Most investors would be aware that Australia has an outstanding reputation for biotech research, with CSL (CSL), ResMed (RMD), Cochlear (COH), Sirtex Medical (SRX) and Acrux (ACR) familiar success stories. But this does not always translate to success on the stock market. Biotech is a field fraught with a lot of risk between research discoveries and human therapeutics.
The life sciences sector on the stock market is one of the largest in terms of numbers of companies, with a great deal of interesting and promising work being done.
Here is a look at four examples of what we think is some of the most potentially significant Australian biotech work that is moving along the commercialisation path.
Clinuvel Pharmaceutical (CUV, $6.10)
Market capitalisation: $291 million
Share price start 2016: $2.63
Clinuvel has become a global leader in understanding the interaction of light and human skin. It has developed a light-protection drug that shields against UV radiation and sunlight by increasing the levels of melanin in the skin. Called Scenesse, the product represents a new way of treating rare, light-sensitive skin disorders, and has a potentially large market in the estimated 45 million patients around the world who suffer from such problems.
Scenesse has reached the market in Europe: it was approved in 2014 by the European Medicines Agency (EMA) as a treatment to prevent photo-toxicity in adults with erythropoieticprotoporphyria (EPP), a condition in which light exposure results in a deep burning reaction in patients’ skin.
Scenesse has become the first-ever approved standard of care for EPP. Health insurers in Switzerland, Italy, the Netherlands, Germany and Austria have been covering the cost of the drug under compassionate use/special access programs, and commercial sales began in Europe in June.
In July, Clinuvel notched a significant milestone in the US, with the Food & Drug Administration (FDA) granting Scenesse a Fast-Track designation for EPP treatment, enabling Clinuvel to file a New Drug Application (NDA). Scenesse is also in clinical trials assessing its ability to treat vitiligo, a depigmentation disorder.
Clinuvel’s revenue almost doubled in FY16 to $6.4 million. The company ended the financial year with cash and financial assets worth $13.8 million.
Source: Yahoo
Admedus (AHZ, 31.5 cents)
Market capitalisation: $71 million
Share price start 2016: 68.5 cents
Admedus is another Australian company that is arguably a world leader, in its case, in regenerative medicine, where its “bio-scaffold” tissue engineering technology has some exciting applications, in particular a cardiac patch to repair and reconstruct heart and vascular defects. Admedus’ patch, known as CardioCel, is the first such product to show in clinical studies the ability to stay free of calcification – it has shown this over eight years from the first implantations – which means it can reduce the need for follow-up surgery. With this quality, CardioCel is a potentially disruptive product in the US$2.5 billion heart valve repair and replacement market.
CardioCel is a bio-implant that comes from bovine pericardium that is engineered through Admedus’ ADAPT platform. Think of it as a “living Band-aid” – it is based on collagens, and has strong mechanical properties and durability, with minimal immune response from the body, while supporting the growth of native cells. This offers heart surgeons an attractive alternative to the current bio-prosthetic heart valve options.
Admedus is focusing on building the global market for CardioCel through getting top cardio-vascular surgeons – called “key opinion leaders,” or KOLs in the jargon of biotech – to use the product.
The follow-up product, VascuCel for vascular surgery, will be launched in November. Admedus says VascuCel shows the same characteristics and patient benefits as CardioCel, including the lack of calcification. The company says VascuCel addresses a market worth more than US$500 million a year.
There is also blue sky from a program to develop therapeutic vaccines for the treatment and prevention of infectious diseases and cancers. Admedus is working with Professor Ian Frazer (creator of the Gardasil vaccine for the Human Papillomavirus (HPV), which was commercialised by CSL. Admedus has two major DNA vaccine programs targeting Herpes Simplex Virus 2 (HSV-2) and HPV. The HSV-2 program is in clinical trials.
Admedus also distributes in Australia and New Zealand a range of medical products including syringes, infusion pumps and catheters. That is the cash-cow business: in FY16, Admedus boosted revenue by 39.6%, to $14.1 million, $5.3 million of which came from CardioCel. The FY16 closing cash balance was $8.8 million.
Source: Yahoo
Actinogen Medical Limited (ACW, 5.7 cents)
Market capitalisation: $35 million
Share price start 2016: 6.1 cents
Actinogen Medical has developed a new approach to Alzheimer’s Disease, based around the hypothesis that elevated levels of cortisol – the human body’s “stress hormone” – is strongly correlated to the major symptoms and progression of Alzheimer’s. This was a chance observation made at the University of Edinburgh: Actinogen Medical picked up the right to research it, and potentially commercialise it.
Actinogen’s lead drug candidate, Xanamem, inhibits the production of cortisol at sites in the hippocampus and frontal cortex, parts of the brain that are important for cognition. Actinogen has completed a series of successful Phase I clinical trials to establish the safety and feasibility of Xanamem for further clinical development, and has begun the process of conducting a global Phase II clinical trial, with the first patients expected to be recruited – and receive first doses – by the end of this year, with the final patients expected to be recruited in the first quarter of 2018. Actinogen has worked with the US FDA to design this trial, which it has called XanADu.
The value proposition for Actinogen is potentially huge. The Alzheimer’s disease and dementia market is a multi-billion dollar market, but none of the treatments developed so far seem to work. The cortisol theory is a new approach, but it has generated a lot of interest in the field. The theory and data were presented to the Alzheimer’s Association International Conference (AAIC) in Canada in July, and Actinogen expects the full clinical data to be published in a major peer-reviewed medical journal “within months.” It will also present the data at other major medical congresses.
This is potentially a major discovery: in 2015, business news and data provider Thomson Reuters named Xanamem one of the top five drugs in Phase I development globally. The addressable market has been estimated to reach US$2 trillion by 2050, as the number of people suffering Alzheimer’s doubles every 20 years: Alzheimer’s affects 11% of people aged over 65 and 32% of those older than 75. Actinogen’s global patents are valid until 2031. Data flow will drive this stock – and any sign of failure of the XanADu trial would be disastrous.
Source: Yahoo
Innate Immunotherapeutics Limited (IIL, 51 cents)
Market capitalisation: $106 million
Share price at start 2016: 18. 8 cents
Another outstanding piece of Australian biotech is the unique immune-modulator micro-particle technology developed by Innate Immunotherapeutics, which can be used to induce the human immune system to fight certain cancers and infections, or to modulate the immune mechanisms that are implicated in major auto-immune diseases such as multiple sclerosis (MS).
That is where the company is focusing its efforts, but the same technology can be used in the design of better vaccines to potentially treat or prevent diseases such as influenza, cancer, malaria or tuberculosis.
IIL’s lead drug candidate, MIS416, is aimed at secondary progressive multiple sclerosis (SPMS), for which there are no drugs currently approved for the safe ongoing treatment. MIS416 is currently in a Phase 2B trial, which is scheduled for completion in April 2017.
There is already strong evidence for the safety and likely efficacy of MIS416 from prior trials, and the fact that it has been used for the last seven years in a “compassionate use” program in New Zealand. Physicians involved in the NZ program have seen significant improvements in motor skills and general wellbeing of patients.
The unmet need is huge. An estimated 2.3 million people suffer from MS worldwide of which about 30% – or 700,000 people – have the progressive and highly disabling SP form of MS.
IIL is banking heavily on its MIS416 drug candidate. As it says, this clinical program is its major ‘asset,’ and “outright Phase 2B clinical trial failure would be very hard to survive.” But for the trial to fail, all the previous patient, doctor and caregiver reports of sustained and significant benefits would need to be wholly attributable to nothing more than placebo effect – and for that to have been sustained over several years. IIL does not believe that is the case.
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