Joseph Krueger's  Instablog

Joseph Krueger
Send Message
Disclaimer: This blog is an expression of my opinion on a particular company or matter. I am not a financial advisor or professional analyst. This is not a solicitation to trade any security. Although I rely on company approved public documents and make all reasonable efforts to confirm the... More
  • Soligenix: The Next Cell Therapeutics Comeback Story? 10 comments
    Sep 26, 2009 7:07 PM | about stocks: CTIC, SPPI

    Soligenix, formally named Dor Biopharma, has changed their name.  But has anything else changed?  At first glance, Soligenix (OTC:SNGX) appears to be the old story of yet another fledgling biotech company, which burned through more than $100 million over 20 years and has nothing to show for itself except a NDA rejection from the FDA for their sole late pipeline drug, orBec.   Like many small biotech companies, the other components of their pipeline appear to be in too early of a stage for approval of any kind before SNGX burns through its remaining funds. It is easy to assume that its destiny will be that of so many other biotech companies- a slow downward spiral into oblivionLong term SNGX shareholders have seen a perpetually declining or stagnating share price, in the face of dilution and clinical trial failure.  In the last few years,  the share count has increased from about 90 million before the failed orBec application in 2007 to nearly 200 million shares due to its recent equity financings.   With the 52 week low of 4 cents in the beginning of this year, in January of this year SNGX appeared to be suffering the same predicted fate as Cell Therapeutics (NASDAQ:CTIC) was facing at the same time:  At this time, both SNGX and CTIC were perceived to be out of chances, out of money, out of time, and ultimately destined for bankruptcy and sale of their assets. 

    The comparison between SNGX and CTIC is an interesting one:  CTIC never changed their name, but as you may know, CTIC bounced from its 5 cent low in January this year to a high of $2.23 in June, upon the release of results from its Pixantrone phase III trial and NDA filing.  Although SNGX shares have appreciated from their low of 4 cents to 25 cents, they have not seen the level of interest and share appreciation that CTIC has.  SNGX’s comparatively modest gains compared to CTIC can be in part explained by the fact that SNGX already filed an IND and was rejected; in contrast to CTIC who is awaiting on its April 2010 PDUFA decision date.  So clearly massive speculation is fueling CTIC’s share price, and few are speculating on SNGX.  However, timing with their name change, SNGX currently is beginning to enroll in a new, restructured phase III trial to again gain approval for orBec.   So can SNGX make a CTIC style comebackIndeed, a quick look at SNGX shows many similarities that poise SNGX for a CTIC type share price come-back with phase III trial news.  However, a closer look under the SNGX and CTIC hood show marked differences that suggest SNGX has even a better chance at a CTIC style comeback than even CTIC itself ever did in the first placeBeyond this, the continued success of SNGX appears far more likely than the continued success of CTIC, given the history of CTIC management compared to SNGX management.  As such, it is my opinion that SNGX investors will see far more return on their investment, both the form of short term share price appreciation, as well as a long term return on their equity stake.

    In January 2009 before its comeback, CTIC’s balance sheet for the first quarter of 2009 showed a meager $1 million in cash and an astounding $119 million in long term debt. CTIC didn’t even have enough money to fund operations for 3 more months, and couldn’t possibly borrow any more to continue on in the middle of the credit crisis.  The entire survival of CTIC was hinging on the phase III trial outcome of Pixantrone.  As you may know, this was the comeback story of a lifetime:  Down and nearly out, in its darkest hour, CTIC announces positive phase III results for its last chance and pulls itself out of the grave.  For CTIC investors who bought shares in the pennies or even dimes range, they were handsomely rewarded for their appetite for risk.  But past and current CTIC shareholders still have paid a price for all of the past transgressions of Cell Therapeutics: CTIC share count went from to nearly 15 million from its IPO in 1997 to 550 million shares in August 2009. This share count is not including the previous reverse splitsAccounting for all  the capital structure changes, the split-adjusted share price for CTIC from about $650 in 1997 (reaching a high of about $3000 in the biotech run-up of 2000) to its current price of about $1.25; a -99.9% return from its highsThe current accumulated shareholder deficit for CTIC is a stomach wrenching $1.4 billionCTIC has burned through almost $100 million per year, and offered nothing in the form of positive shareholder equity in return.  Even now, it is hard to imagine that CTIC ever will show positive shareholder equity on the balance sheet, since they continue to exploit the shareholders to raise money to finance operations. Since the share price comeback, CTIC has been massively and diluting shareholders by converting $53 million in existing debt in exchange for common stock in May, selling 33 million more shares of common stock in July, followed by selling $30 million in preferred shares in August.  An almost comical twist to this story is that in 2007, CTIC offered to buy SNGX for 29 million shares of CTIC stock. It is hard to applaud CTIC management for their ability to provide shareholder value; had they completed the acquisition of SNGX in 2007, perhaps I would not be so critical of CTIC's management. 

    In contrast to CTIC, SNGX does not have to make such valiant efforts to have a dramatic comeback.  Maybe changing their name is indeed enough.  The latest DORB 10Q shows nearly $5 million and cash and absolutely no long term debt whatsoever. DORB currently burns cash at a rate of about $1.5-1.7 million per year, allowing SNGX to survive 3 years off this $5MM; a far cry from CTIC’s last 3 months in January.  This does not include the recent announcements of $10 million in NIH grants to be paid over the next 5 years, a recent private equity deal of $3 million, and a large ongoing partnerhsip and equity deal with Sigma Tau Pharmaceuticals worth up to $30 million to gain approval for orBec.   Already, Sigma Tau has bought $10 million in equity in the form of SNGX common shares.  So needless to say, SNGX is not going to run out of money for quite some time. 

    Even having 10 years in age beyond CTIC (from 1987 vs 1997 for CTIC), DORB only has an accumulated deficit of $100 million (compared to CTIC’s startling $1.4 billion)The equity deals do dilute shares, but in return give SNGX the partnership it needs to gain orBec approval.  SNGX has not had any reverse splits, and even after the equity financing with Sigma Tau the current share count remains at about 200 million; a far cry from CTIC’s dilutionBoth SNGX and CTIC currently only have one significant asset close to FDA approval and are both employing the same strategy:  Focus on their most developed asset, gain approval in the US and Europe; and second to that continue on to develop their pipeline.  They both intend to accomplish this by finding a niche indication for approval of their drugs in the US and EU.  In the case of CTIC, they are trying to gain approval for Opaxio for the relatively rare ovarian and esophageal cancers, and Pixantrone for the relatively small group of refractory NHL patients.  In the case of SNGX, they are trying to gain approval for orBec in GVHD and radiation induced enteritis.  

    So it seems that CTIC and SNGX are similar in their strengths, but SNGX does not many of the weaknesses CTIC does.  So why are the market capitalizations so different?  The current market capitalization of CTIC is about $700 million, compared to the current SNGX market capitalization of about $40 million.  Yet like SNGX,  CTIC has yet to bring pixantrone or any of their other of their current pipeline to approval.  CTIC sold off their only money-making asset Zevalin to Spectrum Pharmaceuticals (NASDAQ:SPPI) this year, and besides Opaxio, has had no other drug in clinical trialIn contrast, SNGX continues to clinically develop orBec into other indications such as radiation induced GI inflammation in the DOR201 trial.  SNGX continues to bring in significant revenue through government grants, and is clearly poising itself for more lucrative government contract revenue in the defense arena with its NIH-sponsored work on ricin vaccine, stemming from its successful work on botulism toxin vaccines (more on this below).   SNGX also owns key patents to make injectable drugs into oral medications that could be licensed from major pharmaceutical companies

    To date, SNGX has managed to have the same or even greater level of success as CTIC, spending only about 7% as much cash.  Even if CTIC pulls ahead of SNGX by gaining the pixantrone approval, the clinical data from the failed phase III trial of orBec strongly suggests that it will succeed this second time around as orBec increased survival 46-37% over placebo from 1-3 years after treatment.  Unfortunately, this was not the outcome which determined approval, so the trial is being run again (more on this below).  Utilizing the FDA's Orphan Drug program, SNGX has done all that it can to ensure that orBec will gain its indication quickly.  Investors are not recognizing the potential in the orBec trial and other components of the SNGX pipeline, causing a disconnect of perceived shareholder value and a low price per share of SNGX stock.  SNGX is in fact much better position than CTIC to give shareholders a larger return on their investment, since the approval of pixantrone is likely already priced into the cost of CTIC share; but the likely outcome of orBec approval is not priced into SNGX shares.  If investors have placed a market cap of $700MM for CTIC, SNGX should be trading with a similar market capitalization; especially given the clean balance sheet, government and corporate partnerships, future pipelineprospects, and commitment to shareholder value.

    What would it take to see SNGX to have a market cap similar to CTIC?  Perhaps the name change is a good start; but clearly SNGX stock needs recognition of SNGX’s strong fundamentals by investors.  As an OTC stock, SNGX does not have the exposure of NASDAQ listed CTICBut as investors gain awareness of SNGX and its strengths, the share price will certainly appreciate.  The dramatic run-up in price of CTIC shares can be attributed mainly to the buzz from retail investors about CTIC:  The phase III trial results for pixantrone and the notice of intent to file a NDA for pixantrone were released in the middle of February when shares were trading at 5 cents.  The share price didn’t budge much until March when an run-up to 35 cents was caused by investors newsletters and stock promoters announcing the results. The official announcement of their NDA filing for pixantrone caused a run-up to its 52 week high, fueled by eager investors and technical traders.

    In contrast, SNGX hasn’t seen any net share price increase since the rejection of the orBec NDA.  It has seen some appreciation in its share price since its February lows which have been consistent with the recovery of the markets as a whole.  But it has yet to gain the attention that CTIC and share price appreciation.  A technical trader would tell you that the SNGX chart shows strength all it needs is a little attention.  Admittedly, SNGX does not have an impending PDUFA date for orBec like CTIC does for pixantrone (April 2010).   However, with the continuing developments over the last year SNGX continues to show for all its programs, more and more attention is coming in.  Given the strong technical signals of the SNGX chart and the steady stream of news coming from SNGX, a CTIC like feeding frenzy could begin and SNGX stock recovery could begin. 

    But despite the lack of frenzy surrounding SNGX, tens of millions of dollars continue to pour into SNGX from partners, investors groups and government grants.  Why is this?  Perhaps the individual investor should follow the cues of people who know what is going on inside the company best:  The insiders, the National Institute of Health, Sigma Tau Pharmacueticals, and the private equity investors who are staking tens of millions on the success of SNGX.  Clearly the smart money is already flowing into SNGX; now if the rest of us could follow suit, we will see a  market cap of SNGX similar to CTIC.  In order to see a dramatic comeback of SNGX share price like CTIC, retail investors need to move to where the institutional investors already have.  In the case of SNGX, it should be even easier given the strong fundamentals of the company and their rich pipeline.  The research and development activity of SNGX will hopefully lead to FDA approval of orBec and its other pipeline drugs, followed by profit generating drug sales. 

    Here is a description of SNGX's pipeline and lead clinical candiate orBec:
    OrBec is a highly potent corticosteroid called beclomethasone dipropionate (BDP).  BDP has been marketed in the U.S. and worldwide since the early 1970'sBDP is used in topical applications such as creams (eczema), and inhalers (asthma, allergies).  Already marketed drugs which use BDP or a related compound have the names Beclometasone, Becotide, Qvar, Beconase, Vancenase, Propaderm, and others.  SNGX owns IP rights for formulation to make it orally bioavailable.  The problem with BDP is that since it is used topically, it cannot act on internal organs and tissues.  What SNGX has done is developed it as a two-pill system with dual release characteristics that initially begins to release BDP in the stomach, and continues to release BDP as it travels down the GI tract for broader coverage in the intestines.  Thus, orBec can be used various gastrointestinal tract inflammations, which is exactly where they are trying to get orBec approved.  If approved by the FDA, orBec would be the first and only oral formulation of BDP available in the United States.

    SNGX’s plan has been to market potential for orBec for the treatment of acute GI Graft-Vs-Host Disease (GVHD).  GVHD occurs after any tissue from another donor is transplanted into a recipient.  This includes all types organ transplants, but the main emphasis SNGX is pursuing is hematopoietic cell transplantations, which are performed after a patients immune system is wiped out from high dose chemotherapy.  Since the GI tract is rich in immune cells, GVHD in the gut occurs in approximately 50% of hematopoietic cell transplantations.  There is no effective treatment for this, so  orBec received orphan drug designations in the US and in Europe for the treatment of acute GI GVHD, which provides for 7 and 10 years of post-approval market exclusivity, respectively. orBec has also been granted fast track designation by the FDA. In the US, orBec has been granted orphan drug designation for the prevention of acute GVHD.
    SNGX completed the first orBec trials in 2006 and filed a new drug application (NDA) for oBec in GVHD in late 2006.  The NDA was based on the results of the Phase 3 study which enrolled 129 patients across 16 leading HCT centers.  The study’s primary endpoint was time-to-treatment failure through Day 50.  In this study, orBec® did not achieve statistical significance in the study’s primary endpoint ([p-value 0.1177]) (it would likely need a p value of 0.1 or less, so it almost made it).  However, it did achieve statistical significance in key secondary endpoints including the proportion of subjects GVHD-free at Day 50 (p-value 0.05) and Day 80 (p-value 0.005); the time-to-treatment failure through Day 80 (p-value 0.0226); a 66% reduction in mortality 200 days post-transplantation (p-value 0.0139); and a 46% reduction in mortality at 1-year post-randomization (p=0.04).

    The FDA did not approve orBec since it did not reach its primary endpoint, but requested data from additional clinical trials to demonstrate the safety and efficacy of orBec for these secondary endpoints and other sections of the NDA.  In response to gain approval, SNGX planned to begin a confirmatory Phase 3 clinical trial of orBec® for the treatment of acute GI GVHD in 2H 2009. This confirmatory trial was agreed to by the FDA through its Special Protocol Assessment (NYSE:SPA) procedure. The primary endpoint of the study will be to replicate the statistically significant endpoint Treatment Failure rate at Day 80 from the previous Phase 3 study where a p-value of 0.005 was achieved.

    So in a nutshell, SNGX has to perform another phase III trial with its primary endpoint being a secondary endpoint of the previous trial, which already showed success.  This is why they are repeating it, with significant financial backing from investors, with approval being far more likely than not.  SNGX sought the GVHD indication first because it could obtain Orphan Drug status, which gave SNGX exclusivity for up to 7 years after approval, and has significant tax benefits.  This is a key part of the business strategy.

    SNGX published the results of the failed trial in the prestigious journal Blood in 2007. Some interesting observations from the phase I-III trials were made which were not criteria in the NDA: Increased survival: OrBec(r) showed continued survival benefit at one year when compared to placebo.  Overall, 18 patients (29%) in the orBec(r) group and 28 patients (42%) in the placebo group died within one year of randomization (46% reduction in mortality, hazard ratio 0.54, 95% CI: 0.30, 0.99, p=0.04).  Similar results from the Phase 2 trial also demonstrated enhanced long-term survival benefit with orBec(r) versus placebo.  In that study, at one year after randomization, 6 of 31 patients (19%) in the orBec(r) group while 9 of 29 patients (31%) in the placebo group had died (45% reduction in mortality, p=0.26).  Pooling the survival data from both trials demonstrated that the survival benefit of orBec(r) treatment was sustained long after orBec(r) was discontinued and extended well beyond 3 years after the transplant.  As of September 25, 2005, median follow-up of patients in the two trials was 3.5 years (placebo patients) and 3.6 years (orBec(r) patients), with a range of 10.6 months to 11.1 years.  The risk of mortality was 37% lower for patients randomized to orBec(r) compared with placebo (hazard ratio 0.63, p=0.03, stratified log-rank test).

    In simpler, more exciting terms, orBec increased survival 46-37% over placebo from 1-3 years after treatement.  That is quite a robust result indeed, and shows how orBec is a potent drug for all the outcomes examined except for the predetermined outcome for which approval was based on. 

    SNGX is also exploring the features of several formulations of oral BDP in the setting of radiation injury, since one of the immediate consequences of radiation exposure is gastrointestinal inflammation and loss of intestinal epithelial functions. The local anti-inflammatory action of BDP is anticipated to mitigate the tissue damage following radiation exposure due to excessive influx of neutrophils and cellular damage caused by release of cytokines.  The DOR202 Radiation Injury Therapy trial is currently in phase 1/2. 

    This trial is funded by a $0.5 million grant from NIH.  It is designed as a multicenter, open-label, sequential, dose-escalation study in approximately 36 patients. Patients with rectal cancer who are scheduled to undergo concurrent radiation and chemotherapy prior to surgery will be enrolled in four dose groups. The objectives of the study are to evaluate the safety and maximal tolerated dose of escalating doses of DOR201, as well as the preliminary efficacy of DOR201 for prevention of signs and symptoms of acute radiation enteritis. The study is expected to be initiated in 2009.

    SNGX has received a European patent for its Lipid Polymer Micelle (LPM(NYSE:TM)) technology for the improved oral delivery of drugs (EP 1460992).  The LPM(TM) technology is a platform technology that uses reverse micelles stabilized by polymers. In the LPM(TM) system, water-soluble drugs are contained in the water space in the core of the micelles and are protected against degradation.  Preclinical results clearly show that it is a competitive system for oral delivery of drugs, especially those biotechnology products derived from synthetic peptide chemistry or recombinant DNASNGX anticipates proceeding towards clinical development of an oral form of the peptide hormone drug leuprolide using the LPM(TM) technology. Leuprolide is a synthetic peptide agonist of gonadotropin releasing hormone (GnRh) that is used in treatment of endometriosis in women and prostate cancer in men. Injectable forms of leuprolide, for which an oral delivery system has yet been developed, are marketed under tradenames such as Lupron and Eligard had worldwide sales of approximately $1.8 billion in 2006. The utilization of LPM techonology to create an oral form of these drugs will benefit the patients using them as well as DORB and the companies currently selling these drugs.

    SNGX has also developed BT-VACC,  a multivalent vaccine against botulinum toxin that is based on formulation technology and inherent properties of the attenuated forms of botulinum toxin. Botulinum toxin is a bacterial toxin that exists as seven serotypes, and is a neurotoxin that is considered the most potent toxin. Consequently, a vaccine will need to contain a majority of the seven serotypes expected to induce protection against those serotypes causing the most prevalent disease in humans. Protection against botulinum toxin is antibody mediated, and can be induced by vaccination with non-toxic subunits of each of the serotypes. SNGX is exploring the feasibility of combining at least three serotypes of the subunits for oral or nasal delivery. The oral delivery of botulinum toxin subunits is anticipated to result in a vaccine that induces not only systemic antibodies to prevent damage to peripheral nerve cells, but also antibodies at mucosal surfaces where they are expected to neutralize botulinum toxin prior to entry into the body.
    SNGX’s progress with BT-VACC prompted a large investment from the National Insitute of Health in the form of a grant to develop a ricin toxin.  RiVax is DOR's proprietary vaccine developed to protect against exposure to ricin toxin and is the most advanced vaccine product in the company's portfolio. With RiVax, DOR is the world leader in ricin toxin vaccine research. The immunogen in RiVax induces a protective immune response in animal One human Phase I clinical trial was completed, and a second trial is currently being conducted. The development of RiVax has been sponsored through a series of overlapping challenge grants (UC1) and cooperative grants (U01) from the NIH, granted to DOR and to the University of Texas Southwestern Medical Center (UTSW) where the vaccine originated. The second clinical trial is being supported by a grant from the FDA Orphan Products Division to UTSW. DOR and UTSW have collectively received approximately $15 million in grant funding from the NIH for RiVax. DORB will receive $9.4MM of the $15MM grant. 

    The results of the first Phase I human trial of RiVax established that the immunogen was safe and induced antibodies anticipated to protect humans from ricin exposure. The outcome of the study was published in the Proceedings of the National Academy of Sciences (Vitetta et al., 2006, PNAS, 105:2268-2273). The second trial, sponsored by the University of Texas, is currently evaluating a more potent formulation of RiVax that contains a conventional adjuvant (salts of aluminum), anticipated to result in higher antibody titers of longer duration in human subjects. SNGX has adapted the original manufacturing process for the immunogen contained in RiVax for large scale manufacturing and is further establishing correlates of the human immune response in non-human primates.

    NOVEMBER UPDATE:
    Princeton, NJ – November 13, 2009 - Soligenix, Inc., (Soligenix or the Company) (OTC BB: SNGX), formerly known as DOR BioPharma, Inc., a late-stage biotechnology company, announced today its financial results for the third quarter of 2009.

    Note: Some of the content describing Soligenix clinical progress is paraphrased from SNGX press releases.
    The author holds a position in SNGX. The author does not hold any position in CTIC or SPPI.

    Disclaimer: This blog is an expression of my opinion on a particlular company or matter. I am not a financial advisor or professional analyst.  This is not a solicitation to trade any security.  Although I rely on company approved public documents and make all reasonable efforts to confirm the accuracy of my statements, the comments made in my articles should be considered only as opinion and should not be considered as current or as absolute fact.  All investors are strongly encouraged to not rely entirely on any single opinion and perform their own due dilgence when investing.  Investing in equities includes considerable risk, and investors should be prepared for the risk of capital loss. 


     
    Highlights and Recent Developments:

     
    ·  
    The initiation of enrollment in its confirmatory Phase 3 randomized, double-blind, placebo-controlled, multicenter clinical trial evaluating orBec ® for the treatment of acute gastrointestinal Graft-versus-Host disease (GI GVHD). The initiation of this trial also triggered a $1 million milestone payment from Soligenix’s partner Sigma-Tau Pharmaceuticals, Inc. (Sigma-Tau).
    ·  
    The appointment of Robert J. Rubin, MD, to its Board of Directors.
    ·  
    The completion of a corporate name change to Soligenix, Inc. from DOR BioPharma, Inc.
    ·  
    The completion of a $4.4 million financing with institutional investors including its partner Sigma-Tau.
    ·  
    The award of a $9.4 million grant from the National Institute of Allergy and Infectious Diseases (NIAID), a division of the National Institutes of Health (NIH). This grant will fund, over a five-year period, the development of formulation and manufacturing processes for vaccines,  including RiVax TM , that are stable at elevated temperatures.
    ·  
    The award of a $500,000 NIH Small Business Innovation Research (SBIR) grant to support the conduct of a Phase 1/2 clinical trial evaluating SGX201, a time-release formulation of oral beclomethasone dipropionate (oral BDP), for the prevention of acute radiation enteritis.
    ·  
    The granting of Orphan Drug Designation by the FDA’s Office of Orphan Products Development for oral BDP (beclomethasone 17,21-dipropionate, or orBec ® ) for the treatment of gastrointestinal symptoms associated with chronic GVHD.
     
    “By any measure, the third quarter of 2009 was a pivotal one for Soligenix,” stated Christopher J. Schaber, PhD, President and CEO of Soligenix.  “With the initiation of our confirmatory Phase 3 clinical trial of orBec ® in acute GI GVHD, orBec ® is poised to potentially be the first FDA approved therapy for this unmet medical need.  Additionally, Soligenix received significant new grant funding for its biodefense and radiation enteritis programs, as well as new equity financing and a $1 million milestone payment from our North American partner Sigma-Tau.  We are looking forward to completing a productive 2009 and continuing that positive momentum in 2010.”
    Stocks: CTIC, SPPI
Back To Joseph Krueger's Instablog HomePage »

Instablogs are blogs which are instantly set up and networked within the Seeking Alpha community. Instablog posts are not selected, edited or screened by Seeking Alpha editors, in contrast to contributors' articles.

Comments (10)
Track new comments
  • kastlem
    , contributor
    Comments (11) | Send Message
     
    Joseph.. You compiled a very good analysis and are well qualified to comment per your bio. However you got bogged down in over-using the comparison with CTIC as your device of presentation. Your readers want to know about stock A, but read far more than they would want or need to about stock B. You lost focus, and you risked losing your reader's attention as the vehicle you used took over the piece. This is turn produced an overall negativite voice, when your purpose was to be positive about SNGX.
    Better not say in a thousand words what you can say in ten. When you edit your work remember the following points: 1. Keep focus where you want it, not on your device. 2. Most investors are scanning a large number of stocks and do not have time for an over-long essay (attention span of intelligent hamsters basically). 3. Revise Revise Revise - red pen anything that does not move your point forward.
    Small point: SNGX was formerly (not formally) known as DOR.
    Don't worry luv, everyone's a critic!! I have decided to follow you just edit more effeiciently:-) kastlem.
    1 Oct 2009, 11:47 AM Reply Like
  • kastlem
    , contributor
    Comments (11) | Send Message
     
    Just wanted to add: Do not take my above comment above wrongly! I would not have bothered with it if I did not see real potential for Joseph to become a highly valued blogger in biotech. I apologize to Joseph for putting the critique here (and yes, I didn't have my glasses on and made a few typos above LOL! ). Now I am following, I look forward to seeing more from him, and will refrain from offering further such criticisms in this forum.
    1 Oct 2009, 12:23 PM Reply Like
  • Joseph Krueger
    , contributor
    Comments (283) | Send Message
     
    Author’s reply » Thanks for the critique- I appreciate feedbak positive or negative; rewrites are always necessary. The article was no meant to be negative but to be fair- SNGX at first glance has many reasons to be written off, but any closer look reveals some exciting potential. The reason I spent so much time comparing SNGX to CTIC was to demonstrate how investor opinion (as reflected by stock price) can be so wrong- both in the case of CTIC and SNGX. The take-home message is that CTIC investors have placed incredible value on potential assets that, in my opinion, pale in comparison to potential assets of SNGX. The first phase III trial of orBec were quite successful in all aspects except for the main endpoint of the trial. The desing of the new phase III trial nearly guarantee sucess and FDA approval as the endpoints the second round is based on were successful the first round. I think this point is clear by Sigma Tau's investment of up to $30MM in gaining an indication for orBec. As well, the SNGX balance sheet is devoid of long term debt, they continue to receive significant support for their vaccine pipeline research from NIH, and they have very enticing IP for drug formulation that could result in significant revenue. Meanwhile, CTIC, with its market cap over 10X or SNGX, has a drug (pixantrone) with limited use and a single pipeline of opaxio. In my opinion, SNGX should be worth at least as much as CTIC, and that is the point I was tring to make. I agree the article is quite long, but in the end, hopefully the reader learns an awful lot about SNGX as part of their own due diligence.

     

    On Oct 01 12:23 PM kastlem wrote:

     

    > Just wanted to add: Do not take my above comment above wrongly! I
    > would not have bothered with it if I did not see real potential for
    > Joseph to become a highly valued blogger in biotech. I apologize
    > to Joseph for putting the critique here (and yes, I didn't have my
    > glasses on and made a few typos above LOL! ). Now I am following,
    > I look forward to seeing more from him, and will refrain from offering
    > further such criticisms in this forum.
    1 Oct 2009, 10:33 PM Reply Like
  • kastlem
    , contributor
    Comments (11) | Send Message
     
    I was in CTIC from 5 cents until selling the last of my position recently. Pity as Pix is excellent and has a wider market than just 3rd line refractory NHL (trials for 1st line to replace Doxorubicin ongoing, also being trialed for MS and I would expect MG eventually). Opaxio was never a favorite of mine, Brostallicin looks good so far. Management is a major problem there, no secret. As a long time RN specializing in Neonatal ICU I was also in DSCO as their synthetic product Surfaxin is IMPO is superior to bovine preps currently in use. If they can get Aero-Surf to market, it will revolutionize that market for those preemies who do not require long term intubation, reduce BPD/RDS etc. Anyway, point is I got out due to management which turned out to be a correct decision (new CEO now as you probably know, safe to be back in the proverbial water since that change:-). Clearly even with a great pipeline management can make or break a company. Can you shed any light on how effective management at SNGX is?
    2 Oct 2009, 02:13 AM Reply Like
  • Joseph Krueger
    , contributor
    Comments (283) | Send Message
     
    Author’s reply » I also bought quite a few CTIC lottery tickets at about 5 cents, and I was suprised when they announced the pixantrone phase III results the stock moved from 5 cents to 12 cents in about 10 days. Quite underwhelmed with the response, I sold then as I feared the next PR would be about bankruptcy and the sale of all their assets. As well, knowing the competition for pixantrone out there from big pharma fishing for the same indications pixantrone was (Dasatinib, Rituximab, Velcade, 20 others; not to mention that Zevalin itself was competition.) I didnt see how CTIC has a chance (I still dont); so I sold. We all know what happened shortly after that....this is the inspiration for my article.
    Anyway, SNGX senior management are all quite new, frankly. Many were hired just before or just after the failed orBec trial in 2007. Before them, the company has a long history of slow cash burn, clean balance sheet, and virtually no dilution, all indications that they were quite competent in the business end of things. Forbes has a profile of the current CEO that is most impressive, and whose experience is right in line with what is needed for approval (regulatory affairs experience) and their liposome drug delivery systems. people.forbes.com/prof... Robert Brey, the chief scientific officer, was also the VP at Endorex and brings vaccine experience to the table. Brian Hamilton, the cheif medical officer, came from Astra Zeneca and is a recognized expert on GVHD and the use of steroids. A poster even told me about the VP of accounting, Chris Schnittker, who he had personal experience with at Micromet and thought highly of. Finally Sigma Tau's investment is the most comforting- it is substantial, and Claudio Cavazza is known as a brilliant scientist and savvy investor. They seem to have a "dream team" assembled and a solif plan to bring orBec and other pipeline drugs to market. Follow the money, as they say, and the money is going into SNGX....

     

    On Oct 02 02:13 AM kastlem wrote:

     

    > I was in CTIC from 5 cents until selling the last of my position
    > recently. Pity as Pix is excellent and has a wider market than just
    > 3rd line refractory NHL (trials for 1st line to replace Doxorubicin
    > ongoing, also being trialed for MS and I would expect MG eventually).
    > Opaxio was never a favorite of mine, Brostallicin looks good so far.
    > Management is a major problem there, no secret. As a long time RN
    > specializing in Neonatal ICU I was also in DSCO as their synthetic
    > product Surfaxin is IMPO is superior to bovine preps currently in
    > use. If they can get Aero-Surf to market, it will revolutionize that
    > market for those preemies who do not require long term intubation,
    > reduce BPD/RDS etc. Anyway, point is I got out due to management
    > which turned out to be a correct decision (new CEO now as you probably
    > know, safe to be back in the proverbial water since that change:-).
    > Clearly even with a great pipeline management can make or break a
    > company. Can you shed any light on how effective management at SNGX
    > is?
    2 Oct 2009, 09:46 PM Reply Like
  • halochief007
    , contributor
    Comments (33) | Send Message
     
    Chris Shaber the CEO has run three or four phase three studies and all have have met their primary endpoint. He and Evan Myrianthopolous have skin in the game so they try to do financings with the least dilution possible, unfortuately sometimes the market doesn't cooperate. This last financing led by Sigma Tau for about 4.4 million dollars was done at market with only 50 percent warrant coverage. Pretty strong in this day and age. It shows you that the investors in the deal are looking toward the future.
    I hope this helps.
    3 Oct 2009, 09:01 PM Reply Like
  • Joseph Krueger
    , contributor
    Comments (283) | Send Message
     
    Author’s reply » Thanks for that insight. The strength the current management and the strength of the Sigma Tau investment speaks alot to what twe can anticipate the future to be. The current endpoints for the OrBec GVHD trial are likely to be met, based on the strength and significance of these endpoints from the last trial. Obviously that is what Sigma Tau is betting on.....I too think it is a good bet.

     

    On Oct 03 09:01 PM halochief007 wrote:

     

    > Chris Shaber the CEO has run three or four phase three studies and
    > all have have met their primary endpoint. He and Evan Myrianthopolous
    > have skin in the game so they try to do financings with the least
    > dilution possible, unfortuately sometimes the market doesn't cooperate.
    > This last financing led by Sigma Tau for about 4.4 million dollars
    > was done at market with only 50 percent warrant coverage. Pretty
    > strong in this day and age. It shows you that the investors in the
    > deal are looking toward the future.
    > I hope this helps.
    5 Oct 2009, 07:27 PM Reply Like
  • halochief007
    , contributor
    Comments (33) | Send Message
     
    In this study, orBec® did not achieve statistical significance in the study’s primary endpoint ([p-value 0.1177]) (it would likely need a p value of 0.1 or less, so it almost made it).

     

    Joseph that statement that you made was incorrect. They needed a p value of .05 to get approval. The problem is, they used the wrong endpoint. The prior management used an endpoint that put emphasis on when a patient failed not if they failed. Unfortunately 8 of the treatment failures on Orbec ocurred in the first ten days, before the drug had a chance to work. It isn't important when they fail it is only important if they fail.
    If you go through the data in the prior trial it also shows that Orbec worked well in mismatched donor transplants and Non myeloablative transplants which are performed in older and sicker patients that can't undergo normal chem regimens. Since it is almost a death sentence to give bone marrow transplants to a unrelated donor or a patient that underwent a non myeloablative treatment doctors do not recommend the transplant. Since Orbec seems to work extremely well in these patients based on the prior phase 3 trial, doctor will be able to perform transplants in these patients and that will increase the size of the market.
    7 Oct 2009, 08:44 AM Reply Like
  • Joseph Krueger
    , contributor
    Comments (283) | Send Message
     
    Author’s reply » Thanks for the correction- I was trying to explain the clinical data is less technical terms for the average reader and made several mistakes.
    You are apparently a know a great deal about the details of the orBec trial and the type of insight you offer is quite valuable. As I mentioned in an above comment, I think the take home message for investors should be that the primary enpoint was indeed the wrong endpoint, and the new endpoint of the current phase III trial is one that was previously met in the first trial. A very nice preview of success.

     

    On Oct 07 08:44 AM halochief007 wrote:

     

    > In this study, orBec® did not achieve statistical significance in
    > the study’s primary endpoint ([p-value 0.1177]) (it would likely
    > need a p value of 0.1 or less, so it almost made it).
    >
    > Joseph that statement that you made was incorrect. They needed a
    > p value of .05 to get approval. The problem is, they used the wrong
    > endpoint. The prior management used an endpoint that put emphasis
    > on when a patient failed not if they failed. Unfortunately 8 of the
    > treatment failures on Orbec ocurred in the first ten days, before
    > the drug had a chance to work. It isn't important when they fail
    > it is only important if they fail.
    > If you go through the data in the prior trial it also shows that
    > Orbec worked well in mismatched donor transplants and Non myeloablative
    > transplants which are performed in older and sicker patients that
    > can't undergo normal chem regimens. Since it is almost a death sentence
    > to give bone marrow transplants to a unrelated donor or a patient
    > that underwent a non myeloablative treatment doctors do not recommend
    > the transplant. Since Orbec seems to work extremely well in these
    > patients based on the prior phase 3 trial, doctor will be able to
    > perform transplants in these patients and that will increase the
    > size of the market.
    10 Oct 2009, 08:53 PM Reply Like
  • halochief007
    , contributor
    Comments (33) | Send Message
     
    have you seen the new article on Soligenix posted by Steven Cordovano

     

    seekingalpha.com/insta...

     

    On Oct 01 01:00 PM Michael Catalin Vlaicu wrote:

     

    > Great article, it will be used as a resource in our profile on StocksHaven.com
    2 Dec 2009, 03:13 PM Reply Like
Full index of posts »
Latest Followers

StockTalks

  • svnt
    Oct 1, 2010
  • Qnexa vote tally: http://bit.ly/a5o8fT
    Jul 13, 2010
  • I see CYTR's news today as quite positive, there are alot of reasons why bafetinib could be used for imatinib (Gleevec) resistant population
    Apr 20, 2010
More »

Latest Comments


Instablogs are Seeking Alpha's free blogging platform customized for finance, with instant set up and exposure to millions of readers interested in the financial markets. Publish your own instablog in minutes.