A Closer Look at NeoPharm, Inc. (Public, OTC:NEOL) Print E-mail
By Michael Vlaicu   
Thursday, 01 October 2009 03:00
At first glance, NeoPharm Inc. (OTC:NEOL) may appear to be just another regular cancer FDA play, but closer inspection reveals a number of key differentiators that may set it apart as an investment option for biotech enthusiasts. First, it has a deep pipeline which targets billions of dollars in market potential, including treatments for: Metastatic Brain Cancer, Metastatic Solid Cancer, Pancreatic Cancer, Glioblastoma Multiforme, and Idiopathic Pulmonary Fibrosis. An undervalued price per share due to the company's inability to meet the NASDAQ requirements, thus leading to a delisting. All the while having a 4Q09 which is bound to reap news and announcements across the board with regards to the ongoing clinical trials.

The company's financials certainly took a hit during second quarter 2009, however, what do you expect given that they've had a busier year with regards to clinical and preclinical development testing than ever before.

About NeoPharm Inc.
NeoPharm has multiple drug candidates in various points of clinical development, including a LEP-ETU Phase II trial for breast and ovarian cancer, a LE-DT Phase I trial, also for various forms of cancer and Cintredekin Besudotox preclinical studies for untreatable brain diseases in humans.

The company's robust pipeline has additional indications for Cintredekin Besudotox for idiopathic pulmonary fibrosis, and its product initiatives are funded and progressing as planned. NeoPharm's clinical trials have been structured to capitalize on broader indications of cancer. With a reorganization strategy originally announced in April 2007, NeoPharm has achieved significant cost-savings and put into place an optimal cost structure which enables the company to focus primarily on the development of drug candidates.

The company has significantly reduced its cash consumption rate and has resources available to fund current candidates in development into the second quarter of 2010. Key initiatives completed as part of this reorganization include:
  • Annualized cash consumption levels reduced to approximately $5 million
  • Cost structure realigned to optimize the progress of several drug candidates to next strategic event
  • Streamlined organization to include a core team of technical employees to support development activities and ensure regulatory compliance for all drug candidates
  • Formed a new management team with relevant experience and expertise, including Dr. Aquilur Rahman, NeoPharm's co-founder and Chief Scientific Advisor
  • Pipeline

    NeoPharm is a biopharmaceutical company developing and commercializing drugs for the treatment of various cancers and other diseases using enhanced and innovative drug delivery systems. NeoPharm is focused on providing life-saving and life-enhancing solutions to the drug delivery and oncology markets. The following table summarizes key information about our current drug product candidate pipeline:

    Cintredekin Besudotox

    The drug product candidate which they have advanced the furthest is Cintredekin Besudotox, a tumor-targeting toxin being developed as a treatment for glioblastoma multiforme, or GBM, a deadly form of brain cancer. Glioblastoma multiformes (GBM) is the most common type of malignant primary brain tumor in adults. They are very aggressive, having tentacles that spread and mix with normal brain tissue, damaging the adjacent tissue as they grow uncontrollably in the brain. Treatment success has not significantly changed over the last 20 years, with most patients living less than one year after diagnosis despite aggressive surgery, radiation and chemotherapy. Radiation therapy has been the most effective adjuvant therapy for these tumors, but the inherent resistance to radiation therapy and the risk of damaging the adjacent normal brain tissue limits its overall efficacy.

    GBM is intrinsically resistant to most chemotherapy and very few drugs cross the natural barrier present in the blood vessels of the brain (blood-brain barrier) which means that even drugs that work in the laboratory and in animals cannot reach the tumor cells within the brain. This unfortunate combination has resulted in only two FDA approved chemotherapy for this type of tumor with two forms of delivery, by vein or by local biodegradable wafers. The impact of these approved therapies increases survival in patients with this deadly tumor by only a few weeks. Clinical Studies They have exclusively licensed Cintredekin Besudotox from the NIH and the FDA, and have been developing this drug product candidate under a Cooperative Research and Development Agreement, or CRADA, with the FDA Center for Biologics Evaluation and Research, or CBER.

    Cintredekin Besudotox has received orphan drug designation in the US and Europe and FDA has designated it for the fast track drug development program. In addition, Cintredekin Besudotox has been selected to participate in the FDA's Continuous Marketing Application, CMA, Pilot 2 program. They also hold a non-exclusive license to utilize a patented process owned by the U.S. government relating to convection enhanced delivery, or CED, for use with drugs, including Cintredekin Besudotox, in the treatment of gliomas. In early 2007, NeoPharm completed its Phase III clinical trial for Cintredekin Besudotox. Upon review of the trial results with us in March 2007, the FDA concluded that an additional Phase III confirmatory trial would be required prior to acceptance of a potential BLA filing by NeoPharm. In June 2008, NeoPharm signed a letter of intent with a clinical research organization (CRO) with regard to the CRO's engagement to oversee a planned confirmatory Phase III trial for Cintredekin Besudotox.

    This initial Phase III confirmatory trial was to have the primary objective of overall survival, with a secondary objective of progression-free survival for patients with recurrent GBM against the standard of care. Subsequently, NeoPharm received notification from the Directorate General of Health Services - Office of Drugs Controller General (India) ("DCGI") that it will not at this time grant regulatory approval for NeoPharm to conduct its planned confirmatory IL-13 Phase III trial. In its previous correspondence, the DCGI requested concurrent enrollment of patients in the trial in the USA. In the fourth quarter of 2008, NeoPharm signed a Cooperative Research and Development Agreement ("CRADA") with the National Institute of Neurological Diseases and Stroke ("NINDS"), a part of the National Institutes of Health ("NIH"), for research on a therapeutic agent for untreatable brain diseases in humans. Under the terms of the CRADA, NINDS will deliver IL-13 in conjunction with a surrogate marker via NINDS' patented methodology of Convection Enhanced Delivery ("CED"), which was previously licensed to NeoPharm. NeoPharm will provide its proprietary drug and technical resources to study its effects in various brain cancers in humans. NINDS Institutional Review Board ("IRB") has approved the protocol and NeoPharm has granted NINDS authorization to cross-reference its prior IL-13 IND for the treatment of GBM.

    IPF - Idiopathic Pulmonary Fibrosis
    The Company has licensed IL13-PE38 from NIH, FDA, and University of Michigan as a potential therapeutic agent for the treatment of idiopathic pulmonary fibrosis and asthma. Idiopathic pulmonary fibrosis may result from a malfunctioning immune system. Repeated immune-related damage and scarring destroys the elasticity of the lungs, compromising the patients' ability to breathe. Cells initiating the immune response to the lungs over-express IL-13 receptors. Selective destruction of cells presenting IL-13 receptors reduces further damage and improves lung function in animal disease models of idiopathic pulmonary fibrosis. The Company's collaborators have completed extensive preclinical studies in animal models to evaluate the control and reversal of pulmonary fibrosis with this agent. The following slide shows reduced pulmonary fibrosis in mouse studies after treatment with Cintredekin Besudotox.

    NeoPharm recently completed a two week inhalation toxicology study in non-human primates performed by the Lovelace Respiratory Research Institute. This study was designed to provide a detailed safety evaluation of the product in non-human primates through nebulization and to fully characterize the distribution in the lungs and other tissues and to identify any toxicity related to any organ with IL-13 inhalation. The physio-chemical properties of the nebulized product are extensively studied to predict its distribution into the lungs.

    Based on the initial results from this study, NeoPharm plans to submit an IND to the FDA in the third quarter of 2009. For a full list of products, visit the company's website.

    NeoLipid Drug Delivery

    NeoPharm uses novel proprietary lipids and improved procedures to entrap difficult-to-deliver drugs in small, homogeneous, and stable liposomes, which are microscopic membrane-like structures created from lipids (fats). Because tumor cells need to consume large amounts of fat to sustain their rapid growth, they recognize the liposomal drug as a potential source of nutrition. NeoPharm's NeoLipid® innovative system of delivering anticancer drugs to tumors can potentially improve pharmacokinetics and reduce the toxicity of potent drugs, creating an opportunity for more comfortable-to-administer, well tolerated, and safer treatments for patients. NeoLipid® formulations are designed to produce small and homogenous drug particle sizes using simple, easy-to-use (ETU) reconstitutions of lyophilized (or freeze-dried) products with the goal of creating an extraordinarily stable liposomal product.. This is especially important during drug storage, reconstitution and administration to the patient. NeoPharm believes NeoLipid® technology may have applications in a variety of other areas in addition to the drug product candidates in clinical development. Potential advantages of NeoLipid® Drug Delivery Technology:
    • Higher anticancer potency
    • Broader range of drugs
    • Toxicity may be reduced
    • Fewer perceived side effects
    NeoPharm intends to explore the use of its proprietary NeoLipid® liposomal drug delivery technology in terms of life cycle management, with the goal of extending patent life and/ or modifying the pharmacokinetic profile of existing cancer drugs, and by utilizing the platform to develop new drugs. NeoPharm is aware of several widely used cancer drugs that are nearing patent expiration, as well as other widely used cancer drugs with patents that have expired. When a drug is combined with another agent or delivery system in a novel way, its patent life may be extended. Additionally, while many chemotherapeutic drugs have been effective for the treatment of cancer, these drugs have been limited in their use because of adverse side effects and difficulties in administration. NeoPharm's NeoLipid® drug delivery technology may increase the usefulness of these compounds as improved anti-cancer treatments. Finally, NeoPharm believes that its liposomal drug delivery technology may provide a platform for the development of novel therapeutic agents for cancer drug development. Intellectual Property NeoPharm owns exclusive rights to the NeoLipid® Technology and Tumor-Targeting platforms. The Company has entered into an agreement with the National Institute of Health (NIH) and the Food and Drug Administration (FDA) to license rights to develop and commercialize Cintredekin Besudotox for cancer indications. The Company has also entered into an agreement with the NIH to license rights to develop and commercialize Cintredekin Besudotox for idiopathic pulmonary fibrosis and asthma. NeoPharm has entered into agreements with Georgetown University to license rights to develop and commercialize the drug product candidates in our NeoLipid® Platform, including LEP-ETU and LE-rafAON. NeoPharm actively seeks strategic collaboration with biotechnology and pharmaceutical companies to enhance the growth and market opportunity beneficial to both companies. NeoPharm continues to build its pipeline rapidly and advance existing drugs to the market, fulfilling its commitment in bringing breakthrough therapeutics to patients. The Company is interested to discuss licensing and co-development opportunities related to drugs in its pipeline or development of new or improved drugs.

    FDA Updates ( Provided by BioMedreports' FDA Calendar )

    Technical Chart Analysis

    Today, September 29th, NEOL took a peek above the middle trend-line (Blue dashed line on the chart) of a very well established price channel and may be giving an indication of its readiness to move up to the top of the channel and beyond. The current price channel (Blue lines on the chart) has been in control for a year now and the price has spent the past 8 months moving through and up the lower half of the channel. In the last 4 months, the price has clearly been consolidating since it jumped above the daily 200 SMA (Yellow line on the chart) back in May.

    Also, during this time, the daily 100 SMA (Orange line on the chart) crossed up and over the 200 SMA and both averages are currently trending up (strong bullish signals). Today’s move looks to be the third attempt this year to break that middle trend-line and it is very common that the third time usually is the charm. Factor in the heavy volume (grey bars) under the strong green candle today and there is certainly an increase in interest and building of momentum that will continue to push the price up the channel. It’s good to keep in the back of your mind that there appears to be a level of strong support/resistance at .50 cents, established throughout 2008, and this corresponds very closely with the ¾ trend-line of the current price channel (Red circle on chart). When the price breaks this level, it could easily expand the top of the current price channel and seek the next level of support/resistance around .80 cent

    Overall Sentiment

    With the Company having drawn down the full amount of the credit line and now projecting that it will have sufficient cash to fund its operations into 2010, NeoPharm has set itself nicely for a bright open in 2010, following much anticipated pending news for 4Q09. With clinical trials continuing to impress, volume rising with each passing day, and a cheap pps due to the recent delisting -- expect NeoPharm to bounce back and make some headlines with its upcoming groundbreaking products and treatments. ———–
    Disclosure: Long NEOL
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