Bulls, Bears: The State of Cancer Immunotherapy in the Public Markets

**This is Part II of our special report on the state of immunotherapy in the public markets. This report looks at promising anticancer immunotherapy technologies, and the major issues in bringing these technologies to the general public.

Part I discussed Ground Zero for immunotherapy issues — Dendreon Corporation and its Provenge vaccine — a survey of how logistics related to Cost of Goods Sold (COGS), manufacturing, delivery and reimbursement have threatened an entire sector.

In Part II, we identify the emerging public immunotherapy companies — Biovest International (OTC: BVTI), Immunocellular Therapeutics (NYSE: IMUC) and BioSante Pharmaceuticals (NASDAQ: BPAX) — with powerful technology that can significantly impact the cancer therapeutic market. These companies have impressive data, a clear regulatory path, and a predictable sales forecast.**

Despite a checkered history, the current path of Dendreon Corporation (NASDAQ: DNDN) and Provenge has proven one very important thing: cancer immunotherapy works, at least in prolonging life – and likely in later generations in reversing the disease path.

Because of the pioneering of Dendreon, several small biotech companies poised to make a big splash with proven technology and a clear plan to meet sales goals.

One company knocking on the door — upon great clinical and regulatory success in Europe — is Biovest International (OTC: BVTI). The Tampa-based biotech – coming out of its Chapter 11 reorganization – has enjoyed progress of its BioVax immunotherapy-based lymphoma treatment, advancing the process for EU approval upon positive clinical trials. The company also announced in August a second Phase III trial for US approval.

BioVax would be the first lymphoma immunotherapy treatment available in Europe.

In addition, the company has been retained by the US Army to develop antiviral solutions for “genetically engineered infectious diseases.”  The Biovest treatment utilizes hollow bio-fibers to deliver vaccines against Level IV biohazard threats such as Marburg and Ebola viruses.

These developmental milestones cap off the narrowing of losses for the company from Q3 of 2011 onwards.  The Army’s agreement calls for “rapid, robust and cost-effective technologies”, a sign that the company will pay special focus to reducing COGS.

As seen from DARPA’s involvement in CytoSorbents (OTC: CTSO), there is as much demand and interest from the military sector, if not more given the potential for these therapies to be found on a battlefield hospital as much as it would be found in a ER, and the multi-billion dollar revenues that they generate.

Biovest — a majority owned subsidiary of Accentia Biopharmaceuticals (OTC: ABPI) — emerged from bankruptcy in 2010. The company generates revenue (a combination of grants, contract cell/cell culture production services, instruments, and clinical trial data sharing agreements) and reports total assets of $5.036MM as of June 30, 2012.

**OneMedForum, January 7-9, will showcase several promising immunotherapy companies and devote panels to investment strategies in the most talked-about sectors. To learn more and register, visit www.onemedplace.com/forum**


Immunocellular Therapeutics (NYSE: IMUC) is another company industry experts are watching. The company focuses on the use of the use of a dendritic antibody to treat certain cancers, with a lead indication in glioblastoma multiforme. GBM represents a significant unmet medical need, as GBM has the worst prognosis of any CNS malignancy.

Immunocellular’s lead platform, known as ICT-107, is an autologous dendritic cell-based vaccine that works by activating a patient’s immune system against specific tumor-associated antigens. It is a similar process to Provenge (and thus a proven method with similar results and promise), allowing the company a longer runway to limit COGS.

 Analysts predict ICT-107 to be priced between $10,000 and $20,000 per dose sales, and have projected revenue for ICT-107 to be $500MM. The addressable market for ICT-107 should be between 6,000 and 8,000 patients per year in the US.

Immunocellular has a new CEO – John Yu, the company’s Chief Science Officer – and ICT-107 is currently enrolled in Phase II studies for its lead indication; in addition ICT-107 has been shown to be an effective therapy for multiple cancers. The company announced in September it had completed enrollment in its Phase II trial, consisting of 278 patients.

Immunocellular is at an advantage, thanks to right-time, a proven technology, limiting COGS and favorable data. Promising Phase I trial data reported in August showed the median PFS in newly diagnosed GBM patients was 16.9 months and median OS was 38.4 month. As the sector emerges from its nadir with a blueprint for producing cost efficient therapies, the company could be undervalued at the $2.70-$2.80 range.

BioSante Pharmaceuticals (NASDAQ: BPAX) is another company making headlines. The company has two approved products in Elestrin for menopausal symptoms and a testosterone gel for men (licensed to Jazz Pharmaceuticals and Teva, respectively).

In May 2012 shares rose 14 percent after the announcement that its pancreatic cancer vaccine increased survival by 60 percent. This Phase Ib study was encouraging for BioSante’s GVAX Pancreas, especially when combined with other anticancer immunotherapies. In a study in which GVAX Pancreas was combined with Bristol-Myers Squibb’s Yervoy (ipilimumab, a monoclonal antibody), survival time increased to 5.5 months as compared to 3.3 months survival of patients treated with Yervoy alone. After one year 27 percent of patients treated with the combination were alive, as compared to 7 percent of patients not given GVAX Pancreas.

BioSante also raised nearly $3.5 million in a private offering in August, capital which management says will be used for clinical activities and to pay down debt.  Its narrowing of losses from last year by nearly 50 percent paints a very healthy picture for the company. The company’s merger with ANI Pharmaceuticals (announced October) with BioSante the surviving company suggests a focus on furthering the clinical pipeline while securing a robust revenue stream.

Anticancer immunotherapy is conservatively valued as a $4 billion industry. In addition to the direct applications in lead candidates, successful therapies such as Biosante have shown promise as multi-use drugs, and in combination therapies.

Still, however, are the specific strategies explored in limiting COGS, most notably based on physical delivery of the therapy. The utilization of 3D models of the patient and DNA samples is particularly interesting – the information can be beamed via the Internet to the labs where the therapy can be customized for the patient; the logistic chain is therefore cut in half since physical shipping is only going one way.

This facet of the ‘med-cloud’ may provide an avenue for streamlined of logistics as well as more integration of patient care and direct communication – thereby drastically reducing cost to patient.

As these technologies become tenable the question of bioethics – the ethics of the true value of human life – becomes increasingly important. A proper strategy for reducing COGS is not only important to the bottom line, but to ensure these treatments are accessible to the entire population. For now, the healthcare complex must be flexible in providing therapies to the general public – not simply those that can afford it.

Technology will help make this dilemma even easier. Ranging from apps that beam information to both patients and doctors to electronic records to 3D DNA and physical mapping, this increased connectivity may eliminate many of these questions.

Within the next 10-15 years, immunotherapy will become commonplace. R&D costs will become streamlined, stable and predictable, making the day-to-day logistics with patients – how they are monitored, how the drugs are physically delivered, and the toll it takes on human life – the most important valuation markers.

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