Building a Biotech Company
Today we find ourselves in an enviable position among emerging biotechnology companies. Only three years since the founding of Pacgen we have a lead drug candidate that has already generated Phase II clinical results. Within the biotech industry it is reasonable to invest ten years of discovery and development to arrive at a vantage point similar to Pacgen’s today. Though it is not without its challenges, we plan to take full advantage of our starting position, focusing on building investor awareness of Pacgen and expanding our relationships within the medical community while our product development programs advance.
I would like to review our three key accomplishments over the last year as well as address our plans for building shareholder value in the year ahead.
The first major accomplishment was the initiation and completion of our Phase I/II study for PAC-113, a novel anti-fungal treatment for oral Candidiasis. The study began in March 2006 and was the first clinical trial to test PAC-113 safety and effectiveness in patients with oral Candida. Positive results from this study were critical for the continuation of the program.
Oral Candidiasis, also called thrush, is an uncontrolled fungal infection of the mouth and throat that causes serious problems for many immunocompromised patients such as impacting their ability to eat and drink. If untreated, it puts them at risk for developing a systemic Candida infection which can cause death. Patients who experience this disease already have a compromised state of health. For example, Candida infection occurs with high frequency in cancer patients due to the radiation and chemotherapy treatments they have had, which suppress their immune system, decreasing their ability to fight off fungal infection.
Diabetics are also at risk due in part to poor blood sugar control (providing a ready food source for Candida) and, asthmatics who manage their disease with chronic use of oral steroids, cause localized immunosuppression in the mouth, throat, and upper airways and can lead to oral Candida infection. Another large group of people who suffer from oral Candidiasis are HIV patients who, due to their loss of normal immune function, often deal with infection and recurrent oral Candida infections.
Today’s treatments for Candida have limitations caused by side effects, drug resistance and poor patient compliance due to poor palatability. The number of people who require better treatment options from oral Candida is staggering. There were an estimated 1.4 million new cases of cancer in 2005 according to the American Cancer Society, approximately 21 million diabetics, 15 million asthmatics and 1.1 million persons are living with HIV/AIDS in the United States. A significant portion of patients in each of these patient populations will contract oral Candidiasis on at least one occasion. We believe PAC-113 has real potential to address some of these issues and give patients new hope in eliminating Candida infection.
In March 2007 we announced that over 100 patients participated in our PAC-113 clinical trial and just two months later we reported positive topline results from this Phase I/II study. The clinical data show that PAC-113 was generally safe and well-tolerated by patients and was effective in the treatment of infection. The positive outcome of this study is a significant accomplishment for Pacgen.
In the year ahead we plan to focus on the late stage clinical development plan for PAC-113. We have evaluated formulation changes for PAC-113 that significantly improve the fungal killing of this compound in laboratory experiments, and we have selected the doses of PAC-113 to use in the Phase IIb study scheduled to start by the end of 2007. We also recently held a clinical advisory panel meeting to review the Phase I/II trial results and provide guidance on the future development plans for PAC-113. Over the next 12 months the majority of our efforts and funding will be allocated to advancing the PAC-113 program and using the value created from this product to build our pipeline.
The second milestone for Pacgen was the completion of an initial public offering in December 2006 and the commencement of trading of our common shares on the TSX Venture Exchange under the symbol TSX-V:PGA. With the continued support of our private investor base, and the entry of new retail and institutional investors, the Company raised CDN $7 million to support its clinical and early stage programs as well as its operations in Vancouver, BC.
For a young company a public offering is no small feat and in the year ahead, will require, a significant commitment, of time building investor awareness of Pacgen and interest in our plans and products. We have already increased our participation at investor and biotechnology events across North America and will continue to pursue these opportunities, potentially expanding in Europe, in 2007. These investor relations initiatives will play a crucial part in our goal to raise additional capital.
In the near term the majority of our resources will be used to support the late stage clinical development of PAC-113, which we believe has an excellent commercial opportunity. We estimate that the current worldwide market opportunity for a novel, safe and effective, oral Candidiasis therapy is approximately US $300 million. This drug candidate has an excellent safety profile, a low technical risk development profile and short clinical study timeline. In comparison to most drug development programs, we anticipate that relatively few patients (less than 500) will be required to confirm safety and efficacy in Phase II clinical trials, lowering our total development costs and allowing us to retain worldwide commercial rights for PAC-113 through to approval. We also plan to expand our pipeline through the completion of a number of preclinical studies for PAC-G31P, a drug compound being evaluated for its potential to treat inflammatory disease, and also, the identification of new drug candidates through in-licensing or acquisition.
Commercial success in drug development demands a range of scientific and corporate capabilities. The last accomplishment I will review in this letter involves the people that bring new and important capabilities to the Pacgen team. Over the past year we have successfully attracted senior level executives from established biotechnology and pharmaceutical companies who bring extensive experience in finance, clinical and regulatory affairs, and business development. In addition, we have built exceptional clinical and scientific advisory boards whose members are recognized leaders in the fields of infectious and inflammatory diseases. The team we have built will ensure that we achieve the milestones we have set for 2007 and remain on track toward our ultimate goal of building a drug development company that offers hope to patients who need new treatment options and creates value for our shareholders.
With our lead product ready to enter a late Phase II clinical program, and solid early stage pipeline plans, I am very much looking forward to being part of building this company, and look forward to sharing our progress with you.
ROBERT “DUFFY” DUFRESNE, MBA
President & Chief Executive Officer