sbp in huntleys

Highly Promising Cancer Technology
SBP has more than doubled since our spec buy
recommendation when the stock was languishing around 8c in
July. There are a number of reasons for the
move but these can best be summed up as follows.
SBP is now recognised as being purely focused on developing
drugs from naturally occuring molecules for treatment of life
threatening or debilitating diseases.
After a long period of frustrating delays clinical trials are
about to start on melanoma and malignant mesothelioma
paving the way for an investigative new drug application
around mid next year.
A Unique Potential
SBP's BEC drug (now known as SBP002) appears to have a unique mode of action. The drug is attracted to a
carbohydrate receptor found on all cancer cells tested to date giving specivity of action against cancer cells . Some
tumours are highlighted as foreign bodies by the drug enabling the body's immune system to link in with SBP002 to
fight the cancer. To date around 200 different types of cancer have been assessed against the drug with positive
implications each time. Around 50 special access patients have used the drug with generally positive results.
A range of potential products has emerged from the research. Apart from the drug as a cancer treatment, it
should lead to a diagnostic for a range of cancers, has a side impact as a palliative by controlling production of
interlukin6 in the body (which in turn seems to impact inflammation and wellbeing) and seems to have a positive
impact on psoriasis. SBP should have a busy time proving up all these applications.
Finances in good shape
Finances have been improved by selling peripheral activities to focus on cancer. Cash or liquids exceeds $3.5m and further
funds should flow in sequentially as a result of a cute option issue this year. The exercise
price of the options is staggered, favouring early conversion. If options are exercised before September 04 the exercise price is
SCG 329 • December 11, 2003 Copyright © Huntleys’ Investment Information Pty Ltd 2003 Page 16
12c. If exercised before September 05 the price is 25c and before September 06 the price is 30c. From our perspective quite a
bit of the 04 alternative is likely to flow given the timing of announcements such as trial progress and relevant applications.
Past activity
Each step of the development path to date has been discussed with the regulatory authorities such as the FDA (Food and
Drug Administration) in the US, our own TGAas well as the relevant bodies in the UK and Europe.
We expect expedited approval and orphan drug status for the first two cabs off the rank in Mesothelioma and
Melanoma.There has been a huge body of work behind the scenes which has kept momentum proceeding despite
frustrations with lack of progress on human trials. Much of the ex vivo work on approaching 200 tumours has been
published clearly demonstrating a specicivity of action on tumours over normal cells and apparently better
effectiveness than traditional cancer products in tested areas.
Much work has also gone into the growth of the raw material from which the SBP002 is extracted, and on
methods of drug production.There is conclusive proof that SBP002 is not expensive to manufacture at something
like $100,000 a kilogram.
A likely development scenario would have the drug being finished off by a local specialist manufacturer and then
distributed through a major at gross sales royalty margins above 10% There is a real pot of gold at the end of the
development because of the indicated broad spread of products or cancers which can be targeted. In fact it would
surprise if positions are not built up by any majors given continued positive results over the next trial phase which
should incorporate phase 1 dosage trials and phase 2a efficacy.
Summary
SBP has come a long way in a hurry despite disappointments over delays in human trials. SBP002 has indications
of being a platform technology incorporating immunology, diagnostics, palliatives, psoriasis and a cancer drug.
The company is now adequately funded and about to enter human
clinical trials followed by a likely fast track approval process. In view of potential market sizes in each of the
prospective cancer products and in the other areas there should be a substantial increase in market capitalisation on
any significant positive developments.We can only conclude that SBP remains an attractive speculative situation as the
proving phase for the technology platform continues to unfold. Continue spec buy recommendation.