Company
Hemobiotech Inc.
5001 Spring Valley Rd. Suite 1040
Dallas, TX 75244
Phone: (972) 455-8950
Fax: (972) 455-8951
www.hemobiotech.com
Contact
Investor Relations
Investor Relations Group
Michaela Heller
Phone: (212) 825-3210
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Share Data
Symbol: (OTC BB: HMBT)
52-Week Price Range: $1.20 - 2.30
Shares Outstanding: 18.4 million
Market Cap: $22.31 million
Balance Sheet Data
(as of September 2007)
Total Assets: $2.6 million
Long-Term Debt: None
Shareholders’ Equity: $2.4 million
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In an era of worldwide blood shortages, Dallas-based biotechnology company HemoBioTech (OTC BB: HMBT) is hoping it has created a solution: a viable human-blood substitute derived from an animal that is historically more popular for its meat. It may be Texas, but the white-faced, red-coated Hereford cattle at the Texas Tech University Health Sciences Center ranch aren’t there to eat; these six heifers are dedicated blood donors.
HemoBioTech was formed in 2001 and went public in 2005. Its primary product is HemoTech, a bovine-hemoglobin-based human-blood substitute. HemoTech is derived from a process of isolating and purifying the bovine hemoglobin (the red blood cell protein that contains iron) that is then chemically modified with Adenosine, ATP, and GSH for human use. The company is also exploring other products that would complement the blood substitute. HemoBioTech is an early-stage company, currently pursuing phase I clinical trials in India, and plans to begin clinical trials in the United States to run parallel with trials in India.
Currently, no blood substitute is commercially available in the United States for use in humans. The World Health Organization estimates that the worldwide demand for banked blood is 100 million units per year. The cost of blood is between $500 and $1,000 per unit. In the United States, 14 million units of blood are used per year, which HemoBioTech estimates as a potential $7 billion to $14 billion market.
HemoTech has a shelf life of six months (compared to just under six weeks for human blood) and is compatible with all blood types. It does not require typing or cross matching prior to use and is designed to be free of infectious diseases. HemoBioTech’s officials say that HemoTech is designed to be safe, effective, inexpensive to manufacture, and safe to administer. Such properties will be confirmed with additional clinical studies.
HemoBioTech is led by molecular geneticist Dr. Arthur Bollon, who has served as chairman and CEO since 2003. For 11 years prior to joining HemoBioTech, Bollon served as chairman and CEO of Cytoclonal Pharmaceutics, a publicly traded biopharmaceutical company that he co-founded. During his tenure with Cytoclonal, he licensed a fungal system that made the key ingredient in the cancer drug Taxol. As a result, Bollon raised approximately $60 million in public offerings and negotiated a licensing deal with Bristol-Myers Squibb. HemoBioTech is the fourth biotechnology company to be headed by Bollon. He said choosing to join HemBioTech was a decision made based largely on the company’s immense potential.
“With all the efforts to come up with a substitute for red blood cells—and since we know the activities of adenosine (a chemical used in HemoTech) that could overcome the toxicity problems—HemoTech may really be one of the most important discoveries in medicine,” Bollon said.
HemoBioTech has chosen to pursue bovine hemoglobin, as opposed to another animal’s blood, because of the biological advantages inherent to cow’s blood. Oxygen doesn’t bind as tightly to the hemoglobin as it does in humans or other animals. As a result, it releases more easily, making oxygen readily available to the surrounding tissues. To avoid contamination of the cows used to help produce the HemoTech product, they are kept in a controlled environment and use a separate feeding area. Furthermore, the hemoglobin from the HemoTech cows’ blood goes through a purification procedure to eliminate any potential pathogens. One of the purposes of this process, Bollon said, is to eliminate the presence of bovine spongiform encephalopathy, otherwise known as mad cow disease, and similar bovine diseases that might be transferred through the animal’s blood.
For 35 years, other companies have tried, and failed to develop a human blood substitute, primarily due to toxicity issues. But researchers are coming closer. Other blood substitutes that have been in development include Northfield Laboratories’ Polyheme, Biopure’s Hemopure, and Synthetic Blood International’s Oxycte. None of these have received approval and several are addressing toxicity issues. Oxycte is in phase IIb trials but prior attempts with synthetic perfluorocarbon technology have had toxicity problems.
Part of the procedure to create HemoTech includes addressing the toxicity issues that have plagued all other products in development. Unmodified hemoglobin can be toxic to the kidneys and also narrows blood vessels and causes tissue inflammation. With HemoTech, this problem is addressed by employing a chemical process using adenosine, which “coats,” “binds” and “links” the hemoglobin, preventing the breakdown that can lead to toxicity. In addition, the product is said to have anti-inflammatory benefits due to this chemical process.
Bollon pointed out that many drugs on the market took decades to develop. “And what happens over time is that researchers learn from the failures of others’ efforts and come up—through their creativity—with solutions to overcome those failures. And we believe that with HemoTech that may have been accomplished,” he said.
To date, only one clinical trial has been conducted for the HemoTech product. That limited trial, 18 years ago in Zaire, involved the transfusion of nine children afflicted with sickle cell anemia with amounts of HemoTech that represented 25% of each child’s total blood volume.
The transfusions helped the Zaire subjects pull out of a crisis, according to former U.S. Army Surgeon General Lt. General Bernhard Mittemeyer, a former acting president of Texas Tech University Health Sciences Center and a director at HemoBioTech. “In addition to recovery from the sickle cell crisis, it was noted that their spleen and their bone marrow was building new red [blood] cells,” Mittemeyer said. “Without this product, there’s no question that some of these children would have died.”
HemoBioTech has engaged Paragon Biomedical as its CRO to represent the company to India’s regulatory agency and provide regulatory and clinical services. India is an attractive site for clinical trials with a large potential patient pool, lower costs than the United States, improving infrastructure and strong government support. But Bollon said the country has additional appeal for HemoBioTech, where he hopes to be able to commercialize HemoTech.
According to Bollon, one out of every 9,000 units of donated blood in India is contaminated with HIV. The frequency in the U.S. is one in 1.80 million. “The middle class in India is very reluctant to use donated blood because of this problem,” Bollon said. “There’s a desperate need for a substitute for red blood cells. The potential market in India alone could exceed $1 billion.”
If clinical trials are successful and the product meets with FDA approval, HemoTech could have broad impacts for medicine, especially trauma, elective surgery, acute anemia, cancer, and heart disease. In addition, a viable blood substitute could greatly enhance the available blood supply worldwide, especially in instances of rapid blood loss, and/or in areas of the world where blood-bank supplies have been greatly diminished.
Currently, HemoTech is patented in 21 global markets in Europe, Asia, and North America. The company’s business strategy, recommended by Fredrick Frank, vice chairman of Lehman Brothers and HemoBioTech business adviser, calls for the completion of phase I and phase II clinical trials and then partner 50/50 (at the end of phase II) with a pharmaceutical partner.
Bollon said the potential global market for a product that can deliver oxygen and induce red-cell production is about $25 billion. But Bollon said HemoBioTech does not intend to sell the company unless, as he puts it, “It’s a price we can’t refuse.
Risks: Although the studies on HemoTech have been positive to date and the use of adenosine to overcome toxicity is reasonable, further advanced clinical studies are needed. The results of these additional clinical studies will determine whether HemoTech receives approval.
— By Maria McLeod
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