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Company
Chemokine Therapeutics Corp.
6190 Agronomy Road, Suite 405
Vancouver, B.C.
V6T 1Z3 Canada
Phone: (604) 822-0301
Fax: (604) 822-0302
Contact
Don Evans
Director, Corporate Communications
Phone: (604) 822-0305 or
(888) 822-0305
Fax: (604) 822-0302
E-mail: devans@chemokine.net
www.chemokine.net
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Share Data
Symbol: (TSX: CTI, OTC BB: CHKT)
52-Week Price Range: $0.16 - 0.97
Shares Outstanding: 47.5 million
Market Cap: $9.5 million
Balance Sheet Data
(as of September 2007)
Total Assets: $1.9 million
Long-Term Debt: $0
Shareholders’ Equity: $3.1 million
Book Value per Share: $0.09
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Liver cancer is the fifth most common type of cancer worldwide. Each year, 600,000 to a 1,000,000 cases are diagnosed, making it the third most common cause of cancer-related deaths. Although not as common in North America, the number of cases is rising, with the prognosis for advanced liver cancer remaining poor. Most patients, unless diagnosed early, die within a year regardless of the treatment they receive—marking this a significant unmet medical need.
Chemokine Therapeutics (TSX: CTI, OTC BB: CHKT) is a biotechnology company developing drugs that harness the therapeutic potential of stem cells through chemokine pathways. Chemokines are a new class of cytokines, proteins secreted by cells that play a critical role in the growth, differentiation, and maturation of cells necessary for tissue repair, regeneration, and fighting infection.
Recently gaining approval to begin phase II studies for its lead product, CTCE-9908, Chemokine is out to beat liver cancer. “Our product is quite different than what is being used today,” says Dr. Hassan Salari, chairman and president of the company. “It kills the cancer by not allowing the tumor to spread and by depriving it of blood.”
Recently, researchers discovered that the growth and spread of cancer are affected by a chemokine known as stromal cell-derived factor 1 (SDF-1). SDF-1 acts on receptors that are expressed in both stem cells and many common cancers. The presence of these receptors on cancer cells allows them to migrate from the original cancer site to new sites that are rich in SDF-1, such as the liver, lungs, and bone marrow, where they develop new blood vessels and form new tumors. CTCE-9908 acts to block the migration of cancer cells to these potential sites of new disease and also blocks the migration of stem cells from going to the tumor. These stem cells form the building blocks for new blood vessels providing blood to the tumors. No stem cells, no blood vessels; the end result is tumor death.
CTCE-9908 has the potential to become part of a new generation of drugs that act to inhibit the spread and growth of cancer cells from primary tumors. The drug is an analog of SDF-1 and acts as an antagonist of SDF-1 receptors. The drug binds to receptors on cancer cells, preventing the interaction of SDF-1 with the receptors. Chemokine holds a patent on this technology, as well as having 11 issued and 16 pending patents.
In January 2008, the company received notice from the U.S. FDA allowing it to begin a Phase II study in liver cancer with its lead drug candidate, CTCE-9908. “We’ve had some encouraging results in animal studies, as well as our early phase I/II human studies,” says Salari. “We have tested the drug on 26 late-stage patients and have found that a number of them have stable disease after a short course of therapy.”
While the company is currently testing the drug on liver cancer, Salari says that the therapy could be effective in treating breast and ovarian cancers as well as a number of other common cancers expressing the receptor CXCR4. “The liver is going to be our first therapeutic target,” he says. “Once the program is under way, there should be sufficient interest from large pharmaceutical companies to finance additional studies through a development partnership.”
Because of the dire need for an effective treatment for liver cancer, Salari believes that CTCE-9908 has, at a minimum, a billion dollar market opportunity. Currently there is only one treatment on the market for liver cancer, Onyx and Bayer’s Nexavar. According to Salari, Nexavar only extends the survival of patients by less than three months. Sales of Nexavar for renal cancer, the first approved indication, have been strong at about $165 million in 2006 and are expected to increase with the recent approval for liver cancer in November 2007. “Considering Onyx and Bayer’s success, you can imagine what the potential of our drug is,” he says. “Our compound has a good safety profile and has the potential to increase survival by much longer.”
The company’s other lead product is CTCE-0214, a synthetic shortened version of SDF-1. Preclinical studies have shown that the drug mobilizes white blood cells and stem cells into the blood, suggesting that CTCE-0214 may restore cancer patients’ immune systems between cycles of chemotherapy. This would mean that patients could receive aggressive chemotherapy without any delays while reducing the potential for serious infections.
“Compared to companies at the same stage of drug development, we are quite undervalued,” says Salari. “Other companies at our stage of development have a market cap between $50 million and $100 million.” Chemokine’s market cap currently hovers around $8 million, meaning that it’s a good value. If the upcoming phase II results prove to be positive, Salari expects that in the next 18 months the company’s market cap could hit $300 million.
The stock lost 75% of its value in 2007. Salari explains this by pointing to an unsuccessful $25 million financing, the result of a poor market rather than a reflection of the technology. The company has also made changes to the management with a focus on building shareholder value. “People thought the company was finished and were scrambling to get out,” says Salari. “But the technology hasn’t had even a slight setback.”
Chemokine has begun to secure additional financing, having closed a $1 million deal in early February 2008, which was primarily raised from its new directors and major shareholders. The company plans to close a second private-placement financing deal by the end of March. Excluding clinical work, the company has a burn rate of $110,000 per month, and to complete its phase II trial, Chemokine will need another $1.5 million. By the end of March 2008, the company expects to have $2.5 million available for starting the liver-cancer clinical trial.
In December 2007, Chemokine announced that Brian Kuhn, Bernard Byrd, George Kowalchuk, and Reza Bahadori joined its board of directors. The new directors will serve until shareholders have the opportunity to vote on a new board at the 2008 shareholders meeting. Kuhn is an experienced businessman with more than 20 years’ experience in trading securities through his fund, Lakeside Investments. Byrd is an entrepreneur with more than 20 years’ experience in various business ventures. Kowalchuk is a retired businessman and investor with 30 years of investment experience in biotechnology companies. Bahadori is a senior financial adviser at Paulson Investment Co.
In the next 18 months, the company intends to complete its trials on 50 liver-cancer patients and sign a partnership deal with a large pharmaceutical company for CTCE-9908. “We’ve already begun the discussion about the future of CTCE-9908 with major pharmaceutical companies. Our plan is to then focus our resources on the further development of CTCE-0214, our next lead drug candidate,” says Salari.
RISKS: Chemokine Therapeutics is subject to all the risks inherent in an early-stage business operating in the biotechnology industry, including limited management resources and the challenges of bringing a drug through development to approval for sale. The company is dependent on the success of its lead products, and there is no guarantee that they will be approved by regulatory bodies.
— By Anthony W. Haddad
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