prr very much alive says matt lehman

Prima Biomed a prime example of investing for the long term when it comes to biotech

by: Richard Hemming The Australian October 26 2013

FOLLOWING last week's column about the peaks and troughs of biotech, Prima Biomed's chief executive Matt Lehman has come out firing and says his company, which is developing an innovative immunotherapy for ovarian cancer, is very much alive and in the running to address a market worth billions of dollars. Speaking from San Francisco, he says: "We have just over $30 million in cash, and our addressable market is very large, in the hundreds of millions or billions of dollars. "It's high-risk, high reward, and the sophisticated investor understands there are a number of catalysts to release value."

We admit that having the cash does help its cause, but the question remains as to when Prima Biomed will deliver value for shareholders. Its shares have plummeted from 40c-plus levels in April 2011 to their current level of less than 4c, taking its market cap below $50 million. There is no doubt you have to work to come to grips with the technology. Prima's CVac treatment is part of the amazing advancement in science called "immunotherapy", which can kill cancer using T-cells, which are an immune response. It has resulted from the discovery of dendritic cells and their role in the immune system by doctors Beutler, Hoffman and Steinman, who won the Nobel Prize in 2011.

There are two approved "immunotherapy" products, Dendreon's Provenge treatment for prostate cancer, with annual sales in excess of $US300m ($312m), and Bristol-Myers Squibb's Yervoy for metastatic melanoma, which generated $US706m in sales last year, and is projected to reach $2 billion by 2018. "We are at an early stage with this technology with two successes," Lehman says.
Prima Biomed's CVac cultures the dendritic cells with a protein called mucin 1, which are then re-inserted into the patient. Mucin 1 is a marker present in about 90 per cent of ovarian cancer cases. The process is extremely labour intensive, which accounts for 18 months it took to initiate the process for 125 women. The CVac works by increasing the virus fighting T-cell activity. It trains those T-cells (via the dendritic culture) to kill the cancer. Lehman says the studies show that CVac is working well to increase T-cell activity, and to get them to the cancer site, but it is struggling with the most complex area preventing, or blocking, the cancer's own defences.

One concern arose last month when the company said that its 63 patient trial missed an end-point relating to progression-free survival meaning the time it takes for the cancer to come back, or grow again. The company has halted the recruitment of its 800 patient trial and is in the middle of a redesign, the progress of which will be announced in the next two weeks. "If we had had 800 (patients) already on that trial and PFS was the primary end point, it would have failed," says Lehman.

One parachute for biotechs has always been big pharmaceutical companies. After all, it took Genentech about 20 years from discovery to market of its breast cancer treatment Herceptin, which has annual sales of about $US1.7bn. "My goal is to bring product through its development and to add value by negotiating a good partnership opportunity. We will only deal when it's right for us, and having a good cash balance gives us flexibility," Lehmann says.