southern cross equities report

Here is the Southern Cross article. This is an extract from their newsletter .......

>Location: Perth
>Business: Developing a plant-derived steroidal glycoside as an anti-cancer
>agent
>Leadership: Tony Kiernan (Chairman), Stephen Carter (CEO)
>Share Price ©: 15.5
>Market Cap. of tradeable shares: $25m
>Twelve Month Range ©: 18 - 6.9958
>No. of shares tradeable: 159.3m
>Volume this week (Average weekly volume): 4.54m (2.72m)
>Value this week (Average weekly value): $0.75m ($0.41m)
>% below 12 month high: 13.9%
>
>Solbec provides more proof of the power of SBP002
>
>SBP002, so Solbec Pharmaceuticals told the
>market yesterday, can both kill cancer cells of the mesothelioma variety and
>trigger an immune response against those cells. The market shrugged its
>shoulders, but to this analyst the announcement was yet more proof that
>Solbec is on to something quite special. Solbec, readers will recall from
>our last discussion of this company on 5 December, is attempting to develop
>SBP002, an anti-cancer compound made up of a couple of steroidal glycosides
>fractionated out the fruit of a noxious weed called the Devil's Apple
>(Solanum linnaeanum) into a drug that can treat the asbestos-induced lung
>cancer called mesothelioma. For several years up until 2003 Solbec had been
>getting the kinds of positive signs one looks for in a cancer drug in terms
>of its effectiveness in various in vivo and in vitro settings. Then around
>nine months ago came word that SBP002 actually seems to work better than a
>lot of other chemotherapies. The red letter day here was 4 September, which
>was around four days before the peak of the 2003 biotechnology bull market.
>That morning Solbec announced, under the headline 'Solbec cancer drug may
>boost immunity', that some studies at the University of Western Australia,
>initiated earlier in the year, had more or less confirmed what scientists
>close to Solbec had been thinking for some time - that administration of
>SBP002 seemed to induce an anti-cancer immune response in test subjects.
>Yesterday's announcement provided some follow-through on the 4 September
>development. To understand its importance let's go back in time for a
>moment.
>
>In the late 1980s a Dutch biochemist domiciled in Brisbane named Bill Cham,
>who invented a precursor to SBP002 called BEC®, figured out that his
>compound worked because cancer cells seem to overexpress what he called
>Endogenous Endocytic Lectins, or EELs for short. A lectin is any protein
>that binds strongly to a specific sugar, while endocytosis is the process by
>which a cell takes in material from its environment. Endogenous endocytic
>lectins are, therefore, basically receptor molecules sitting on the surface
>of the cell whose function is to draw sugar-based molecules into the cell,
>mainly so it can provide for its
>
> energy needs. That cancer cells overexpress receptors for sugar molecules
>intuitively makes sense in that these cells are growing and dividing faster
>than normal cells. And that these receptors can therefore be used to make
>cancer cells susceptible to chemotherapy will come as no surprise to
>investors familiar with the work of Meditech
>(ASX-Code MTR), the Melbourne-based company which is pioneering the use of a
>carbohydrate known as hyaluronic acid as the delivery vehicle for
>conventional anti-cancer drugs. However where SPB002 potentially goes one
>better than Meditech's HyACTTM approach is that with SBP002 the
>carbohydrate-based substance is also naturally part of the drug that does
>the cell killing. The key here is lies in the 'glycoside' part of Solbec's
>molecule. Cham found that his EELs had a strong affinity to a sugar called
>rhamnose, which is a constituent part of SBP002, and the lectins were
>eventually named Rhamnose Binding Proteins, or RBPs for short. Were this
>analyst doing the naming, he would have called them THSSAs, that is, Trojan
>Horses of Solbec's Steroidal Alkaloid. That's because when the cancer cells
>encounters SBP002, RBP binds to the rhamnose in the drug, but in drawing
>that sugar into the cell via endocytosis it also pulls in the steroidal
>alkaloid connected to the rhamnose. Carbohydrates the cell can handle, but
>steroidal alkaloids are something else. Continuing the Troy analogy, the
>part where the Achaean soldiers pour out of the horse occurs when SBP002
>arrives in the lysosome, an organelle, that is, little organ, within the
>cell whose function is to digest material that has been taken into the cell
>by endocytosis. Unable to digest the alkaloid connected to rhamnose, the
>lysosome ruptures, spreading poisonous digestive enzymes throughout the cell
>and bringing about its death. Valé the cancer cell...but not the normal
>cell, which SBP002's mechanism of action is much more likely to leave
>unscathed. Herein lies the difference between SBP002 and most well known
>cancer drugs, which, broadly speaking, deal with the disease by going after
>the mechanisms cells use to divide. Take, for instance, a powerful
>chemotherapy drug introduced in 1996 by Pfizer/Pharmacia called Camptosar
> (generic name irinotecan), which
>at the time of its launch had been something of a step forward in the
>treatment of colorectal cancers. The Camptosar molecule is a topoisomerase
>inhibitor, meaning that it tackles the enzyme which uncoils DNA in the
>nuclei of cells so as to permit cell division to take place. Since cancer
>cells divide more quickly than normal cells, drugs like this can kill them,
>alongside a lot of normal cells that get caught in the cross fire when they
>go through their normal process of cell division. SBP002 is quite different
>because the drug can, thanks to the RBP gateways into cells, be naturally
>more discriminating as to who are the good guys and bad guys. Permit a
>somewhat different warfare analogy: In effectiveness against the disease
>most chemotherapy is like bombing Hanoi in 1968 whereas SBP002 is designed
>to be more like bombing Baghdad in 2003 in terms of precision.
>
>SBP002 may be more precise but it also seems to be more effective. The
>mechanism of action we've just described to you is called 'necrosis' by
>those in the trade, meaning that the cell literally blows up. That's counter
>to the mechanism of action of most sophisticated oncology drugs, which
>involves the induction of a more stately end to cellular life called
>apoptosis, or 'programmed cell death'. Now, since the former kind of cell
>death is somewhat more traumatic on a cellular level, it seemed reasonable
>to scientists working with Solbec to suggest that SBP002-induced death of
>cells would spark the interest of the immune system, which would turn on an
>inflammatory response to repair any tissue damage that resulted from the
>cellular carnage. From there it could be postulated that the inflammation
>would bring in T-cells specific for the tumour cells, making it more likely
>that the primary tumour would shrink harder than would otherwise have been
>the case, while at the same time rogue secondary tumours would be rendered
>more vulnerable to early detection and destruction.
>
>The 4 September press release was to tell the market that initial
>observations seemed to confirm the immune response hypothesis. This week's
>announcement was a little more forthcoming in terms of the details. UWA
>researchers, under the aegis of the chest diseases expert Professor Bruce
>Robinson - a leading authority on mesothelioma and one of the driving forces
>behind world-leading research into the disease at Perth's Sir Charles
>Gairdner Hospital - took some mouse models of mesothelioma and used SBP002
>to treat the cancer cells in the mice. As this analyst understands it, the
>Robinson team looked at samples from the lymph nodes out of the mice before
>and after drug treatment, lymph nodes being the place where antibodies and
>T-cells get created. What they found was greater amounts of mesothelioma
>antigens in the lymph node samples after treatment. In other words, the
>murine immune system had got a fix on the mesothelioma cells, and had taken
>the details to the lymph nodes so that the appropriate cellular resistance
>could be generated against cancer cells displaying those antigens. The fact
>that the drug attacked the tumours but didn't attack the mouse's white blood
>cells, as a lot of other chemotherapy drugs do, meant that the murine immune
>systems had a much better chance of working against the mesothelioma. Just
>think about it for a second. This drug appears very strongly to put the
>patient's immune system in a position to go after those cancer cells that
>have managed to elude SBP002's tender mercies the first time round. In
>effect it's a combination drug and cancer vaccine. We would suggest that
>this double mechanism of action raises the chances that when the data
>collation is complete for the current 25 patient Phase I trial of the drug
>at Sir Charles Gairdner late this year, the numbers will show that SBP002 is
>not only safe and well tolerated but that it can quickly induce a favourable
>tumour response in a significant number of patients.
>
>It's important to note that Solbec is not just a cancer play, although
>SBP002 is a pretty good lead compound to run with. Solbec announced last
>month that it had started work on a clinical trial, slated for late this
>year, of SBP002 as the active agent in an anti-psoriasis cream. There is,
>moreover, still the potential looking forward that SBP002 could serve as the
>basis of a fairly sensitive commercial cancer diagnostic given its ability
>to selectively merge with cancer cells. In effect, SBP002 is a kind of
>platform that can be used in a variety of different settings. However we
>think that Solbec's current share price performance, while better than most
>biotechs out there, doesn't even adequately price the potential of SBP002 as
>an anti cancer drug given the way the compound continues to perform well in
>the laboratory. As a consequence Solbec continued to rate a Speculative Buy
>for Knowledgeable Professional Investors.