On 7/23/09, Access Pharma (OTCQB:ACCP) announced that its European partner, SpePharm, is collecting data from a post-approval marketing study of MuGard in head and neck cancer patients undergoing radiation treatment in the UK showing prevention of oral mucositis (OM). In a multi-center study expected to enroll a total of 280 patients, patients are provided with seven weeks of MuGard therapy, and begin using MuGard one week prior to radiation treatment and then throughout the subsequent six weeks of planned therapy. The first 140 patients being treated in this assessment study have been enrolled and treated, and as of the time of the update, none of these patients have experienced any OM.
The encouraging interim results thus far for MuGard in the first 140 patients include some that have completed all seven weeks and others who are still pending completion in the study, and the final numbers for all 280 patients enrolled in the study are expected in several weeks. More than 90% of patients who receive radiation therapy and about 40% of patients receiving chemotherapy experience OM while those receiving radiation for head and neck cancer tend to experience the most severe cases.
In the MuGard clinical trial conducted by Access, 50% of patients did not experience OM while the other 50% had less severe and shorter cases of OM. The excellent interim results announced today in SpePharm’s trial (affording complete protection from the incidence of OM) may be the result of beginning MuGard administration earlier at one week before radiation therapy (rather than starting at the same time). This may have resulted in an additive effect with each subsequent dose and/or make patients more compliant as they became conditioned to using MuGard before radiation therapy started.
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.
MuGard functions like a liquid Band-Aid to protect the lining of the oral cavity in cancer patients who develop mucositis as a side effect of radiation or chemotherapy, and the product has already received marketing clearance from the FDA through the 510(k) route. The product was cleared for marketing by the FDA through the 510(k) route because the product does not include any active pharmacological agent. Therefore, the experience with MuGard to date has revealed no safety concerns, no drug interactions, no side effects (even if swallowed), and no cases of overdose.
The news today follows an announcement yesterday that the Company will be presenting at the Jesup & Lamont 2009 Growth Stock Conference organized by the LifeTech Capital Group on 7/30/09 at 10:45am (ET). The presentation will occur live and will be held at the Waldorf Astoria Boca Beach Club in Boca Raton, FL. Jeffrey Davis also stated in the press release yesterday that the commercial launch of MuGard has achieved “very significant and positive initial results and feedback” and that “clinical feedback and experience exceeds our expectations.”
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.
Initial commercial partner estimates for MuGard included global annual peak sales potential of $350 million with a scaled royalty rate of 20-25% for Access. The Company 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. However, these preliminary estimates may prove to significantly underestimate the potential for MuGard if it is confirmed as a preventative treatment for patients undergoing radiation therapy and chemo.
Based on National Cancer Institute statistics, the incidence (number of diagnoses) of cancer in the U.S. is expected to be about 1.5 million people in 2009. Please note this number does not even include any patients receiving chemo or radiation therapy who were previously diagnosed with cancer (prevalence includes individuals who are newly diagnosed, in active treatment, have completed active treatment, and those living with progressive symptoms of their disease). The World Health Organization (WHO) estimates that cancer rates (incidence) could further increase by 50% to 15 million new cases in 2020 from 10 million new cases diagnosed globally in 2000. Developed nations with the highest overall cancer rates include the U.S., Italy, Australia, Germany, The Netherlands, Canada, and France.
MuGard is priced at about $150 per week of treatment, which translates into about $1,000 per patient who receives a six-week treatment course of radiation and/or chemotherapy (the latter treatment may last for much longer than six weeks). Using a conservative estimate of $1,000 per six-week treatment course (of radiation therapy and/or chemo), MuGard would reach $1 billion in annual sales by adding the product to 1 million six-week treatment cycles per year (please note that a single patient could receive multiple treatment cycles or receive treatment for longer than six weeks so this number could be reached by treating less than 1 million unique patients on a global basis).
One million six-week treatment cycles represents less than the number of new cancer diagnoses expected in the U.S. alone in 2009 (1.5 million people), 10% of the 10 million new cancer diagnoses on a global basis in 2000, and less than 7% of the estimated 15 million new cases of cancer on a global basis in 2020. Also, the $1,000 pricing for MuGard in a six-week treatment cycle is a fraction of the cost for most anti-cancer therapeutics and less than the cost of treating the complications of severe cases of mucositis (e.g. intravenous feeding/hydration, pain medications, extended hospital stays, and antibiotics for infections that may arise from open sores in the mouth and GI tract).
MuGard sales of $1 billion would translate into royalties for Access exceeding $200 million based on a scaled royalty rate of 20-25% on a global basis through regional marketing partners. Assuming 25 million shares of fully diluted common stock in 2012, MuGard royalties of $200 million, and operating expenses + taxes of $100 million; Access would have potential earnings power in excess of its current stock price – about $4/share in just three years. If final clinical results and future experience with MuGard confirms the positive results announced today, it would become part of the standard of care for patients receiving radiation therapy and/or chemo associated with OM as there would be no legitimate reason for NOT using MuGard because of the excellent safety profile due to its non-drug composition and low cost.
Access trades at a fully diluted market cap of about $45 million at the closing price of $2.07 on 7/22/09, 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. 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 (which only requires global MuGard sales of about $25 million) 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.
According to Google Finance statistics on 7/22/09, the year-to-date stock price returns for a basket of small and micro-cap cancer biotechs includes: Access (+109%), Cell Therapeutics (NASDAQ:CTIC) (+1,064%), Spectrum Pharma (NASDAQ:SPPI) (+332%), SuperGen (NASDAQ:SUPG) (+46%), and Aeterna Zentaris (NASDAQ:AEZS) (+327%).
Click here for the most recent overview article on Access Pharma at BioMedReports from mid-July including a review of the Company’s deep pipeline and promising oral cobalamin drug delivery technology (including encouraging results for the delivery of insulin by mouth in preclinical animal models) which make the stock a compelling risk/reward trade at its current market cap of below $50 million given the study results for MuGard announced today.
Biotech stocks have also been reignited this week with shares of Human Genome Sciences (NASDAQ:HGSI) up about 4X since reporting positive clinical trial results on Monday for its lupus treatment. Also, last night Bristol-Myers make a $16/share all cash offer to acquire Medarex (NASDAQ:MEDX) for over $2 billion, which follows a deal by JNJ two months ago for cancer biotech Cougar for $1 billion.