Starpharma Holdings (ASX: SPL, OTCQX: SPHRY) is an Australian company with a Bank of New York Mellon sponsored ADR on the OTCQX. The company is looking to use dendrimer nanotechnology to discover, develop, and commercialize pharmaceuticals to treat diseases. Starpharma’s lead product, VivaGel, is a vaginal microbicide gel being developed to prevent sexually transmitted diseases. Microbicides reduce the infectivity of microbes, such as viruses or bacteria.
Results of a phase I clinical trial have shown that VivaGel is safe for further trials and suitable for development, and phase II trials are underway. VivaGel was granted fast-track status by the FDA in 2006 as a product for prevention of HIV infection. This designation will accelerate the clinical and regulatory development path.
In the United States, about 45 million people are infected with genital herpes, making it an unrecognized pandemic in the industrialized world. Many patients are asymptomatic, inadvertently passing on the virus to their partner. There is no cure for genital herpes; the virus remains in affected nerve cells and can produce symptoms throughout a patient’s life. Having genital herpes increases a person’s risk of HIV infection by four to eight times. VivaGel offers a safe, convenient, and affordable way for women to protect themselves from genital herpes and HIV. Studies have shown that there is a substantial demand for such a product in North America and Europe, with an estimated billion-dollar market. The company was awarded $20 million from the U.S. National Institutes of Health to develop VivaGel’s HIV indication, and was given an additional award to develop its genital herpes indication. The microbicide program has received a $5.4 million grant to develop additional microbicides.
In addition to the gel application, the company has an agreement with SSL, the makers of Durex, that sets out a co-development program for VivaGel-coated Durex condoms. The deal could lead to substantial revenues, given that Durex is the market-leading condom brand and that SSL holds about 30% of the global condom market.
Starpharma’s development candidates are based on dendrimer nanotechnology. Dendrimers are man-made, nano-size compounds with unique properties that make them useful to the health and pharmaceutical industry as both enhancements to existing products and as new products. Within its product pipeline, Starpharma is pursuing leads in fields such as oncology, ophthalmology, and targeted diagnostics. Its technology may also lead to commercialization in drug delivery, transfection reagents, and contrast agents. The company expects revenues in these areas primarily by licensing rights to third parties.
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More broadly, Starpharma is actively exploring dendrimer opportunities in materials science with applications as diverse as adhesives, lubricants, and water remediation. It has a comprehensive IP portfolio that comprises more than 224 patents and patent applications issued and pending across 56 patent families—an outstanding number among nanotechnology companies.
Starpharma’s CEO, Jackie Fairley, has over 15 years’ experience in the pharmaceutical and biotechnology industries, holding positions in business development and senior management. Before joining Starpharma as COO in 2005, Fairley was CEO of Cerylid Biosciences Ltd. During her time at Cerylid, the company generated revenues of over $20 million, raised more than $10 million in private equity funding, and completed the acquisition and integration of a private company. She is a member of the Australian government’s Pharmaceutical Industry Working Group and the Victorian Innovation Economy Advisory Board.
With 161 million shares outstanding, Starpharma has a market cap of $50 million. Shares trade around $3 on the OTCQX, representing a bundle of 10 shares. In fiscal year 2007, the company lost 4 cents per share, improving on its 2006 loss of 6 cents per share. Over the same period, revenues increased 155%. In 2007, Starpharma’s cash and equivalents decreased by 30%, representing a burn rate of $324,465 per month. Starpharma did not raise any cash through issuing new shares. Expenses were met instead through its reserve and its cash revenues, including government grants. Because Starpharma’s products are at the pre-commercialization stage, the company’s main sources of revenue are royalty and licensing revenues, various government grants, and interest earned on excess cash balances.
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