Brief Overview of Ricin
Yesterday we saw a massive spike in attention for a small biopharmaceutical company known as Soligenix (OTCQB:SNGX) as a result of the heavy media coverage of the most recent bioterrorism threat - the mysterious packages mailed to President Barack Obama (and other government officials) that were intercepted early and found to contain a poison known as ricin. The Center for Disease Control classifies ricin as a Category B biological agent, which is the second highest class of dangerous biological agents. These are not as serious as Category A agents (which can basically be considered "bioweapons"), but they require serious attention due to their potentially fatal toxicity.
What makes ricin frightening these days, as mentioned in many other news articles, is the domestic availability of the castor bean that it's derived from. Refining the toxin from its source isn't necessarily easy, but it's been used in assassinations before (Georgi Markov, 1978) and was once considered for use in chemical warfare due to its ability to rapidly move into the bloodstream through the respiratory system. Although it cannot enter the body as easily as anthrax (which can infect individuals through exposure to the skin alone), it takes less than 2 milligrams to kill the average adult. By volume, this equates to a few grains of table salt.
There are no FDA approved treatments for ricin poisoning indication, nor are there any vaccines. A few companies have expressed interest in the ricin vaccine and therapeutic space, but Soligenix's RiVax™ vaccine program is the most dedicated. Rivax is also Soligenix's furthest developed vaccine product.
RiVax: The First Ricin Vaccine?
Ricin works by inhibiting protein synthesis in cells that it comes into contact with, and it's quite efficacious as implied by preclinical data. RiVax attempts to prepare the immune system to ricin by introducing it to a far less toxic and inactive chain of the ricin protein, which essentially allows the immune system to get "used" to the molecule before it has to face the full introduction of ricin into the body.
The vaccine has been shown to be well tolerated and immunogenic during phase Ia and Ib clinical trials, which implies that RiVax is not only safe but does indeed induce an immune response in healthy adult patients (aged 18-31). Efficacy is more difficult to establish due to the fact that we can't perform a standard double-blinded study, although the government seems to be very supportive of Soligenix's programs and will base its decision for approval on efficacy demonstrated in animal models (this is possible due to the "Animal Efficacy Rule"). It has also received orphan drug status due to the rarity of ricin poisonings.
Financially speaking, RiVax would be going into unexplored territory after an FDA approval, although the general lack of competition and the support of the NIH should help tremendously.
VeloThrax & Government Funding
In addition to RiVax, Soligenix has a vaccine for anthrax known as VeloThrax™, which was originally developed at Harvard utilizing the company's ThermoVax™ technology. ThermoVax is central to Soligenix's biodefense vaccine portfolio, and improves the stability of standard vaccines. Based on preclinical studies, we believe that the vaccines based on Soligenix's platform can last as long as 6 months at high temperatures, which is far longer than standard vaccines.
This stability improvement brought about by ThermoVax seems essential to the government contracts that fund Soligenix, since the stockpiling of ricin/anthrax vaccines has become a heated topic (and urgent task) after recent events related to bioterrorism.
Seeing competitive advantage in its biodefense pipeline, the National Institute of Allergy and Infectious Diseases (part of the National Institutes of Health) gave the company a grant of $9.4 million to develop ThermoVax-based compounds like RiVax. Although defense agencies have been stockpiling vaccines for decades, their inherent instability makes them a logistical nightmare to distribute in the case of a national emergency, which makes stability at high (normal) temperatures a very valuable trait.
Basically, the thermodynamic instability of normal vaccines is what will offer Soligenix a competitive edge against vanilla anthrax vaccines like Emergent's (NYSE: EBS) rPA 102, which is further developed as a Phase II drug but may be outclass by ThermoVax due to thermodynamic stability.
Investing In Soligenix/ThermoVax Is Investing In Vaccine Stockpiling
Soligenix offers a very unique kind of investment that taps into a niche market, especially with improvements brought about with ThermoVax. The stock spiked 18.57% in yesterday's trading, bringing the market capitalization of the company to roughly $18.56 million (based on 11.18 M shares). About $3.4 million in cash at the start of the year will keep the company afloat, although a new government contract or some other form of financing would be needed to finish funding Phase II development for RiVax.
Having said this, Soligenix has a few things going for it. Six of its eight development programs are backed by the NIH, and cash from the government contracts has kept the company virtually debt-free up to this point. Soligenix has an approximate net worth of roughly $3.5 M, and also boasts an orphan/fast track vaccine OrbeShield for GI Acute Radiation Syndrome, which may see FDA approval first. The furthest developed program is SGX942, which will enter Phase II trials in H2 2013 geared towards the oral mucositis in head and neck cancer indication.
Investors may see another round of buying interest in Soligenix later today, as the company's CSO Dr. Robert Brey holds a morning presentation at the World Vaccine Congress & Expo. Momentum could easily bring the stock above $2/share again with lingering threats of bioterrorism in the United States, but short term speculators are very fickle and may also be inclined to retreat after yesterday's run.
I'd also give a nod to Soligenix's ThermoVax platform, which makes it very competitive overall as a vaccine developer. Soligenix's programs still have a long way to go, but the NIH's support will make the process a lot smoother for both the company and its investors (with less need for equity financings). Still, it is yet another early-stage biotech stock that offers substantial returns at the cost of substantial risks. Trade this one only if you're comfortable with the implied volatility, and the risk that Soligenix may not have government funding later on.