In fact, 21 vaccines against infectious disease in all, were introduced during the 20th century, significantly improving human life, and health. Regardless of from where we've come however, it is only now, given a revolution in science, that the golden age of vaccines is truly upon us. Factors propelling us towards this new era include:
1) The biotech revolution. This revolution is not only providing the ability to create better, and safer vaccines, where vaccines already exist, but is making more vaccines possible, for more indications, than ever before. Even the very notion of what is caused by infectious disease may be about to change significantly. According to the NIH, advances in technology: "may soon give researchers the tools to determine the role of infectious agents in a number of chronic diseases. With this information vaccines may one day be used to control, prevent or treat chronic diseases, such as heart disease." Another important area of development for vaccines is the genomic sciences. More than a dozen microorganisms have already been genetically mapped, and more than 60 other sequencing projects are underway according to the NIH. Lastly, into the future, even the needle may increasingly become a thing of the past as other vaccine delivery systems are born to better take advantage of our immune systems, and circumvent our fear..
2) Potential cost savings: The World Health Organization estimates that for every $1 invested in vaccines, $7-$20 can be saved. The C.D.C. estimates the savings at $16. In a time of ever rising health care costs, and with the aging of the baby boomers, and growth in medical options, this factor should prove substantial.
3) Antibiotic resistant 'superbugs': Dr. George Post, of Smith Kline Beecham, has stated: "We're not going to see new antibiotics until at least 2007 in any significant numbers." This will effectively leave humanity vulnerable to many infectious diseases, in a way we haven't seen, for a very long time. To further complicate this, in the 10 years it may take for an antibiotic to go from the lab, to the clinic, to where it is making a difference in people's lives, the 'bug' that it is designed to treat may have already evolved its' way around the medication.
4) The passage of the 1986 no-fault National Vaccine Injury Compensation Act, in the U.S., which shielded vaccine producers from all liability unrelated to manufacturing error.
5) The increasing resolve of wealthier nations, and institutions, to help vaccinate the developing world. Vaccines are becoming an increasing global standard especially because we are now in an era of increasing international travel, and immigration, and because: politically, socially, and economically, this world is increasingly becoming our 'global village.'
6) In an age of increasing sensitivity towards the possibilities of bioterrorism and biowarfare vaccines may be more needed than ever before. According to a recent Reuter's article, for instance, the plague has become a potential biological weapon dispirsible via aerosol. "The worst scenario, according to the Working Group on Civilian Biodefense led by Dr. Thomas Inglesby, would be severe pneumonia-like symptoms in thousands of people, killing 25 percent of victims, and currently there is no vaccine for its prevention. There are no ways to detect such a plague attack, and few doctors are familiar with cases of plague. Rapid treatment is needed for survival, while symptoms include fever, weakness, skin ulcerations, and gangrene, nausea, breathing problems, and diarrhea."
THE BLOCKBUSTER & ID BIOMEDICAL:
Within the emerging golden age of the vaccine, ID Biomedical has already built a portfolio of potential blockbusters, targeted against diseases known to us all, and of significant consequence to society. Further acquisitions are anticipated in the months to come. ID Biomedical's current portfolio targets the following illnesses: |
