Please Note: Blog posts are not selected, edited or screened by Seeking Alpha editors.

Acuvax To Gain Breast And Stomach Cancer Vaccine With Biolife Science Acquisition

Acuvax (ASX:ACU) is in the process of acquiring Biolife Science Qld Ltd, backed by Dr Roger Aston and Paul Hopper, via a reverse takeover and looking to raise $5 million from investors via a prospectus issue in a corporate vehicle Acuvax Limited.

Acuvax is developing a vaccine for breast and gastric cancers. On 22 March 2013, Acuvax shareholders voted to approve the acquisition of Biolife and to raise $5m to fund Phase II trials of the vaccine.

The shares of Acuvax are currently suspended from ASX pending the completion of the capital raising, the consolidation of shares and re-admission to ASX. On re-admission, Acuvax will change its name to Biolife Science Ltd.

Dr Aston has held senior roles with Peptech Ltd, Mayne Pharma , pSivida and Cambridge Antibody Technology. Paul Hopper is Executive Chairman of Viralytics Ltd (ASX:VLA).


The $5.0 million raising will fund the production of vaccine for the Phase II trial, the preparation of an Investigational New Drug (NYSE:IND) application with the US Food & Drug Administration and the administration of a Phase II trial. Based on a total issued capital of 56.5 million shares (assuming a placement of 25 million shares and issue to Biolife vendors), the company will have a market capitalisation of $11.3 million and an enterprise value of only $5.3 million.

This value is well below peer group companies that have products in a similar stage of clinical development (Phase I-II).

A Phase II trial in gastric cancer patients is currently in preparation and is expected to enrol first patient in 4Q 2013.

Taking a mid-point of peer companies with a successful Phase II Trial (disregarding the higher Galena market valuation), would place a valuation on Acuvax/Biolife of between $20 million - $25 million.

On completion of a successful trial, we would expect the company to be able to commercialise its product (either through a trade sale or licensing agreement) or to raise funds to fund further development of the technology at a significantly higher valuation.

News flow, such as the successful granting of an IND application, should support the momentum in share price and could offer upside to investors.

Sector: Healthcare
Share Price $0.001
Fully Paid Ordinary Shares 2,290M
Market Cap (undil) $2.29M
Share Price Year H-L $0.001 - $0.002
Approx. Cash $0.5M


- Successful Phase I results in metastatic breast cancer; excellent safety and tox profile and production of HER-2 specific antibodies;
- -Unlike many vaccine attempts, HER-Vaxx is directed against a validated target: HER-2;
- HER2 is also the target of Roche's Herceptin®, one of the largest selling cancer drugs globally, with $6.4B in annual sales;
- Successful Phase I results in metastatic breast cancer; excellent safety and tox profile;
- Potentially significant advantages over Herceptin®;
- Phase II study design big pharma-oriented; double-blind; randomized; placebo controlled (n=68);
- Commercial 3rd party manufacture and scale up with established Swiss vaccine manufacturer, Pevion Biotech AG;
- Outstanding scientific pedigree;
- Experienced Board and management. Axel Hoos (Head Oncology at GSK) - only Board seat worldwide;
- Attractively priced and undervalued relative to Phase II peer companies listed on ASX;
- Likely value uplift on successful Phase 2 completion; and
- Possible exit via takeover, industry partnership.


Acuvax has entered into a conditional agreement to acquire the entire issued capital of Biolife Science Qld Limited which owns the rights to ownership of intellectual property (NYSE:IP) that forms the basis of an early stage novel vaccine that is being developed to treat certain types of cancers.

A total of $9.9 million has been spent to date on the technology. The lead candidate, known as HER-Vaxx, is a Phase II ready, B Cell gastric and breast cancer vaccine against the validated target, HER-2.

HER-2 is a receptor that is responsible for regulating cell division and, when over-expressed, results in uncontrolled cell division.

HER-Vaxx comprises three peptides that, when injected, induce the body's B cells to produce a regular stream of polyclonal antibodies that block the HER-2 signalling mechanism.

The vaccine was acquired from a research group at the Medical University of Vienna comprising several of the world's leading cancer experts. The technology is currently under a deed of assignment to a company named Biolife Science Qld Ltd, which is to be vended into Acuvax.

The Company has also entered a letter of intent with vaccine developer, Pevion Biotech AG, to acquire an additional patent that will extend the life of the HER-Vaxx vaccine.

Together the IP technology, vaccine and new prospectus issue presents investors with a front row seat in the development of a product for certain types of breast, gastric, pancreatic and ovarian cancers.

Listing on the ASX represents an attractive option for small biotechs such as Biolife since the Australian Government offers a 45% cash rebate to Australian companies for what they spend on R&D.

So in the case of our Phase 2 clinical trial, Biolife would get approximately $1.2 million back in a cash rebate plus manufacturing costs.

The current primary treatment is a monoclonal antibody, such as Herceptin, combined with chemotherapy. Herceptin has annual sales of over US$5 billion. HER-Vaxx is designed to act in a similar fashion to Herceptin but is also designed to bind to other epitopes on the receptor giving it the potential to be more effective, longer lasting and, therefore, more cost effective.


Biolife will acquire three major patents that cover the vaccine technology. The two core patents - granted in all major market jurisdictions, were developed at the Medical University of Vienna and expire in 2022 and 2027 respectively.

These patents have been secured from founding scientists in exchange for a royalty agreement. The royalty is calculated as 20% of the net income the company receives from the drug, such as from a licensing deal with a large pharmaceutical company or sales of Her-Vaxx or other product(s) when approved.

The third patent, which is being acquired from Pevion, is currently under application and, if granted, will extend the life of the vaccine out to 2030. The Company has also negotiated a licensing agreement with Pevion for the use of its virosome technology in the manufacture of the vaccine. It will pay a 2% royalty on net profit to the manufacturer, Pevion, for the use of this technology.


In a sign of confidence in the technology, the founding scientists have foregone equity in Biolife in favour of a royalty agreement, which only materializes in the event the vaccine is successfully commercialized and generates sales.

This royalty is calculated on the basis of 18% of any income Biolife receives from the drug, such as a license deal with big pharma, or sales of the product when approved.

This is not a "reach-through" royalty, which can sometimes complicate and deter an agreement with a big licensing partner.

No founders will be selling upon listing. The founding shareholders are subject to 24 month escrow restrictions of the ASX.


The company intends to submit an Investigational New Drug application to the U.S. Food and Drug Administration (FDA).

This is expected to take up to six months, during which the company is aiming to begin manufacturing sufficient supplies of HER-Vaxx for the Phase II trials.


Acuvax is seeking to raise $5 million (minimum of $4 million) through a placement of up to 25 million shares at $0.20 per share through a prospectus offering. The capital raising is being managed by Patersons Securities.


The Biolife acquisition will involve a 200:1 consolidation of the issued capital of Acuvax that will see a reduction in issued capital to 11.5 million shares. There will also be a subsequent issue of 20 million shares to complete the acquisition.



Dr Roger Aston is both a scientist and seasoned biotechnology entrepreneur, with a successful track record in both fields. He received his B.Sc. (Hons) and Ph.D. degrees at the University of Manchester after which he spent four years at the Wellcome Foundation (now Glaxo SmithKline).

He joined ASX listed Peptech Ltd in 1987, and in 1995 he become CEO of the Peptech Group of companies. During this period Dr Aston was also a Director of Cambridge Antibody Technology and later he joined the UK Government's Defence Evaluation and Research Agency.

In 2001 he co-founded pSivida Ltd. Dr Aston has also held directorships/chairmanships with Clinuvel Ltd, HalcyGen Ltd, and Ascent Pharma Health Ltd. More recently Dr Aston was Executive Chairman of Mayne Pharma Group from 2009 to 2011 and until recently, CEO of Mayne Pharma Group. Dr Aston is currently a Director of Regeneus Ltd, IDT Ltd, Immuron Ltd, Pitney Pharmaceuticals Ltd and Cynata Ltd.

Dr Aston will assume the role of Chairman on completion of the Biolife acquisition.

Director-elect and Chief Operating Officer

Paul Hopper has over 20 years experience in international public company markets primarily in the biotechnology & healthcare sectors, with a particular focus on cancer vaccines where he has been closely involved in clinical trials from Phase 1 to Phase 3 studies. He has served as CEO, chairman or non-executive director of over a dozen public companies in the US, Australia and Asia.

He is Managing Director at the Los Angeles based investment bank Cappello Capital, where he is also heads the Life Sciences and Biotechnology Group and the Australia Desk. Mr Hopper is also the Executive Chairman of Viralytics Ltd, a director at pSivida Corp and Imugene Ltd, and during the past five years was a director of SomnoMed Ltd, Isonea Ltd and Fibrocell Science Inc.

Mr Hopper will assume the role of Director on completion of the Biolife acquisition.


The Phase I trial of Her-VAXX in breast cancer patients was successfully completed demonstrating that the vaccine is safe and could offer a significant clinical benefit to patients with HER-2 positive cancers.

A Phase II trial in HER-2 positive gastric cancer patients (n=68) is currently in preparation and is expected to enrol its first patient in 4Q 2013. Updates on the progress of the IND application and the subsequent trial will be released to the market.


Biolife's vaccine acts on the immune system causing the patient's B-Cells to produce their own antibodies which bind to a cancer protein marker called HER-2, which is common on the surface of many cancer cells including gastric and breast cancer cells.

Using antibodies to target HER-2 is a clinically proven approach as evidenced by Roche's Herceptin, an antibody drug that is now the largest selling breast cancer drug globally with over $6.4 billion in annual sales (source: Roche).

Unlike Herceptin, which is a ready-made antibody that is injected into a patient's body, BioLife's approach involves using a vaccine to activate the patient's own immune system to produce a continuous supply of anti-cancer antibodies. Effectively, the patient's body becomes a "Herceptin factory".

Rather than injecting a ready-made antibody, like Herceptin®, HER-Vaxx comprises 3-cell peptides derived from the extracellular domain of HER-2 that, when injected, activates a patient's own immune system to produce its own antibodies against the HER-2 receptors.

By vaccinating against a validated target (i.e. HER2 receptor) that is known to produce a clinical response, Biolife's technology platform is circumventing many of the immunological obstacles encountered by previous cancer vaccines.


- Invokes the body to produce it own natural antibodies, and is therefore expected to be considerably safer;
- Polyclonal Antibody - expected to produce a more powerful anti-tumour effect;
- Antibodies continuously produced - a lasting immune response to inhibit tumour recurrence;
- Potentially one vaccination series required; and
- Potential low cost of production enables greater pricing flexibility and opens up additional markets that are currently uneconomic.

By comparison, Herceptin® is a synthetic, monoclonal antibody with a half-life of approximately 12 days. A course of treatment requires infusions every 1-3 weeks and is costly - up to US$70,000 per year in the US. Some of the side effects associated with Herceptin include ventricular dysfunction, congestive heart failure and, anaphylaxis



Gastric cancer is the second most common cancer in men and third most common in women. A total of 934,000 new cases are diagnosed and an anticipated 700,000 deaths annually accounting for 10.4% of cancer deaths worldwide. The prognosis is generally poor for sufferers. The median survival is only 7-10 months.

Gastric cancer drugs are forecast to experience robust growth over the next decade increasing from just $800 million in 2010 to nearly $1.4 billion in 2020. This will be driven by the take-up of Roche's Herceptin and the possible launch of another drug under ddevelopment.

Around 80-90% of patients are ultimately diagnosed at either an advanced stage when the tumor is inoperable or develop recurrence within 5 years after surgery that was performed with curative intent.

Current drugs that are approved on the market for gastric cancer:

- 5-Fluorouracil - anti cancer chemotherapy, given as an injection or an infusion. Side effects include diarrhoea, nausea and possible occasional vomiting, mouth sores and poor appetite;
- Cisplatin - anti cancer chemotherapy, given as an infusion into a vein. Side effects include vomiting & nausea, kidney toxicity and blood cell problems;
- Herceptin - monoclonal anti-body, given as an infusion into a vein. Side effects include headache, diarrhoea, abdominal pain, back pain, infection, flu-like symptoms and vomiting;
- Herceptin was approved by the FDA in 2010 for use in gastric cancer in combination with chemotherapy. Herceptin® is not widely used for gastric cancer (cost/benefit conundrum); and
- The principal benefit of Herceptin®, in conjunction with surgery and chemotherapy, is that patients get to live about 2.7 months longer than patients who received chemotherapy alone.

With limited competition for the treatment of advanced gastric cancer, there is a significant business opportunity for Biolife to target this market and develop a vaccine.


Biolife is developing a B-cell peptide vaccine utilizing an adaptive immune approach that, when injected into patients, causes their B-cells to produce antibodies against HER2 - similar to Herceptin.

Her-Vaxx stimulates patients' immune system to produce their own antibodies internally.

In the core of immunotherapy there is a tumour antigen that is causing an immune response, but the way of delivering of the antigen could be very different.

As a result, cancer immunotherapeutic strategies can be generally categorized into three groups: innate immunity, adaptive immunity and immunomodulation18.

BioLife is developing a vaccine (viral-based peptide vaccine) utilizing adaptive immune approach that aims to generate tumor antigen-specific cellular responses.


This is the most common cancer in women (1 in 8 risk). The prognosis varies with breast cancer type. 0.5M deaths per year.

Herceptin® is used but the cost is $50,000 - $100,000 per annum but is reimbursed in most countries.

Herceptin® benefits (in conjunction with surgery and chemo) vary with breast cancer type and primary treatment. It improves overall survival by 33-52%.

Biolife believes that HER-Vaxx will address not only relapsed patients, but patients in all settings. HER-Vaxx has a significantly more convenient dosing regime than Herceptin®'s weekly administration.


The Biolife vaccine has been in a 10-patient, Phase I trial. The single centre, Phase I trial enrolled ten patients with metastatic breast cancer with low protein over-expression of HER-22 (+ or 2+ upon immunohistochemistry, FISH negative) and positive hormone receptor status.

Antibodies based on B-cell responses such as Biolife's have passed the crucial test of clinical trials and the market validation of targets.

Phase 1 trials are typically small to meet their safety endpoints. Notwithstanding this, in addition to demonstrating safety, Biolife's Phase I trial showed:

- Patients developed anti-HER-2 antibodies - HER-2 has shown its importance as a target in the treatment of cancer. Herceptin, which targets HER-2 has been approved in gastric and breast cancer;
- Patients developed significant levels of interferon-gamma;
- Patients developed significant levels of TNF-alpha upon in vitro re-stimulation with the vaccine; and
- Evidence that vaccination with our vaccine significantly reduced T Regulatory (T Regs) cells which are known to suppress anti-tumour activity.

The results are positive and extremely encouraging for a Phase I trial, above and beyond demonstrating safety.

What provides additional confidence that the vaccine will work is that, unlike many other vaccines, BioIife's vaccine target (HER-2) has been previously validated by Herceptin. In other words, thanks to Herceptin, it is well known that creating antibodies against HER-2 will be an effective cancer treatment.


- Cellular immune responses (PBMCs):IL-2, IFN,TNF indicated induction of TH-1 biased immune responses;
- Sufficient induction of memory T & B cells after vaccination (comparable to healthy controls); and
- Significant reduction of Reg T cells after vaccination (indicating a good vaccine responsiveness as well as beneficial anti-tumor effect).


- Stable disease in 50% of patients; and
- 1 patient in remission, potentially indicating a beneficial effect of the immune responses induced by vaccination, even in the non-target population.


- No side effects; and
- Negligible toxicity.


Biolife is planning to conduct a Phase II trial of HER-Vaxx in 68 patients with relapsed metastatic gastric cancer who test positive for HER-2 over-expression.

Given Biolife's molecular target of HER-2, occurs across many cancers (not just breast cancer), the company has chosen a cancer type where the recruitment of patients may be easier and where the trial will be shorter - gastric/stomach cancer.

A Phase II clinical trial in gastric cancer is likely to take a shorter time to complete, and is therefore is expected to cost less - and from perspective of both patients and investors, getting the results sooner, is better.

It will take between 9- 12 months before the Phase 2 trial will commence - that period will be spent manufacturing the vaccine at Pevion.

This is a gold standard, Phase II clinical trial of a very robust nature in terms of design: double-blind; randomized; and placebo-controlled.

Data emerging from trials of this design are highly regarded.

Very few companies in Australia are conducting Phase 2 trials to this high level.

The plan is to do most of the Phase II trial in Eastern Europe.

There are two parts to the Phase II trial: a small lead in phase of 10 patients, then the main part of the trial comprising 68 patients divided into 2 arms of 34 patients each.

Quotes received from the five CROs indicate the trial will cost around $2.5 million

The target of its drug is the same whether in breast cancer or gastric cancer.


- Updates on Phase II development; and
- News on TGA and IND applications.


Direct comparisons with ASX cancer companies, which are Phase II ready, are not straightforward given that many companies have other drug candidates or technologies in their portfolios.

As a guide, the following companies are comparable and provide an indication of value for Biolife.

It illustrates that, once a company is in Phase II (as Biolife will imminently be), then the market is likely to substantially re-rate the company. In any case, the $8.0 million vend valuation is substantially below that of Phase I companies, and even those without single product in the clinic.


Overlaying these observations are the facts that over $9 million has been spent on the project to date, and that the founding scientists have foregone a significant upfront payment in lieu of a royalty arrangement.

Another valid comparison is with Galena Biopharma (NASDAQ:GALE) which also has a breast cancer peptide vaccine targeting HER-2.

Galena's vaccine is a traditional vaccine which stimulates CD8+ killer T cells, unlike Biolife, where the patient generates their antibodies against HER-2.

They are treating earlier stage disease with low HER-2 expression - we are treating later stage disease with high HER-2 expression.

The disadvantage is that Galena's vaccine is HLA restricted which means it does not work in all patients, whereas the Biolife vaccine has broad application across all patients.

It is worth noting that Galena has a market capitalization of $150 million compared to Biolife's of $11.0 million (post capital raising), although Galena has a deeper pipeline than Biolife.


The $5.0 million raising will enable Acuvax/BioLife to progress its vaccine towards the end of the Phase II trial. Based on a total issued capital of 56.5 million shares, (assuming a placement of 25 million shares and issue to Biolife vendors) would give the company a market capitalisation of $11.3 million and an enterprise value of only $6.3 million.

This value is well below peer group companies that have products in a similar stage of clinical development (Phase I-II).

A Phase II trial in gastric cancer patients is currently in preparation and is expected to enrol first patient in 4Q 2013.

With a successful Phase II Trial and taking a mid-point of peer companies (disregarding the higher Galena market valuation), we would place a valuation on Acuvax/Biolife of between $20 million - $25 million.

At which point we would expect the company to be able to sell itself at a significantly higher valuation or be able raise funds at a higher valuation to fund further development of the technology.

News flow should support the momentum in share price and could offer upside to investors.


The prospectus offering of 25 million shares at $0.20 to raise up to $5 million can be ACCESSED HERE.

Proactive Investors Australia is the market leader in producing news, articles and research reports on ASX "Small and Mid-cap" stocks with distribution in Australia, UK, North America and Hong Kong / China.