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As reports of out of Japan show the aftermath of a powerful earthquake and a devastating tsunami, government and public officials are scrambling to avert another catastrophe: a widespread release of radiation from damaged nuclear power plants.

Several Japanese nuclear plants were struck and at least one explosion has the crews and emergency personnel who are trying to contain the meltdowns exposed to elevated levels of radiation and several people have already tested positive to life-threatening exposure.

According to late-breaking news reports from Japan, officials do not know for certain whether there have already been meltdowns at facilities in the northeast, but they are working under the presumption that such meltdowns have taken place as they attempt to cool down radioactive material and release pressure inside the reactors.

A meltdown is a catastrophic failure of the reactor core, with a potential for widespread radiation release and authorities have been distributing iodine tablets to at least some of the 200,000 residents which have already been evacuated. Networks like CNN and others have been erroneously reporting that there are currently no highly effective and non-toxic anti-radiation treatments available for any of those workers or residents who have already been exposed. They are wrong and as soon as they and the rest of the world begin to understand differently, they will also understand why shares of Cleveland BioLabs (Nasdaq:CBLI) experienced 5x the recent average daily call volume as the nuclear reactor story began to take on a life of its own last Friday afternoon.

Apparently, for some time now, Cleveland Biolabs has been developing a drug candidate to protect humans from acute stresses such as radiation, chemotherapy or nuclear bomb exposure with the help of the U.S. Department of Defense, the Armed Forces Radiobiology Research Institute and others. The company’s leading Protectan compounds CBLB502 and CBLB600 have significant activity as both radio-protectants (injected prior to radiation exposure) and mitigators of radiation damage (injected after radiation exposure).


According to several reports by Seeking Alpha’s biotech opinion leader, M.E. Garza, the drug candidate, CBLB502 is set to be stockpiled as a nuclear counter-measure by the Biomedical Advanced Research and Development Authority (BARDA), the drug has also been assigned an FDA Fast-Track approval designation and has been safety tested on animals and human beings- showing great efficacy. Garza reports that company has very strong intellectual property positions covering these technologies and products, including granted patents for CBLB502.

Joe Salvani, another authority in biotechnology who began his career on Wall Street as Senior Vice President and Chemical Industry Analyst at Goldman Sachs, has been recommending the company in video interviews since 2009; predicting that CBLI shares could go to $30 this year.

The United States government has already spent millions in grants and development funds with the company, but other countries like Israel and the U.K. also want the drug for their stockpiles. According to Salvani, “you can inject yourself up to 72 hours after exposure to nuclear fallout” to prevent cell death.

The stock’s climb to those higher levels may have begun on Friday when the stock jumped from $6.80 at the intra-day low to a close of $7.19 and then jumped another five and a half percent after hours to $7.59.

I would not be surprised to see the stock run much higher if the situation in Japan continues to worsen.

We have seen new technologies suddenly cast into the disaster news mainstream before. When they do, share values jump.

In the late spring of 2007, Shares of SIGA Technologies (Nasdaq:SIGA) went from $1 to $6 after the New York Times ran a story about a 2-year-old boy who spent seven weeks in the hospital and nearly died from a viral infection he got from the smallpox vaccination his father received before shipping out to Iraq.

The boy recovered after doctors worked with the Food and Drug Administration to allow the compassionate use of an experimental drug for smallpox, ST-246, from Siga Technologies.

Dr. Madelyn Kahana, the chief of pediatric intensive care medicine at the hospital, said in an interview that the child was close to dying had been covered with “mounds of pox” that reminded her of photos of bees swarming over beekeepers. “I’m a veteran of 25 years of practice in the I.C.U.’s, and I thought I’d seen it all,” Dr. Kahana said. “But this was stunning to the eye.”

It is also interesting to point out that at the time, the SIGA drug was neither as far along in clinical development or had been proven as safe as Cleveland's drug candidate is today.

Another recent example is the one involving a small company founded by actor Kevin Costner, which was awarded an opportunity to help clean up the BP Oil Spill disaster last May. Even though Costner had spent $26 million to develop and license his oil spill cleanup centrifuge machines back in the early nineties. It wasn’t until last year that BP purchased 32 centrifugal oil separators, marketed under the brand name Ocean Therapy Solutions, for a cost of around $52 million.

Just last month, a former investor in the company, actor Stephen Baldwin and his business associate announced that they were suing Costner, alleging that they were fooled into selling their shares of the company.

In addition to the very real possibility of getting called into the spotlight due to the terrible developments in Japan, Cleveland Biolabs is reportedly ready to receive tens of millions in additional government funding for its anti-radiation drug. In CBLI’s recent presentation at BIO CEO, management noted that it expects a grant from BARDA-HHS to be over $50 million. That development alone would send shares higher given the immediate impact on its relatively undervalued market-cap.

That pending news makes the Cleveland Biolabs play a two-for one and it also makes it my stock to watch this week.

Source: Leaks From Japan's Nuclear Plants Could Send Cleveland Biolabs' Shares Beyond $20