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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), a Canadian biotech, is pioneering a revolutionary approach to treat cancers, neurodegenerative diseases, and many other serious illnesses. The science underlying this new approach is the Gap Junction system of communications between the cells of the body. The cells of your different organs stay in sync by passing chemical and electric messages via Gap Junctions or ports linking cells. While comparatively unknown except in the research community, the system is as critical to life as your circulatory system.

In researching what is known as "Gap Junction Intercellular Communication" (GJIC), two things stand out.

First is the system itself. Most of the cells of your body have in the order of one thousand Gaps providing communications. The photo below shows Gaps on the surface of a human cell.

Dr James Trosko (source of photo).

This electron micrograph shows hundreds of Gaps on a cell's surface. GJIC is the rapid, direct flow of molecular and ionic information between cells and helps to integrate the activities of multi-cellular tissues.

Second is the broad impact the functioning of Gaps can have on one's health. As an example, all heart cells communicate via Gaps, keeping all cells beating in unison. Dysfunctional heart Gaps cause arrhythmia. The literature also says that in 98% of cancers, the Gaps are not working. PharmaGap has discovered the way to making the Gaps work properly. And in-vitro application of its corrective measures, this has made cancer cells return to healthy behaviour, stopping the proliferation of tumours, and dying at the prescribed time according to the normal cell cycle.

The number of diseases PharmaGap's technology could address is very large, and the market for such treatments is estimated at U.S. $60 billion of unmet needs. PharmaGap has discovered the first of series of drug candidates that will feed its pipeline for years to come. This first candidate is aimed at treating four different cancers, including lung cancer (the largest killer), as well as multidrug resistance that could prevent resistance to chemotherapy, for example.

The objective of the company is to advance its first candidate past the animal trials into human testing and sign a collaboration deal with a major pharmaceutical company that will invest the US $800 million required to take the drug through development into the market. Such deals bring in up-front payments that could reach US $30-40 million, R&D and milestone payments and royalties on the sale of the drug, or even profit sharing. As the drug candidate moves to more advanced phases of development, the company gets paid for milestones. Also the value of the shares tends to go up significantly. This is compounded as more candidates are getting into development. In that respect, a major advantage of PharmaGap is that its pipeline is rich in terms of new compounds addressing large market diseases.

Another major strength of the company is its potential for revenue in the near term. The company's vast knowledge of cellular functions has also generated projects associated with cell-based assays or testing. These tests are not subject to regulatory requirements and could be marketed as soon as they are developed. All are still in the development stage. These include new tests to identify potential drug candidates for the parasite market in animals (a test to measure the general disease resistance of individual pigs) and a new method of culturing skin cells without the use of any animal serums or by-products.

Founded in 1999, PharmaGap is a product of Canada's prestigious National Research Council (NRC). The NRC commercializes its technology through licensing or the "spinning-off" of new companies. Over 50 new companies have been created in this manner over the past decade.

Indeed, PharmaGap has been well-groomed for success. The company has an exclusive worldwide license for all NRC's Gap Junction technology developed over ten years at a cost of Can. $10 million (U.S. $6.8 million). For this, PharmaGap pays a 3% royalty on revenues derived from NRC's technology, and NRC received an initial 10% equity in PharmaGap.

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 found a way to arresting the spread of diseased cells in humans and animals, alike. Uninterrupted cellular communication is key to our life force. The Gap Junction pathways permeate our being, allowing our 100 trillion cells to continually "talk" to their neighbours, passing on instructions that originate, many steps back, from our genetic code.

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.

The recent achievements of the Human Genome Project are a major step in unlocking the secrets of human genes. But knowing the gene structure is not sufficient; there is also a need to understand the individual function. Genes are transformed into proteins that play different roles in the cell. Understanding the process will have positive implications for the medical community. This new approach to treating pathological diseases will be profound. Instead of focusing on 400 to 500 disease targets as the industry did for the last 50 years, scientists are now looking at 5,000 to 10,000 possible targets and even personalized treatments, Letellier says.

PharmaGap's technology is based on the understanding and control of one such protein that is not functional for a number of major diseases such as cancer, heart, and neurological conditions. PharmaGap's goal is to find compounds to make this protein work properly again and control the disease.

"What is interesting in this emerging field of protein function and control is that gap junctions remain unexplored as yet by the major companies. To my knowledge, only one other small company in Denmark is involved and has recently secured a deal with a major for arrhythmia. This is a very good sign indicating that big pharmaceuticals are interested in the approach," Letellier says.

"This is such a huge area, the more players there are, the better it is to make the approach known and create value for companies that are the first entrants."

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 is of the view that: "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."

This is what PharmaGap is doing.

First Gap Junction Drug Candidate To Treat Cancers.
PharmaGap biggest milestones occurred within the last 18 months:

1. The computer model was completed for the key activation site for a protein in the signaling cascade that controls Gap Junctions.. The structure of the site was previously unknown, and is now part of PharmaGap's patents.
   
   

2. With this site model, PharmaGap built its first lead compound, a peptide (a small protein molecule) intended to treat four types of cancer and multidrug resistance. The model works and, because it is applicable to many other Gap Junction types, PharmaGap should be able to accelerate the discovery process for many other drug candidates to feed its pipeline.

Modeling requires supercomputers and specialized software. From the activation site model, the design of molecules that bind to the target can be finalized. The information permits PharmaGap's peptide chemists to synthesize and purify the compound. Molecular structures are then analyzed by Nuclear Magnetic Resonance (NMR) systems, providing information to refine the model.

Since certain cancer cells have identical components in their signal pathways, the synthesized peptide corrects communications for four types of cancers: lung cancer, the most common form of breast cancer, prostate cancer, and neuroblastoma, a cancer which strikes young children. The same compound is also expected to be effective at preventing resistance to chemotherapy and possibly other drugs. When cancer cells don't communicate with other cells, they grow uncontrollably and do not die. PharmaGap's peptide 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.

Of the four cancer applications, PharmaGap intends to initially target neuroblastoma. This is because this disease offers the shortest route through clinical trials. Approximately 600 North American children are stricken with neuroblastoma each year. Hence, the economics tend not to attract 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. PharmaGap expects a successful neuroblastoma drug to be profitable. Significantly, this first drug would also provide the evidence that the Gap Junction drug works and would accelerate the trials for the three other cancers, which are the major cancers occurring today.

At the same time, PharmaGap intends to push the multidrug resistance application into the chemotherapy arena, where the compound would be a complement to existing chemotherapeutic agents.

PharmaGap's peptide drug is about to start animal testing in-house. Shortly thereafter, official pre-clinical toxicity tests (on animals) will start in view of applying for human trials. Dan Larkin, PharmaGap's CFO, says that the timing is somewhat dependent on financing.

"Developing and testing the molecule in-house is low cost compared to the official trials which are now required. The process of securing a major funding is underway, but this takes longer than the small fundings we currently carry out. The market has been difficult over the last 18 months for everyone, but biotech is the one area that is rapidly turning around."

In-vitro tests, plus the size and nature of the molecule, suggest it to be non-toxic. Also, in-vitro testing of efficacy in correcting dysfunctional Gap Junctions has provided excellent results, says Mr. Letellier. With resources and "Orphan Drug" status (regulatory fast-tract), young patients afflicted with neuroblastoma could be participating in trials in 12 to 18 months.

"We fervently hope the funding and regulatory processes will permit this timing. We know the risks of failure, but we feel these are lessened because we know in detail the mechanisms at work here. With the type of action we expect of the peptide, the cancer should be controlled," Letellier adds.

Such a milestone development would surely likely attract the attention of big pharmaceutical companies that can see the multi-billion dollar, multi-application potential of such a cancer-treating breakthrough.

Drug Candidate for Neurodegenrative diseases in Development

In addition to cancers, gap junction modification could eventually play an important role in treatment of neurodegenerative conditions, such as ALS (Lou Gherig Disease), multiple sclerosis, Parkinson's Disease and Alzheimer's. PharmaGap is well underway in the development of its first drug candidate to address some of these conditions.

The starting point here is how gap junctions could prevent neurons from degenerating which is the case with all diseases mentioned above. An effective protector would stop the progression of the disease. So far, a first patent has been filed relating to gap junction and a naturally produced compound in the brain that has a neuroprotective effect. When produced by the brain there are no side effects. When administered externally, it has undesirable side effects. Since this natural compound is a protein, PharmaGap's scientists are making modifications so as to eliminate side effects while keeping the neuroprotection. The first version of this modified compound is being tested.

The model that is used to design compounds mentioned in the above section will also generate compounds for the neurological applications. Several compounds will be available. It also has implications for other diseases caused by faulty cell communications such as cardiac arrhythmia and psoriasis.

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

"In essence, we hope to 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."

Near-term Product Lines under Development

As mentioned, PharmaGap also has a number of other projects that have resulted from its platform technology.

- Growing Human Skin Cells without the use of any animal products

PharmaGap has developed a medium in which skin cells can be grown without any animal serum, or animal by-products at any stage whatsoever. This has never been done before. This is highly desirable because of the risk of diseases transferred from animals. SARS, Aids, and Mad-Cow are a few examples of diseases originating from animals.

In addition to growing cells in animal-free medium, PharmaGap has also grown cultures which contain 90%-plus stem-cell-like epidermal cells. Industry today rarely can exceed 30% concentrations. This is important because these types of cells can develop into a variety of skin cells, such as hair follicles and sebaceous glands. PharmaGap's process (for which a patent is pending) should result in a better quality skin repair than alternative methods, perhaps with no scar tissue. In addition, it should eliminate any risk of animal diseases. For burn victims, a patient's own skin could be cultured 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, slow healing diabetic wounds, and bed sores, and also where plastic surgery is required or wanted," says Larkin.

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

Another large market is plastic surgery. Just the cosmetic applications represent a market of over US $1 billion. Wrinkle reduction systems include the injection of collagen from animals, of human collagen grown with animal inputs (Isolagen Inc.), of Hyaluronic acid gels (Q-Med, US $325 million in revenues) which have no animal components, or of Botox. All these options have either a risk of contamination from animals or offer a solution which does not re-establish the natural state within the skin. PharmaGap's planned process would use a minute amount of the patient's skin cells, grow them in an animal-free medium, and inject patients with their own skin cells and the collagen. PharmaGap plans to deal the technology to an established plastic surgery company to accelerate market entry.

- Measuring Disease Resistance in Pigs

In animal health, PharmaGap is also exploring gap junction modulation as a possible treatment for numerous conditions. They include immunology in livestock, 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 their natural immuno-resistance to diseases. The company is collaborating with PEI Pork and the Canadian Centre for Swine Improvement. Such a test promises to identify the most disease-resistant animals for reproduction, while shipping early to market those that are susceptible to diseases due to weak immune systems. The test may also provide a tool to better manage the administration of preventive drugs to animals, such as antibiotics.

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 development of new animal lines and the use of fewer antibiotics, providing greater value to some consumers. 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.

A prototype test has been fully developed and has proven effective in early tests. A commercial test is under development, and field trials on new-born pigs are underway with pork producers.

- Cancer Treatment In Animals

The company is also negotiating a licensing agreement to commercialize a compound that controls gap junctions and has the effect of significantly reducing tumors and controlling their proliferation in mice. The compound will target cancer prevention in family pets. The compound is non-toxic in mice. 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 conventional cancer treatments, and could even be administered by injection and orally.

Identifying Potential Drugs

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 testing 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 cancer 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 cell 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 generate collaboration revenues from 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 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.

In summation, 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 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.