ImmunoCellular Therapeutics' Growing Intellectual Property Garnering Attention

Warner-Lambert's 1996 approval for Lipitor paved the way for the company's future as it was key to the company sealing its February 2000 $90 billion merger agreement with Pfizer (NYSE:PFE). Sales of the blockbuster drug were phenomenal and proceeds helped pay for the next decade of clinical trials by the now $165 billion dollar entity. The 2000 decade saw Lipitor dominating the prescription drug market with sales from $5 to $6.6 billion annually. Lipitor's patent afforded Pfizer competition protection for the cholesterol-lowering drug enabling it to sell it at a premium as it had little competition for the indication. In November of 2011 Pfizer's patent protection for Lipitor expired causing an immediate impact on the company's financials as generics selling for roughly 1/3 Lipitor's price immediately started hitting market by India's Ranbaxy Laboratories Ltd. (OTC:RBXZF) and by Pfizer's partner, Watson Pharmaceuticals (WPI). As a result of the competition, Pfizer has reduced its 2012 sales forecast for Lipitor by $2 billion. Sales will now likely continue in a downward trend as multiple generics are coming with costs dropping to about 20% of Lipitor's, ending its dominance in the marketplace and underscoring the all-to-important role of patent protection to a company's bottom line.

Patent expirations will continue to impact Big Pharma as billions of dollars of drug sales will be lost with AstraZeneca (NYSE:AZN), Eli Lilly & Company (NYSE:LLY), Pfizer and Sanofi (NYSE:SNY) bearing the largest potential losses. 2012 will witness patents expiring on drugs with combined annual sales of more than $40 billion according to marketing research firm IMS Health. Each of these companies and many more will be attempting to shore up their financials with new drugs in their pipelines and through mergers and acquisitions to keep them profitable. These companies will be looking for biotech acquisitions and partners with solid pipelines having real market potential, novel mechanisms and corresponding patent protection enabling them marketing protection highlighted by Lipitor's example above. Drugs with indications targeting types of cancers where there has been little success and therefore little competition are particularly appealing as not only is there patent protection but also potential protection by the FDA via its 1983 Orphan Drug Act. A drug awarded Orphan Drug status for an indication in which there are less than 200,000 cases diagnosed annually in the U.S. receives 7 years of competition protection with additional clinical trial tax incentives. The Orphan Dug status is intended to make it more profitable for pharmaceuticals to pursue clinical trials and marketing of drugs not previously profitable because of low potential return of their invested capital due to the smaller targeted market. Biotechs with a solid patent portfolio with current or potential Orphan Drug potential will become increasingly appealing to large pharmaceuticals as they fight to remain competitive in today's environment of shrinking margins and expiring patents.

ImmunoCellular Therapeutics (NYSEMKT:IMUC) is one such biotech that has been garnering attention from individual investors as well as Big Pharma with its diverse patent portfolio and pipeline as well as its lead candidate, ICT-107. The company's phase II trial of ICT-107 for newly diagnosed Glioblastoma Multiforme (GBM) is well underway with enrollment completion expected in Q2 2012. The trial follows outstanding phase I data in which the median overall survival {OS} for the patient set was 38.4 months with a median progression free survival {PFS} of 17 months. The three-year OS for the patient set was 55% with 6 patients having no recurrence of the tumor after three years. 19% were still disease-free after four years with one patient now at 5 years of PFS. With the current prognosis for GBM at about 3 months median OS with no treatment and about 15 months for those receiving current standard of care, this data has gotten the attention of investors, Big Pharma and healthcare providers as it gives hope to a group of patients that only a few short years ago would have taken a GBM diagnosis as a hopeless battle.

With a smaller target group in GBM patients than with many other indications, ICT-107 profitability and value added to the company was enhanced in June 2011 when it received Orphan Drug designation from the FDA for the drug. This gives it the highly sought after 7 years of competition protection and tax incentives that make it a good target for partnership or acquisition for Big Pharma. ImmunoCellular received patent protection for ICT-107 for the treatment of GBM in October of 2011 further strengthening its protection and marketability. The patent covers the mode of delivery and the makeup of the six antigens in ICT-107 that include TRP-2, MAGE-1, HER-2, IL-13 receptor a2, gp100 and AIM-2. The patent is key here as the makeup covers many of the targets that comprise GBM tumors and makes the drug more efficient by covering a wider range of patients rather than just those with, for example, only "newly-diagnosed patients with GBM with the overexpression of HER-2" or other potential limitations to the marketability and functionality of a drug. In other words, the design of the drug and the patent wording allow the protection of a drug that has better potential efficacy for individual patients and has a wider marketability because of the targeted patient set due to the many antigens targeted. As the efficacy of ICT-107 is more fully realized in the coming months with interim data likely in Q4 2012 or Q1 2013, the value of the drug and its patent protection rises. If/when the patent protection and pipeline is extended on the drug for other indications, the value only grows as does its marketability, licensing potential or outright price tag.

The six antigens targeted give ICT-107 a wide range of potential uses with possible indications including melanoma, breast cancer, ovarian cancer and colorectal cancer. The patents on the technology will give the company protection for ICT-107 and any other current or future drugs utilizing the technology, which will cover a range of cancers as indicated above. However, the company is not content sitting on its portfolio of intelligent property rights as it has recently entered into a licensing agreement with John Hopkins University for technology associated with targeting the tumor-associated antigen, mesothelin, expressed in pancreatic and ovarian cancers in addition to mesothelioma. ImmunoCellular has already indicated plans for the technology to be utilized in a drug termed ICT-140 to target cancer stem cells as well as daughter cells in an ovarian cancer indication by targeting the antigens mesothelin, Her-2/neu, IL-13Rα2 and other currently undisclosed antigens. A recently announced agreement with the University of Pennsylvania adds to the company's intellectual property by adding rights to intellectual property surrounding EphA2, a tyrosine kinase receptor that is highly expressed by ovarian cancer and other advanced and metastatic malignancies. The agreement gives exclusive worldwide rights to the technology for ovarian and pancreatic cancers and non-exclusive rights to the technology for brain cancers. This agreement adds EphA2 to the antigen list targeted for ICT-140 and other dendritic cell-based vaccines in or soon to be in ImmunoCellular's pipeline.

An additional licensing agreement with the University of Pennsylvania for an enhanced dendritic-cell production technology gives the company expansion of their intellectual property surrounding ICT-107. Not only contributing to the observed impressive response of ICT-107 treating newly diagnosed GBM as described previously, the technology also enables multiple doses to be manufactured from a single ICT-107 production run (and likely applied to other drugs present and coming soon). This allows the company to keep the costs of the drug down with shorter manufacturing times and likely less blood being required of the patient being treated. In a January 30th news release, the University describes the response of breast cancer patients treated utilizing the technology "When the team looked at immune responses, they found that 85 percent of patients had HER2-reactive CD4 and CD8 T cells, suggesting that the patients developed a robust and relatively complete immune response after vaccination. Importantly, some patients maintained their immune responses as long as 52 months, which means that they continue to have some protection from recurrence of HER2-positive disease - a key insurance policy for patients, since doctors currently are unable to accurately predict which women are likely to develop invasive breast cancer following a DCIS diagnosis." In essence, the dendritic cells produced via the newly licensed technology has already been shown to express very high levels of the cytokines interleukin {IL} -12 and -IP-10 which in turn are strong antigen presenters in this example for CD4 and CD8 T cells in attacking the HER2 positive cells/tumors. To change the targeted antigen, the extracted dendritic cells would simply be exposed to whatever antigen(s) would be the target, which gives the technology a wide range of applications for ImmunoCellular. The importance of the latter statement simply cannot be emphasized enough to indicate the wide range of antigens and thus cancer types and subtypes that can potentially be targeted.

ImmunoCellular Therapeutics is very active building its portfolio of intellectual property with the three recent licensing agreements it will use to further its pipeline and add to its market value. The company is amassing a patent and soon drug portfolio targeting a wide range of cancer tumors/indications. With success in the ICT-107 indication for newly diagnosed GBM possible on the horizon, investors and Big Pharma will begin to take even more note of the possibilities as its technologies are validated and other indications for a wider range of cancers become a real possibility. Dendreon (NASDAQ:DNDN) has had its time in the spotlight via Provenge with success in marketing approval there opening the doors for the immunotherapy approach to treating cancers. ImmunoCellular takes that technology several steps ahead with increased indications likely, a more efficient drug production technology and the added step of attacking cancer stem cells possibly reducing, prolonging or eliminating recurrence of many cancers. Biotech investors recognize the fact that P/E ratios, current income, EBITDA and other performance indicators used in the stock investment world are usually less significant in the biotech sector and focus is instead made on potential marketing of drugs in trials and likelihood of partnerships or acquisition. There are few biotechs fitting the description of the latter as well as ImmunoCellular Therapeutics. Big Pharma and investors are watching this emerging biotech with great interest. Catalysts known and unknown for the company's stock price and price tag are likely coming soon.

Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.

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