Access Pharma (OTC:ACCP): Deep Pipeline, Shallow Valuation

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Tuesday, 14 July 2009 11:53

Access Pharma (OTC:ACCP)(ACCP.OB) is an emerging bio-pharmaceutical company which is focusing on the development of a late-stage, diversified oncology pipeline in addition to a treatment for a common side effect of some cancer treatments known as mucositis (painful sores in the mouth and GI mucosal lining) which has already received FDA 510(k) marketing clearance and European CE Mark approval. On 7/13/09, Access announced that it would be among the LifeTech Capital Group companies presenting at Jesup & Lamont's 2009 Growth Stock & National Sales Conference to be held at the Waldorf Astoria Boca Beach Club on 7/30/09 in Boca Raton, FL, which will also include former FDA Commissioner Dr. Lester M. Crawford D.V.M., Ph.D., as the keynote speaker for the event.

On 6/10/09, Access announced that the Company received issue notifications from the United States Patent and Trademark Office for two US patents (numbers 7,544,348 and 7,547,433) for MuGard and related product line extensions. MuGard is a polymer solution which provides a protective coating for the oral cavity when swirled gently around the mouth that could be expanded into related markets, including dental applications, oral surgery, and other related medical interventions requiring protection of the oral mucosa. The product is formulated as a ready-to-use viscous liquid which is easy to use and carries the added benefit of preventing the incidence of mucositis.

Up to 40% of all patients receiving chemotherapy and/or radiation therapy develop moderate to severe mucositis, and almost all patients receiving radiotherapy for head and neck cancer and those undergoing stem cell transplantation develop mucositis. In patients receiving radiation therapy for head and neck cancer, 42% of patients using MuGard Rinse did not develop significant mucositis, as compared to just 9% in a historical control group. Updated clinical practice guidelines for the prevention and treatment of mucositis recommend the use of a preventive oral care regimen as part of routine supportive care along with a therapeutic oral care regimen if mucositis develops.

In late May, Access announced that MuGard was launched in Germany, Italy, UK, Greece (launched in late June), and the Nordic countries by its European commercial partner, SpePharm, a pan-European specialty pharmaceutical company dedicated to the provision of high medical value medicines in supportive and critical care. The Company has previously announced commercialization agreements in North America, China and eight Southeast Asian countries and Korea with expected commercial launches in these regions throughout the remainder of 2009 as manufacturing and reimbursement becomes established in each region.

Commercial partner estimates for MuGard include global annual peak sales potential of $350 million with a scaled royalty rate of 20-25% for Access, which translates into royalties of $70M or about 1.5X the Company's current fully-diluted market cap. Access has already announced marketing agreements with SpePharm for the EU, Milestone for the U.S., JCOM in Korea, and RHEI for China and other Southeast Asian countries.

On 7/7/09, Access announced new preclinical data demonstrating that thiarabine shows remarkable efficacy in the prevention and treatment of rheumatoid arthritis (RA). In a well-established animal model for RA, an exceptional restoration of joint structure was observed in the studies, which were conducted at Wayne State University School of Medicine and at Southern Research Institute.

Thiarabine is the Company's next-generation nucleoside analogue (e.g. fludarabine, cladrabine) designed for the treatment of blood-based cancers such as lymphoma and leukemia. Once again, ACCP is working with the leader in this field - in this case, Dr. Hagop Kantarjian, who is Head of the Leukemia Department at the M.D. Anderson Cancer Center in Houston (which is the primary treatment centre in the U.S. for leukaemia and lymphoma). The Company is currently finalizing clinical trial protocols based on previously gathered data to evaluate the drug in a variety of leukemia and lymphoma subtypes.

As a therapeutic treatment of established disease, thiarabine demonstrated a highly significant, dose-dependent amelioration of arthritis. Thiarabine treatment resulted in a broad inhibition of disease pathology, with reduction of both inflammatory and erosive disease parameters, as well as protection from loss of cartilage matrix proteins. When used as a preventative treatment, thiarabine blocked the development of joint disease at the 60 mg/kg/day dose level and exhibited a significant reduction in disease incidence and severity at 20 mg/kg/day.

In a therapeutic study comparing thiarabine to methotrexate, a commonly used clinical drug for RA treatment, high resolution 3-D images from an X-ray microtomograph were used along with histological scoring to evaluate joint and bone destruction. Thiarabine demonstrated statistically significant anti-arthritic efficacy comparable to that of methotrexate President & CEO Jeffrey B. Davis, stated, "Our current development focus for thiarabine is for the treatment of hematological cancers, but we believe these new RA data provide compelling evidence that thiarabine should be developed for rheumatoid arthritis as well."

In early June, ACCP announced that new thiarabine preclinical data will be published in the journal "Cancer Chemotherapy and Pharmacology" which demonstrates that thiarabine combined with clofarabine provides much greater anti-tumor activity than achieved by either agent used alone (e.g. in one colorectal cancer model, 66% of mice were cured of their tumors). The publication is based on work conducted by the Company's collaborators at the Southern Research Institute, and the paper is entitled "Enhancement of the in vivo antitumor activity of clofarabine by 1-beta-D-[4-thio-arabinofuranosyl]-cytosine" (thiarabine).

Access is currently working with leukemia and lymphoma specialists to initiate additional Phase 2 clinical trials in acute myeloid leukemia (AML), acute lymphocytic leukemia (ALL), and B-Cell lymphomas. These studies will seek to determine the optimal dosage regimen and most susceptible malignancies for future trials with data expected around mid-2010 to serve as the basis for partnership discussions for further development and commercialization. The IND for thiarabine has been transferred to Access and the Company is awaiting FDA clearance of study protocol and drug recertification before initiating RA trials, in addition to seeking co-development partners for the drug across all therapeutic indications.

ProLindac is a very promising, next-generation platinum anti-cancer compound which includes a proprietary nano-polymer drug delivery vehicle that allows for over 10X the dose of platinum to be delivered in a targeted manner to cancer cells with a much better safety profile compared to standard platinum-based drugs which cause significant and cumulative neurotoxicity. The unique nano-polymer delivery system selectively releases the platinum in a targeted manner to cancer cells because they reside at a low pH (acidic).

Pharmacology studies conducted outside of living, human tissue (ex-vivo) within comparable environments (e.g. acidic or low pH) to the tumors being treated by ProLindac have demonstrated that about half (50-60%) of the platinum is released over a period of 96 hours (four days) from a single administration. Thus, a single dose of ProLindac not only delivers over 10X the platinum dose in a targeted manner to cancer cells, but also mimics a four-day continuous infusion as the drug persists at the tumor site.

ProLindac is meant to be a safer, more effective replacement for Eloxatin (oxaliplatin), which posted estimated global sales of $2.5 billion in 2008 for Sanofi-Aventis (NYSE:SNY). In addition to having more side effects than ProLindac, Eloxatin is available on an off-patent basis in Europe. Access also employs Esteban Cvitkovic as their director of oncology R&D - who has over 30 years of experience in this area and played a key role at SNY in the development and approval of Eloxatin. Preliminary data from a Phase 2 clinical trial in patients with relapsed ovarian cancer demonstrated that over 12X the dose of ProLindac was delivered compared to Eloxatin and the final data from this trial is still pending.

Despite the much larger platinum dose delivered by ProLindac, the drug demonstrated an excellent safety profile in the trial among patients receiving nine or more cycles of therapy. Access previously announced positive safety and efficacy results from its Phase 2 mono-therapy clinical study of ProLindac in late-stage, heavily pretreated patients with ovarian cancer. In this study, 66% of patients who received the highest dose achieved clinically meaningful disease stabilization according to RECIST criteria. No patient in any dose group exhibited any signs of acute neurotoxicity, which is a major adverse side-effect of the approved DACH platinum, Eloxatin, and ProLindac was well tolerated overall.

Access has scaled-up its manufacturing in order to begin the next phase of clinical development for Prolindac and the Company plans to conduct several combination Phase 2 trials during 2H09 in different solid tumor types both as Company-sponsored trials and in conjunction with its two previously announced co-development partners. Access is currently in discussion with potential North American and European partners for co-development of ProLindac while the Company is working with its existing partners in Asia to design and manage new clinical trials for the compound.

Access also has a monoclonal antibody (MAb) with encouraging preclinical results in comparison to Roche's (OTC:RHHBY) Avastin. Angiolix targets a specific portion of a protein called lactadherin that is only expressed on solid tumors. Angiolix has a dual mechanism of action, which includes (1) inhibiting angiogenesis (blood vessel proliferation which feeds tumor growth) via the lactadherin target and (2) inducing a process known as apoptosis or programmed cell death in cancer cells which are dividing and growing in an unregulated manner. Unlike Avastin, Angiolix has an anti-proliferative effect on cancer cells when used by itself in addition to when it is used in combination with other chemo drugs.

Finally, Access has demonstrated promising results for a nano-polymer drug delivery system for the oral administration of large molecules such as insulin, human growth hormone (hGH), and erythropoietin (EPO). This novel delivery mechanism utilizes the body's vitamin B12 absorption system in a Trojan Horse manner with the potential to eliminate the need for injections of widely used drugs such as insulin, hGH, and EPO. This drug delivery technology involves coating a nano-particle with a B12 analog (cobalamin) that binds to intrinsic factor in the gut and triggers binding to cellular receptors which absorb the entire package, resulting in 1,000 to 1,000,000-fold increases in absorption through the gut of large molecule drugs typically administered by injection.

Access anticipates an expense of about $2 million and about 12-15 months to get an IND filed to initiate clinical trials in humans for the nano-polymer drug delivery system; although this timeline could be shortened if such trials were conducted outside of the U.S. (e.g. India). A long-acting, basal insulin product (similar to the activity profile of Lantus insulin) is the most advanced in terms of achieving oral bioavailability of about 80-90% after initially achieving results in the 30-40% range. hGH, which is about 3X larger than insulin on a molecular basis, is currently in the 30-40% bioavailability range in preclinical animal models.

In mid-June, Access announced that the Company has signed evaluation agreements with two bio-pharmaceutical companies for its Cobalamin Oral Drug Delivery Technology. Under the terms of the agreements, both companies plan to evaluate the Company's oral insulin product in preclinical, animal models before entering licensing discussions. Access previously announced an agreement with a large pharmaceutical company to evaluate the oral delivery of hGH.

Access trades at a fully diluted market cap of about $40 million at the closing price of $1.84 on 7/13/09, which includes 11.3 million shares outstanding and 10.6 million shares of common stock convertible under preferred shares (even though this is not reflected by financial data providers such as Yahoo and Google Finance). At the end of 1Q09, Access also had a convertible note outstanding in the principle amount of $5.5M that is due 9/13/11. Access should have sufficient liquidity to fund operations at the current level (net cash burn rate for 1Q09 was $0.5M) through at least 2H10 based on its current cash/equivalents ($2.2M at the end of 1Q09) and expected upfront, royalty, and milestone payments from additional partnerships and MuGard royalties.

During 2H09, the Company plans to start multiple clinical trials for ProLindac and thiarabine, in addition to selling off its anti-infective dermatology assets (EcoNail - topical econazole and Pexiganan - a novel topical anti-infective) for an additional source of non-dilutive funding. If MuGard reaches just $20 million in global sales at a 20% royalty rate, this would generate positive operating cash flow during 2010. Between non-dilutive funding, partnerships, and MuGard royalties; the fully diluted share count should stay below 25 million at the time Access achieves positive operating cash flow so that existing shareholders will not be diluted into oblivion. Access is also in the process of obtaining an AMEX listing for its shares for greater visibility and liquidity compared to the OTCBB trading.

A video presentation for MuGard is available at YouTube, in addition to more information and links at the Company's newsroom website. Please visit the research section of BioMedReports.com to view or download PDF stock research reports for Access written by Griffin Securities from April 2009 with a 12-month price target of $7.50 (which equates to a fully diluted market cap of about $164 million) and Dawson James from July 2009 with a $4 price target (3X estimated 2011 revenue), in addition to the Company's most recent corporate presentation. Access also has a proactive management team which holds a large financial stake in the Company and has established a social media presence on Facebook, Twitter, and LinkedIn.

The list below (Data Sources: Yahoo! Finance, SEC Filings as of 7/12/09) includes a valuation comparison, upcoming catalysts, and pipeline comments for several other small and micro-cap cancer biotechs, including Aeterna Zentaris (NASDAQ:AEZS), Allos Therapeutics (NASDAQ:ALTH), Cell Therapeutics (NASDAQ:CTIC), GTx Inc. (NASDAQ:GTXI), Lixte Biotech (OTC:LIXT), Spectrum Pharma (NASDAQ:SPPI), SuperGen (NASDAQ:SUPG), and YM BioSciences (AMEX:YMI).

Company Ticker Price Market Cap

Aeterna Zentaris AEZS $1.74                     $93 million

initial cetrorelix Phase 3 results 3Q09, NDA filing 2010

Allos Therapeutics ALTH $7.60                     $679 million

pending FDA decision late 3Q09 for pralatrexate (priority review)

Cell Therapeutics CTIC $1.35                     $624 million

possible 4Q09 regulatory decisions for pixantrone (US-FDA) and Opaxio (EU-EMEA)

GTx Inc. GTXI $7.84                     $286 million

toremifene 80mg pending NDA 4Q09, toremifene 20mg Phase 3 results 3Q09

Lixte Biotech LIXT.OB $0.61                     $18 million

preclinical cancer drug discovery pending patent applications, IND filings

Spectrum Pharma SPPI $5.08                     $168 million

possible 3Q09 FDA rulings to expand label of Zevalin & Fusilev, EOquin - Phase 3

SuperGen SUPG $2.03                     $120 million

Eisai 1Q10 sNDA to expand label of Dacogen + early stage cancer pipeline, CLIMB drug discovery platform

YM BioSciences YMI $0.55                     $30 million

pending Phase 3 trials AeroLEF, nimotuzumab multiple Phase 2/3 trials, $40 million cash and zero debt

Disclosure: Long ACCP.





BiomedReports is not paid or compensated to report news and developments about publicly traded companies. Full disclosure can be read in the About Us Section

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