Australians are very good at discovering medical breakthroughs. What we can rarely do is find the necessary venture capital to fund them through to full commercialisation.Take the example of Imugene (ASX code IMU), holder of the worldwide rights to a vaccine which looks as though it can block three or four major cancers.The vaccine, called HER-Vaxx, was invented at the Medical University Vienna, the oldest known university in the western world, whose Professor Ursula Wiedermann spent last week in Australia briefing brokers and investors.Her story was impressive. In normal cells, the HER2 gene produces a protein receptor on the cell surface in the form of a tiny hair.Breast, gastric, ovarian and pancreatic cancer cells over-produce receptors and have many tiny hairs on their surface. The receptors' roots go deep into the cell to feed it protein and stimulate its growth and multiplication. The receptors, therefore, become the engines that drive the multiplication of those cancer cells.HER-Vaxx comprises selected molecules called peptides which gravitate to the cancerous receptors and block them, thus stopping the growth of the cancer cells. A drug called Herceptin, marketed by Roche, already uses the same technique against cancer cells, but costs $US70,000 or more for a course. IMU claims that HER-Vaxx is potentially a safer, more potent, effective and cheaper alternative because it induces an antibody response that targets more than one site. Broadly, HER-Vaxx stimulates the body to produce its own relevant antibodies whereas Herceptin does not.Professor Wiedermann, who was the principal investigator for the pre-clinical development of HER-Vaxx, told a Sydney audience earlier in June that there are seven peptides which bind to the receptors and her research team had separated the three which were effective. The vaccine is designed through some very smart microbiotic technology. The scientists begin by taking an influenza virus and emptying it of the infectious agents, so all that is left is the empty shell of the virus. The scientists then insert the three peptides into the shell, creating HER-Vaxx which is then injected into the body.IMU has appointed Bachem AG to manufacture the peptides. The vaccine is now going through trialling which, as usual, takes forever. There has been a Phase I breast cancer trial. The next step will be a clinical trial on gastric cancers, which will take a year, plus another 6 to 12 months to evaluate the results. If those are successful there will have to be Phase III trials.This is where the crunch comes for small companies. Drug trialling under the auspices of the US Federal Drug Administration can take anywhere up to 10 years before one is approved, so only companies with deep pockets can survive.Companies which have a useful drug but run out of money are routinely picked off by the majors in the industry. IMU's executive chairman Paul Hopper says: "If the Phase II trials showed some strong signals we are confident one of the big companies would buy in."That's a roll of the dice, because at December IMU was down to $2 million cash, and was burning money at the rate of $1 million a year. It already has 940 million shares on issue and they're trading around 1.4c, giving the stock a market capitalisation of $13 million.Any significant equity raising would be highly dilutive. Their best hope would seem to be in finding a friendly big brother, which would doubtless want a large stake in their vaccine. Roche, whose $6.9 billion per year Herceptin would be replaced by HER-Vaxx, seems a likely contender.(Editor's note: Pharmaceutical giant GlaxoSmithKline is also viewed as a natural owner of a successor to Herceptin, even more so following the appointment GSK's global vice president of oncology Dr Axel Hoos to the Imugene board.)If you're inclined for a long-term long-shot, a lazy $15,000 would buy you a million shares in IMU. It could look like a good bet in two years' time, even if there's a share consolidation in between.And if the big brother never arrives, this is the sort of problem the government's proposed Future Medical Research Fund is supposed to address. The FMRF is a good idea in principle, but it's light years away even if it's passed by the rabble who now control the Senate.[Warning: Trevor Sykes is NOT a licensed investment advisor. Invest at your own risk.][/table]
IMU Price at posting:
1.4¢ Sentiment: None Disclosure: Unspecified
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