Investors are buying into Soligenix’s (OTCBB:SNGX) future, pushing its stock up more than 138 per cent year-to-date. The drug development company, which is focused on making products to treat inflammatory disease and biodefense countermeasures, has drug candidates under its belt that exude market potential, more than one of which has caught the interest of industry heavy-hitters, including renowned life sciences billionaire Randal J (RJ) Kirk. According to a company presentation updated this month that can be found here, it has multiple programs targeting indications that each have at least $200 million plus of worldwide market potential, with Soligenixjust having closed a $7.1 million financing to advance its candidates.
The first under the spotlight is the company’s lead drug candidate SGX942, a drug designed to treat oral mucositis, a debilitating side effect of cancer therapies such as radiation or chemo, in head and neck cancer patients. The drug is coming upon its phase II trial, expected to start by the end of the year, after recently receiving investigational new drug (IND) clearance from the U.S. FDA. It also has fast track designation, a status which is designed to expedite the review of new drugs. A phase I double-blind, placebo-controlled study in 84 healthy volunteers showed SGX942 was safe and well tolerated, and indicated an anti-inflammatory response.
The phase II study, which will take place only in the U.S., will enroll approximately 75 head and neck cancer subjects with oral mucositis. “The drug is designed to treat an unmet medical need, and has the opportunity to see effect in a substantial market,” says chief executive Dr. Christopher J. Schaber. Indeed, there is potential for large numbers. Oral mucositis, grades II-IV, affects over 180,000 head and neck cancer patients worldwide, and it is estimated that the condition affects around 90,000 of these patients per year in the U.S. alone.
In a recent research report, Zacks analyst Grant Zeng, who has a buy rating and $4.50 price target on Soligenix, wrote that the market opportunity for this drug is "huge" as mucositis is a condition that frequently affects cancer patients undergoing radiation and chemotherapy treatment.
"SGX942 is an innate defense regulator and its mechanism of action is well aligned to treat oral mucositis, which has been linked to the dysregulation of the innate immune system," says Dr. Schaber.
As recently as earlier July, the company inked a commercial collaboration deal with SciClone Pharmaceuticals, its second such agreement in as many months, to develop its SGX942 candidate. SciClone completed two phase II clinical studies in 2010 and 2012 on drug SCV-07, which was also targeted for the treatment of oral mucositis in head and neck cancer patients, before deciding to terminate the program.
Soligenix will gain access to SciClone's clinical and regulatory data library in exchange for commercialization rights in China. "Oral mucositis is a difficult development area, and we need as much insight as possible. We know that SciClone went after the same patient population we're going after and we can use their data, insights, regulatory interactions to accelerate our program and to potentially increase our likelihood for a positive outcome," says Soligenix's chief.
Importantly, Dr. Schaber highlights the crucial insights gained into SciClone's placebo subjects, such as patient medical histories, and the location of the head and neck cancers that provide a higher likelihood of developing oral mucositis. "They're giving us tremendous insights into our development program," he says, adding that SciClone is known for its commercial efforts in China, hinting toward some type of shared royalty agreement should the program be successful.
The new funds raised from Soligenix's recent financing, which included a hefty contribution from a venture firm founded by famed entrepreneur RJ Kirk, will predominantly be going toward SGX942's development, as well as to the advancement of SGX203 for the treatment of pediatric Crohn's disease.
"We are looking to start both programs in the latter part of this year, with primary endpoint data targeted for the second half of 2014," says Dr. Schaber.
Its pediatric Crohn's candidate is another area of significant market potential, as there are some 160,000 children and adolescents with Crohn’s worldwide. The drug, a two-tablet proprietary formulation of immediate- and delayed-release oral BDP (beclomethasone 17, 21-dipropionate), is anticipated to be tested in a 150-subject phase 2/3 study in North America, as well as potential sites in Europe.
The drug, which has both orphan drug and fast track designations, is designed to work against inflammation in both the upper and lower gastrointestinal (GI) tract, and is positioned as a corticosteroid, with less toxicity than the current standard therapy of systemic steroid, prednisone, according to the company's chief. "About 80% of Crohn's patients get systemic steroids as first-line treatment for their disease, and doctors struggle with how long to keep them on because of its concerning safety profile such as growth retardation," Dr. Schaber explains. "Our treatment isn't as systemically absorbed, at around 30% versus essentially 100% absorbed for prednisone."
The topically active corticosteroid, BDP, has been marketed globally since the early 1970s as the active pharmaceutical ingredient in inhalation products to treat people with allergic rhinitis and asthma, but the company has been working to develop proprietary formulations of the drug for several applications. Indeed, the company is awaiting a potential multi-million dollar contract with The Biomedical Advanced Research and Development Authority (BARDA) to develop its radiation therapy, OrbeShield, whose main ingredient is also oral BDP. OrbeShield is being developed – with orphan drug and fast track status - in the company's biodefense business segment for the treatment of gastrointestinal acute radiation syndrome (GI ARS), which occurs after potential lethal dose radiation exposure.
And Soligenix is using a time-release formulation of oral BDP in its SGX201 drug candidate, designed to block an inflammatory component of acute radiation enteritis in the GI tract of cancer patients receiving pelvic radiation therapy. Radiation enteritis affects over 200,000 cancer patients worldwide, and there are currently no approved therapies.
"We are also working on SGX201 for colorectal cancer, which is a pretty large market. In a small NIH funded study in 16 rectal cancer subjects, we have seen promising preliminary data and are hoping to secure continued government funding from the NIH [National Institutes of Health] for the follow-on phase 2 study."
Aside from all these potential money-makers, real buzz is being drawn around some of the company's biodefense drugs, which could be an important area for Soligenix in times of national security threats. Indeed, with all the attention surrounding the ricin toxin of late, a light has been shone on the company's RiVax vaccine. To date, RiVax has received approximately $20 million in U.S. federal funding and, if approved, would likely be purchased under government contract.
However, Dr. Schaber says the ricin vaccine is not the company’s core focus, as the majority of its internal team is driven toward the biotherapeutics part of the business. Currently, Soligenix’s chief scientific officer works with one project manager and multiple outside contractors to drive its biodefense vaccine programs, where it also has a vaccine candidate for anthrax, known as VeloThrax. "You can't go just anywhere to conduct biodefense preclinical studies. We have a specialized contractor base that is experienced in this area," he affirms.
Still, that hasn't stopped the drumming of interest in the company's biodefense unit, which is being supported entirely through government grants and contracts. “There remains a great deal of interest in our biodefense programs, which hopefully translates to significant additional funding in 2014.” The company currently is operating under a $9.4 million NIH grant award to continue the development of ThermoVax, its vaccine thermostabilization technology, with its RiVax and VeloThrax vaccines, which ends in the latter part of 2014, potentially positioning Soligenix “for more government support”, says Dr. Schaber.
The thermostabilization technology, which can produce vaccines that do not require storage at refrigerated temperatures, is a potential money-maker in itself as it can lead to the easier and faster distribution of national stockpile biodefense vaccines in emergency situations, as well as with vaccines used to prevent a number of medical conditions. “We can’t quantify the potential significance today, but beyond the biodefense application, there is also the potential to interact with other pharma companies to stabilize their own vaccines,” says the chief executive. “We have received some nice interest in the program so far.”
“We’ve been very active on the business development front, and we continue to look for opportunities across biotherapeutics and biodefense,” he adds.
Case in point – in addition to the SciClone deal, Soligenix as recently as May signed an exclusive worldwide collaboration agreement with Intrexon, a company controlled by billionaire RJ Kirk and which recently filed for an IPO, for the development of a treatment formelioidosis, which is a high priority government biothreat, with the potential for widespread dissemination through aerosol. It’s caused by a bacterium that is highly resistant to antibiotic regimens, with mortality rates as high as 40% in parts of Southeast Asia.
“Melioidosis is also recognized as a significant infectious disease as the bacterium grows in wet soil in regions like Thailand, Northern Australia, India and China, giving us potential to move beyond just a biodefense focus.”
Dr. Schaber describes the process leading up to the deal as a time-consuming one, as “there is a lot of due diligence that goes into potential collaborators of Intrexon,” he says, which hopefully translates to a greater likelihood of success between the two parties.
Success, it seems, with all the high profile government and corporate interest, is practically spelled out for Soligenix, which has a cash position of some $8 million, excluding grants. “We’ll see how the stock performs, but ideally we’d like to wait as long as possible before undertaking another financing.” Until then, there are several catalysts and news items to look forward to both this year and next, from phase 2 clinical trial results to multi-million dollar government contracts.
Shares of Soligenix, which has recently been lauded for its drug development potential in analyst research and influential financial markets blog Seeking Alpha, closed last week at $1.43, giving it a market cap of approximately $22 million, taking into account the completion of the recent financing that increased its outstanding shares.
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