Island Pharmaceuticals' (ILA: $0.066) lead drug candidate, ISLA-101, was first investigated as an oncology drug by Janssen (Johnson & Johnson). Executive Chairman of Island, Paul MacLeman, said that whilst its ability to kill cancer cells was poor, its safety profile was good and well established. ISLA-101 has been assessed in 45 clinical studies to date.
ISLA-101 was identified by a research group at Monash University and found to have antiviral properties. The identification process focused on the mechanism of action of the compound.
Second Compound to be Acquired
Island is now also looking at acquiring a second antiviral compound, galidesivir, from BioCryst Pharmaceuticals, for the treatment of the Ebola, Marburg, Zika and most other RNA viruses. A non-binding term sheet, which is expecting to become binding shortly, will give Island up to 12 months to assess the program. The main unknown surrounding the program is the clinical path forward, which will need to be discussed with the FDA.
Island will pay BioCryst US$50,000 for the 12 month option, with an exercise fee of US$500,000 plus milestone payments to BioCryst. A royalty of 5%-10% of net sales will also be payable to BioCryst, plus 25% of the proceeds from the sale of the Priority Review Voucher if the compound is cleared for approval by the FDA. (The program is eligible for a PRV under the Tropical Diseases classification.)
Around US$80 million has been spent on this program, however Biocryst is now focusing on orphan diseases and this falls outside of its core focus. MacLeman said that given the level of funding from the US Army, it is keen to see the program continue.
The galidesivir program should be eligible for the 'Animal Rule' which means that once Phase I safety studies have been completed, and sufficient animal models are conducted, the compound can be filed for approval with the FDA without efficacy studies in humans.
The main commercial target for this compound will be for government and military stockpiles, as well as funds from the Priority Review Voucher if development is successful.
Similarities with Both Programs
MacLeman said that both programs have similarities, with a faster path to market (than for new chemical entities), secured government funding, an open IND to conduct studies in the US, and mid stage clinical data, or in the case of galidesivir, an abbreviated path to market (where further clinical studies may not be required). Each program is also eligible for a Priority Review Voucher which sell for around US$100 million, and are granted upon FDA approval of the therapy.
Dengue Program - ILA101
Island recently conducted a site initiation visit for the Phase II study at Suny University Teaching Hospital in New York for its Phase II dengue study. However before the study commences Island needs Ethics Approval and clearance from the FDA for modifications to its clinical program in its IND.
The amendment will see a smaller and faster trial, with more data based on learnings from its single ascending dose Phase I study where the effective dose was determined. As such the forthcoming Phase II study may not be a dose ranging study (pending FDA agreement).
MacLeman said the company also found that dosing with a high calorie meal can increase the bioavailability of the compound by two to three times. The technical data from ISLA-101 is very good according to MacLeman.
The first indication for ILA-101 is for the treatment of the dengue, which is spreading from tropical areas due to climate change. The Phase II study will trial the therapy in healthy volunteers infected with an attenuated (weakened) version of the virus.
The study, which is funded by the US military and partially funded by Suny, is expected to deliver comprehensive biomarker data, including viral load in the bloodstream. The study will look at prophylactic use as well as therapeutic treatment post infection. All data will be owned by Island, with the trial costs substantially lower now than originally expected. It will be a single site study with results expected this financial year.
There have been recent outbreaks of the dengue virus in Bali, Singapore, and Brazil. MacLeman said there is also expected to be a surged of imported cases at the current Olympic games in Paris, with no therapeutic available. With continuing global warming, the virus is expected to spread to Australia, Europe and the US as well by 2050.
Island Pharmaceuticals is capitalized at $8.4 million with $1.6 million in cash at the end of March.
Bioshares recommendation: Speculative Buy Class B
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