We should know within a week or so whether Viralytics (VLA) is...

We should know within a week or so whether Viralytics (VLA) is granted approval by the US Food and Drug Administration (FDA) to begin Phase II trials in America with its anti-cancer agent Cavatak. Then the stock is bound to get a re-rating of its share price.

In the hopeful anticipation of that, we?ve lifted our portfolio shareholding this week as nervous tax-loss sellers push the stock down.

Last week, Viralytics? shares were sold down from a week?s high of 8.3? to a low of 6.9? on turnover of 28.26 million shares. That represents almost 4.8% of Viralytics? 587 million issued shares.

A month earlier, in mid-May, the shares surged to a year?s high of 11? before closing at 9.1? on a weekly turnover of 121.3 million shares.

At a current price of close to 7?, Viralytics carries a market capitalisation of $41 million with cash on hand at the end of the last March quarter of $4.75 million, after total cash operating outflows for the nine months to March 31 of $2.1 million.

Viralytics shares began to surge after the Speculator reported on April 27 that the company should know within 30 days whether it would get the green light to proceed with crucial Stage II trials in America on late-stage melanoma sufferers.

It was on that date that the company announced it had lodged a ?reply to all questions? raised by the FDA, following the FDA?s initial review of the company?s investigational new drug (IND) application lodged earlier for a 54-patient Phase II melanoma trial.

The FDA then had a mandatory 30-day review period during which time it could ask for further details on the planned trial.

That they did on May 23, with another two questions of a procedural nature, to be answered before the trial could begin. Viralytics announced on the same day it would file a ?Clinical Hold Full Response? within five days on the two items relating to the technical definition of efficacy measurements to be used in the planned trial, and the timing of the independent safety review.

Fingers crossed, the outcome of those issues should be resolved by next week.

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In the meantime, Viralytics managing director Bryan Dulhunty and chief scientific officer Professor Darren Shafren have not been sitting on their hands. They have been very active on the world stage, accepting invitations to present the company?s credentials to the scientific communities in the United States and Europe.

Shafren (professor of virology at the University of Newcastle) addressed the annual conference of the American Society of Clinical Oncologists (ASCO), held on June 3?7. He delivered a paper on the company?s Phase I trials of Cavatak in treating late stage melanoma patients. (Cavatak is the trade-marked name for Viralytics? proprietary formulations of the naturally occurring coxsackievirus Type A21, a virus that forms part of the common cold family. It is one of five viruses in the company?s research portfolio for attacking a range of cancers.)

Shafren has since moved on to attend the 14th World Conference on Lung Cancer to be held in Amsterdam. On July 3 he will give a presentation on oncologic activity of the company?s Cavatak agent on lung cancer. Then he?s off to Munich to present on July 7?8 at the European post-ASCO conference on developing new treatments for melanoma.

As Shafren addresses the international scientific community, Dulhunty was off to New York as one of a select group of 10 Australian biotech companies invited by the industry body, Ausbiotech, to present to the New York investment community on June 23.

He has now moved on to Washington, where this week he will address the BioWashington/Biointernational Convention over from June 27?30.

As I pointed out on April 27, Viralytics has identified some 10 companies internationally that are developing oncolytic (cancer-attacking) viruses.

In a posting on its website, the company says ?most are conducting Phase I trials or involved with pre-clinical work. However, there are three international companies in later-stage development that demonstrate the potential value of virotherapy companies.? They are:
Biovex, a privately owned Massachusetts-based company taken over in January by Amgen Inc for $US1 billion. Biovex is now conducting Phase III clinical trials using a genetically modified herpes virus on melanomas and head and neck cancers.
Oncolytics Biotech Inc, a Canadian company listed on Nasdaq and Toronto with a market value of $US450 million.
Jennerex, a private Californian company with a $US116 million licensing development deal using a pox virus in liver and prostate trials.

The value placed on those companies must be an indicator of Viralytics? potential, with its comparatively lowly market capitalisation of $41 million.