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PharmaGap Unlocks Secrets Of Cellular Biology To Counteract Cancer And Other Deadly Diseases

By Marc Davis, Managing Editor
May, 2003

PharmaGap Inc. (TSX.V-GAP) (www.pharmagap.com) is a small Canadian biomedical company that has pioneered a revolutionary approach to treating many forms of cancer and other serious diseases.

Additionally, the company's unprecedented ability to manipulate cellular functions also gives new hope to burn victims. Another key spin-off application involves animal therapeutics, with an emphasis on boosting the immune systems and fertility levels of farm animals. If successful, PharmaGap's biomedical breakthroughs would be applicable to a number of different, highly lucrative pharmaceutical markets. This includes the global market for diseases involving dysfunctional "gap junctions" (electrical pathways between cells) which is worth an estimated U.S. $60 billion.

Founded in 1999, PharmaGap is a prodigy of Canada's prestigious National Research Council of Canada (NRC). The nation's premier science and technology research organization, the NRC is a leader in scientific and technical research. It often acts as an unofficial incubator for dynamic start-up science and technology ventures like this one.

Indeed, PharmaGap has been well-groomed for success. The company benefits from ten years and Can. $10 million (U.S. $6.8 million) worth of government-funded research and development. Now PharmaGap is on the threshold of bringing several of its innovative biotechnologies to market. And its first major drug candidate, which is based on gap junction intercellular communications, is expected to begin pre-clinical trials within a few months.

So let's look at what stands to make PharmaGap a potential front-runner among emerging biomedical equities in the coming months. Simply stated, the company believes it has unlocked the secret to arresting the spread of diseased cells in humans and animals, alike.

By way of background, uninterrupted cellular communication is key to our life force. These electrical pathways permeate our being with approximately 100 trillion cells all "talking" to one another simultaneously.

According to PharmaGap's president, Robert Letellier, there now exists irrefutable evidence that links the breakdown of this complex circuitry with the onset of many diseases. Such a phenomenon is believed to be associated with cancers, vascular and kidney diseases, and up to 70 per cent of all neurodegenerative diseases. PharmaGap believes that the restoration of seamless cellular communication can be achieved through its proprietary gap junction technology.

This quantum leap in the understanding of cellular activity stems from the recent major breakthroughs in the Human Genome Project - the unlocking of the secrets of human DNA. The positive implications for the medical community of this new approach to treating pathological diseases are profound, Letellier says.

"Other companies are trying to stop the growth of the cells or kill the cells or are trying to work with the cells," Letellier says. "With gap junctions, we're doing all three things at the same time. This is a very important aspect. There's no other North America pharmaceutical company looking at gap junctions," he adds.

"This is a relatively new scientific approach. Once proven, we are confident it will be welcomed with open arms by the big players in the pharmaceutical industry."

Letellier's enthusiasm for this scientific breakthrough is shared by other leading figures in this relatively new field of research. They include Mark Yeager, an associate professor of cell biology at the Scripps Research Institute and Director of Research in the Division of Cardiovascular Disease at the Scripps Clinic. (He has no affiliation with PharmaGap).

"The Holy Grail of membrane channel biology is to understand how channels open and close. If you understand that, then you have insight into regulation. If you understand regulation, you can say something about disease and even pharmacology and treatment of disease," says Yeager. PharmaGap is therefore in the process of synthesizing its first drug to treat solid tumor cancers such as neuroblastoma, prostate, lung, brain, bladder, and breast cancer. When cancer cells don't communicate with other cells, they grow uncontrollably and cannot be killed. PharmaGap's "smart" peptide drug restores communication between healthy and cancerous cells by mending faulty gap junctions. As a consequence, the healthy cells "teach" cancer cells to behave appropriately which stops them from multiplying and leads to their demise.

The drug or "compound" will initially target neuroblastoma -- a rare solid tumor afflicting young children. This is because this disease offers the shortest route to clinical trials. Because of its rarity, the treatment of neuroblastoma is not of great interest to pharmaceutical companies. Regulation agencies will therefore extend patent protection periods and allow for faster approval times in order to encourage companies to pursue research in these smaller markets.

And PharmaGap's peptide drug is on the fast-track to clinical trials. So far, it has already proven to be non-toxic and seems to be working well in in-vitro (test tube) testing. Now the company will soon begin in vivo (invasive) testing on animals. And if pre-clinical tests are successful, it could be tested in patients before the year's end. Such a milestone development would likely attract the attention of big pharmaceutical companies that can see the multi-billion dollar, multi-application potential of such a cancer-treating breakthrough.

In addition to cancers, gap junction modification could eventually play an important role in treatment and prognosis for neurodegenerative conditions, such as ALS, multiple sclerosis, Parkinson's Disease and Alzheimer's. It also has implications for other diseases caused by faulty cell communications and heart conditions like cardiac arrhythmia and psoriasis.

Though this potential wonder drug may prove effective in treating such chronic illnesses, it is not however a "magic pill" cure, cautions PharmaGap's Vice President and CFO Dan Larkin. Instead, it would keep the illnesses in check, he says.

"In essence, we will be able to control a disease and arrest its progress," Larkin says. "The result would be to turn the disease into a chronic condition like diabetes. So as long as a patient takes a pill or injection on a regular basis, he or she would live a normal life."

Another important but secondary application for PharmaGap's gap junction modulation is in the accelerated growth of skin cells for burn victims. Laboratory testing has shown that PharmaGap's process (for which a patent is pending) grows new skin much faster than alternative methods, requires no animal testing and leaves little or no scar tissue. For burn victims, a patient's own skin could be cultured. Stem cells would be produced and replacement skin could then be generated in the laboratory to produce a more natural, rejection-free healing.

"We believe there is a huge potential to impact people with extended skin wounds like severe burns and bed sores, and also where plastic surgery is required or wanted," says Larkin. "Also, this research could also be a breakthrough for diabetes patients, for whom skin wounds often heal slowly."

"We believe by growing this artificial skin, it will produce a lot better healing than anything on the market."

In animal health, PharmaGap is also exploring gap junction modulation as a possible treatment for numerous conditions. They include immunology in livestock, particularly with regard to parasite control, as well as even treating family pets for cancer. The application that promises the nearest-term payback for PharmaGap is the testing of pigs for immuno-resistance to diseases. The company is collaborating with a major veterinary company to commercialize this unique diagnostic blood test.

Such a test promises to identify the most disease-resistant animals for reproduction, while eliminating those that are susceptible to diseases due to weak immune systems. This simple diagnostic test could equally be applied to other livestock such as cattle, sheep and poultry. The identification of less disease-prone animals would lead to the use of fewer antibiotics and a higher production in terms of meat and exported livestock. The advent of healthier animals could also enhance fertility rates. Again, this represents a potentially very lucrative market for PharmaGap, especially since North America is home to over 92 million pigs and about 109 million cattle.

The company is also negotiating a licensing agreement to commercialize a drug compound that is expected to reduce tumors and control their proliferation in family pets.

It is worth noting that nearly half of all dogs over the age of 10 die of cancer. PharmaGap's treatment would be highly inexpensive, compared to surgery and conventional cancer treatments, and could even be administered orally due to its non-toxic nature. It likely also has a valuable application for racehorses and exotic zoo animals, particularly endangered species.

Last but not least, PharmaGap is also developing three-dimensional cell-based screening assays that mimic human or animal tissues. This allows other drug developers to quickly and cheaply evaluate drugs for their efficacy and toxicity at the discovery stage. This in vitro biotechnology is not regulated and therefore does not require government approval. Consequently, PharmaGap is already making these drug-screening assays available for commercialization in a multi-application marketplace that is worth an estimated U.S. $12 billion globally. This includes such other commercial realms as genomics, proteomics, nutraceuticals and cosmetics.

All told, PharmaGap's skin cell repair and animal immunology business models are expected to be launched within the next 12 to 24 months, while cell-based assays are already market-ready. These lucrative revenue channels are expected to go a long way to internally financing the company's core venture. To this end, the modification of cellular communications to successfully treat serious illnesses stands to make PharmaGap a darling of the investment and medical communities alike. And with the imminent commencement of animal tests, PharmaGap is well on its way. Upon the completion of pre-clinical trials, PharmaGap is expected to become an attractive joint venture candidate for deep-pocketed pharmaceutical or biotechnology companies.

The realization of these major milestones rests in the hands of a very capable management team that has the technical acumen and business expertise to succeed. On the corporate development front, PharmaGap benefits from the leadership of company president and director Robert Letellier. A seasoned expert in industrial development, Mr. Letellier he has been instrumental in the creation and development of numerous science and technology companies. As a business manager at the National Research Council of Canada (NRC), he designed and developed its entrepreneurship program -- one of NRC's key initiatives to transfer technologies to the marketplace. Following his departure from NRC, he formed PharmaGap Inc. and secured exclusive rights to the gap junction intercellular communications technology.

Mr. Letellier's skills at running start-up companies are complimented by vice president, CFO and fellow director Daniel Larkin. With an M.B.A. to his credit, Mr. Larkin also draws upon three decades of experience in the business world, particularly in senior management roles with Imperial Oil Ltd and in the high tech sector. He has been in charge of the economic analysis of multi-billion dollar projects for Imperial Oil and has served as CEO of two other small public companies.

On the technical side, PharmaGap benefits from the involvement of Dr. Jenny Phipps, PhD, the company's chief scientific officer and a fellow director. Dr. Phipps worked as a research scientist at Ontario's Carleton University before joining the NRC. In the early 1990s, she started focusing her research in the area of gap junction intercellular communication. Two major technology platforms emerged from her work. These platforms were transferred to PharmaGap. After a long career at the NRC, she joined PharmaGap to spearhead the development of its ground-breaking biotechnology. Dr. Phipps is also an adjunct professor at Ottawa University Medical School and at Armand Frappier Institute in Montréal. Nor surprisingly, she is a recognized authority in the field of cellular biology.

The fourth key member of PharmaGap's management team is Richard Meadows, the vice president of business development. He holds a Masters degree in physiology from Montreal's McGill University and an M.B.A. from the University of Toronto. He was most recently president and CEO of a biotechnology start-up in Quebec City. Mr. Meadows has spent over 14 years as a consultant to the Canadian government and to the biotechnology and biopharmaceuticals industries. Prior to becoming a consultant, he spent 14 years in various senior management positions for such well-known pharmaceutical companies as Astra, Bristol Myers, Norwich Eaton, and IMS.

On a technical note, PharmaGap is viewed by SmallCapMedia as an undervalued micro-cap stock that is primed for major developments through 2003 and beyond. Currently, the share price appears to be in a consolidation phase near its 52-week lows. Such a scenario suggests that the stock is marking time while the company arranges further financing. With a relatively tight share structure, PharmaGap is primed to benefit from an ongoing post-Gulf war revitalization in the broad markets. Also, the advent of a steady flow of news in the coming months regarding the company's several biotechnologies should act as a further catalyst to an imminent recovery in the company's share price.