To all, here is an interesting post from emailslob over on stockhouse.ca:
EVENT: In view of current market conditions, we are taking this opportunity to provide an overview of the reasons why we believe that Stressgen Biotechnologies Corp. (Stressgen) is an attractive investment opportunity at current levels. The company has experienced share price depreciation during 2001 of 46% despite a preponderance of positive clinical trials developments and interim results.
COMMENT:
Stressgen’s technology platform is unique and expandable to address several prevalent disease states · Stressgen’s technology, for which it has an exclusive license from the Whitehead Institute for Biomedical Research (MIT), focuses on the use of heat shock protein (Hsps) fusion peptides as the basis for novel immunotherapeutics. In general, Stressgen couples a Hsp to a disease-specific antigen (a protein that is expressed in diseased tissue, but not normal tissue), thereby stimulating the immune system to destroy diseased tissue.
· To our knowledge, only one other company is using heat shock proteins as a platform for drug development (NYbased Antigenics Inc. (AGEN, NASDAQ)). However, Antigenics’ technology does not involve the generation of fusion peptides and it is initially focused on various cancers (renal cell carcinoma, melanoma) rather than the virusassociated diseases initially targeted by Stressgen (see below).
· Stressgen has demonstrated in preclinical studies that various Hsp fusions, including those incorporating peptides derived from the human papillomavirus (HPV), hepatitis B, herpes simplex, and HIV viruses, are able to stimulate both the antibody-producing and cellular arms of the immune system without requiring adjuvant. Consequently, Stressgen’s immunotherapeutic platform is expandable to numerous infectious diseases for which a microbe-specific antigen can be identified.
Stressgen is initially targeting diseases associated with human papillomavirus (HPV), a large growing market for which few effective treatments currently exist · Stressgen’s lead product, HspE7, is an injectable peptide designed to stimulate the immune system to fight diseases associated with HPV. This is a huge market opportunity, since according to the Center for Disease Control (CDC), HPV is estimated to have the highest incidence of any sexually transmitted disease (STD) in the U.S. At least 20 million individuals are currently infected with HPV, with an incidence of 5.5 million new cases each year. Furthermore, the disease burden of HPV infection is high, giving rise to several epithelial-derived cancers and precancerous conditions (principally anal or cervical neoplasia), genital warts (GW), and a rare, but life-threatening disease of the upper airway called recurrent respiratory papillomatosis (RRP). We estimate that approximately 500,000 individuals with anal intraepithelial neoplasia (AIN) and 1.0 million new genital warts patients could be effectively treated with HspE7 annually in the U.S. alone.
· We believe that Stressgen’s interim data analysis compares favorably with data derived from other HPV therapeutics programs. In a previous research comment, we observed that Xenova (XNVA,NASDAQ) has just begun a 30-patient Phase II study testing TA-HPV and TA-CIN in combination as a vaccine against HPV, with a reported clinical response rate for TA-HPV alone (44%) that was below that observed for HspE7 (over 70%) in Stressgen’s Phase II AIN study. Separately, the private firm Medigene AG recently reported data from a 272-patient Phase III GW trial testing its lead product, Polyphenon E ointment, in which clearance rates of approximately 60% were achieved (interestingly, placebo showed a clearance rate of 37%). Although data is limited for Stressgen’s GW program, preliminary retrospective data from the company’s Phase II high-dose AIN study showed that 93% of GW patients treated with HspE7 experienced positive clinical response at six months. Furthermore, HspE7 holds the promise of longer term immunoprotection and is not limited to external warts to which ointment can be applied.
Good Phase II efficacy data reported to date for HspE7
· AIN – as stated, interim analysis of Stressgen’s high-dose (500 microgram) Phase II AIN study showed that 71% of patients exhibited pathological downgrade of disease at six months;
· GW – in a retrospective analysis of 14 patients in the AIN study who also presented with GW, 13 (93%) exhibited either significant reduction in wart size or complete resolution.
Several HspE7 clinical trials milestones expected in the next two to three quarters
· AIN – Stressgen expects to present additional interim Phase II AIN data at the 41st Interscience Conference on Antimicrobial Agents Conference in Chicago on December 18. Importantly, we expect that 12-month follow-up data from certain patients will also be presented. A 133-patient Phase III AIN study completed patient enrollment in August 2001, two months ahead of schedule, for which 6-month data will be available in 2003.
· GW – Stressgen’s 54-patient Phase II GW trial completed patient enrollment in April 2001 and the data were locked in late October 2001. Although data analysis should be complete within the next several weeks, the company may identify a suitable scientific meeting at which to present the data in early Q1 2002.
· RRP – Stressgen has enlisted sites for its 27-patient pediatric Phase II RRP study and expects to commence the trial shortly. The company received orphan drug status for this life-threatening, albeit relatively rare, disease earlier this year. We believe that an RRP indication provides both the fastest route to HspE7 commercialization and an attractive reference point for future HspE7 pricing.
· CIN (cervical intraepithelial neoplasia) – In partnership with the National Cancer Institute, Stressgen expects to announce the commencement of a 150-patient high-dose CIN trial in Q4 2001. CIN represents another HPVassociated disease afflicting over 300,000 women annually in the U.S.
Despite numerous positive developments in 2001, Stressgen is undervalued in comparison to the YHI and comparable company Antigenics
A partnership is expected in H1 2002
· We believe that Stressgen is a highly desirable partner for a large pharmaceutical firm focused on oncology or infectious diseases because it provides a therapeutic platform that addresses numerous highly-prevalent infectious agents. Stressgen has a strong balance sheet, with approximately $44 million in cash and equivalents, providing the company with funds to support its existing burn rate (which can easily be ratcheted down if necessary) until H1 2003.
· Stressgen’s intellectual property includes several composition of matter and methods patents issued in 1998 & 1999, providing both Stressgen and its partners with exclusivity over Hsp fusion peptide therapeutics until at least 2015 (pre-GATT terms of protection).
CONCLUSION: As stated, we anticipate several near-term events that should highlight the value of Stressgen’s heat shock fusion protein platform. We are maintaining our 2-Buy recommendation and 12-month target price of $10.00 on Stressgen.
Heat. |
