WHITEFISH, MT / ACCESSWIRE / November 13, 2014 / The biotechnology industry has significantly outperformed the general market for some time now. So far this year, the iShares NASDAQ Biotechnology Index ETF (NASDAQ: IBB) has jumped nearly 30% compared to a nearly 10% return for the S&P 500 SPDR ETF (NYSE: SPY). Investors concerned about the industry's lofty valuation may want to take a look at some smaller diversified players in the space.
In this article, we'll take a look at a $30 million micro-cap biotech company that has diversified into both biodefense and cancer treatments.
Innovative Approach
Cleveland BioLabs Inc. (NASDAQ: CBLI) has developed a portfolio of innovative drugs for radiation defense and oncology. The Company's most advanced drug candidate, entolimod has shown the potential to both mitigate radiation injury and treat systemic and local cancers. This approach is unique in that the radiation market provides near-term potential, while oncology provides long-term potential.
On the radiation side of the business, the company's entolimod product has progressed through preclinical, pivotal, and human safety studies in accordance with the FDA's Animal Rule. The FDA has confirmed that it is eligible to submit a pre-Emergency Use Authorization (pre-EUA) application that will facilitate commercialization prior to full licensure. With no FDA-approved radiation countermeasures available, the market could prove quite large if the treatment is granted pre-EUA status, as the U.S. government would likely stockpile the drug in case of radiation emergency. Most of the stockpiled countermeasures purchased by the U.S. government to date have been purchased following the achievement of pre-EUA status. Foreign governments would also be a potential market.
On the oncology side of the business, the company's three Phase I clinical trials are poised to report near-term data and could drive partnerships. Entolimod has shown potent immune-stimulatory effects in preclinical models as an immunotherapy. A Phase 1 study in patients with advanced cancer, conducted at the Roswell Park Cancer Institute, is completed with data expected in the first half of 2015. In this trial, the company measured immune cell response in addition to the typical safety data with the goal of better characterizing the drug's potential as an immunotherapy.
Cleveland Bio's other lead cancer candidate, Curaxin CBL0137, is a multi-targeted chemotherapy progressing through Phase 1 trials for both intravenous and oral administration. Interim safety, pharmacokinetic and pharmacodynamic data for the oral study are expected to be released later this quarter, as the company investigates the proper dose levels and dosing regimen for Phase II studies. The drug has been shown in animal studies to stimulate anti-tumor activity, both alone and in conjunction with existing treatments.
Large End Markets
Cleveland BioLabs' clinical pipeline targets several large end markets. On the radiation side, nuclear attack remains a major security threat whereby more than 100,000 people could die from radiation injuries if a detonation occurred in a major city. Despite these risks, the FDA has no approved medical radiation countermeasures that can be administered after irradiation to reduce injury and improve survival.
Cancer immunotherapy represents a second large end market. According to Decision Resources Group, the market for cancer immunotherapy is projected to increase from $1.1 billion in 2012 to nearly $9 billion by 2022. Large pharmaceutical companies like AstraZeneca plc (NYSE: AZN) and Roche Holdings Inc. (OTC: RHHBY) have taken notice and are actively developing therapies and entering into large development partnerships with smaller companies that show promising research. With the potential to be used in combination with other approaches, immunotherapy could greatly improve outcomes in a broad range of tumor types.
And finally, Curaxin CBL0137 offers a unique chemotherapeutic approach that modifies several known and validated cancer pathways being pursued individually by most major pharmaceutical companies. Commercial partnerships following strong Phase I or II results in either of these areas could provide near-term milestone payments and cover the costs of taking trials through Phase III.
Looking Ahead
Cleveland BioLabs trades with a market capitalization of about $30 million, despite its compelling preclinical results to date and its plethora of upcoming catalysts. In the meantime, the company plans to file its pre-EUA submission for entolimod as a medical radiation countermeasure during the first half of 2015, which could pave the way to commercialization. Investors may want to take a closer look at the stock given these catalysts.
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SOURCE: Emerging Growth LLC