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Shares of Cleveland BioLabs, Inc. (NASDAQ:CBLI) rose yesterday afternoon on "no news," prompting investors to wonder whether growing tensions in the Far East had caused prices to jump slightly. Today, the drug discovery and development company leveraging its proprietary discoveries around programmed cell death announced that CBLB502, a drug under development to treat exposure to radiation, has been granted orphan drug status by the FDA for prevention of death following a potentially lethal dose of total body irradiation during or after a radiation disaster. Share prices rose as high as $6.96 in early day trading.

Tuesday's news may help pave the way for some of the additional government grants and stockpiling orders which we continue to expect and told investors about in October.

As the company pointed out in their own press release, orphan drug status qualifies CBLB502 for an accelerated review process, tax credits, financial assistance for development costs, and seven years of marketing exclusivity upon approval by the FDA for this indication. The designation also allows for a possible exemption from the FDA-user fee and assistance in clinical trial protocol design.

Orphan drug designation program also provides orphan status to drugs and biologics which are defined as those intended for the safe and effective treatment, diagnosis, or prevention of rare diseases/disorders that affect fewer than 200,000 people in the U.S., or that affect more than 200,000 people but are not expected to recover the costs of developing and marketing the treatment.

"We are very excited that CBLB502 has been assigned orphan drug status for its lead indication and look forward to working closely with the FDA as we complete development," said Michael Fonstein, Ph.D., president and chief executive officer of Cleveland BioLabs.

In July 2010, CBLB502 was granted fast track status from the FDA for reducing the risk of death following total body irradiation during or after radiation disaster. There is currently no FDA approved medical countermeasure for this indication.

We continue to be very bullish on CBLI and agree with analysts that the stock has significant potential to start trading at multiples greater than the current trading levels within a relatively short period of time.

Aside from pending U.S. and foreign government orders, the company's entire pipeline and development portfolio with potential applications for oncology and cancer treatments points in the right direction and CBLI could easily become a multi-billion dollar company within the next 12-18 months.

CBLI shares saw a 52-week trading high of $7.24 in September when the Department of Defense selected the company's injectable compound, CBLB502, for a contract to protect troops during a nuclear catastrophe. That contract gave Cleveland $14.8 million in immediate funding to be used for completing more tests and the application process with the FDA.

Disclosure: Long CBLI

Source: New Orphan Drug Status May Boost Cleveland BioLabs Shares