Competition
Academic researchers and private companies have been searching for an
effective blood substitute for decades. These blood substitutes generally have
been derived from three sources: discarded human blood, bovine blood and
recombinant human blood. Because of its abundance and low cost, we believe
bovine blood is the most attractive source from both the standpoints of
availability and feasibility. Discarded human blood tends to be an expensive
source of hemoglobin and suffers from the same logistical and supply problems
associated with banked blood. Recombinant human hemoglobin, while theoretically
abundant, is extremely expensive to manufacture given today's technology.
Hemobiotech believes that bovine hemoglobin could remain the most cost effective
and most available source of hemoglobin, and that blood substitutes derived from
a bovine source will enjoy a competitive advantage in the marketplace.
While no blood substitutes are commercially available today in the U.S. for
use in humans, Biopure Corporation's Hemopure product currently is available for
limited use in South Africa. A number of human blood substitute products are,
however, currently under development and testing in the United States. We
believe that most of these products are first generation and were developed
before the intrinsic toxicity of hemoglobin was identified as a major impediment
in the development of a viable blood substitute. Many of these products,
including HemAssist (Baxter) and Optro (Somatogen, later acquired by Baxter),
and Oxygent (Alliance Pharmaceuticals) have been removed from clinical, while
other products, such as Hemopure (Biopure), Hemolink (Hemosol), and PolyHeme
(Northfield Laboratories) are facing difficulties in proving their efficacy or
addressing toxicity. For example, in 2001, Northfield's PolyHeme failed to
receive FDA approval for use in elective surgery and is now being studied as a
potential oxygen bridge in trauma cases. In addition, in 2003, BioPure submitted
a biologic license application (BLA) for its product, Hemopure, but the FDA
requested that BioPure perform additional pre-clinical animal studies before
such application could be reconsidered.
As some developers began to understand the limitations of their products,
they sought alternative applications for their existing products, such as
treatment of hypotension associated with septic shock (Apex), veterinary
applications (Biopure), or as a temporary treatment until safe blood could be
found. We believe that none of the aforementioned products may be used for the
treatment of hemorrhagic shock (which results due to the lowering of blood
pressure and loss of blood), the most important and most lucrative segment of
the market, because these products do not effectively address the intrinsic
toxic properties of hemoglobin that lead to the narrowing of blood cells,
oxidative stress, and inflammation.
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In addition to competing with first generation developers, Hemobiotech
expects that it will have to compete with the emerging blood substitute
developers shown in the following table:
Second Hb Source and
Company Product Generation Modification
SynZyme - Polynitroxylated human
Irvine, hemoglobin
CA Privately Eliminate with anti-oxidant
Held HemoZyme oxidative stress properties
Sangart - PEG decorated low
San viscous human
Diego, CA Eliminate
Privately hemoglobin- hemoglobin - reduced
mediated vasoconstriction
Held Hemospan vasoconstriction effect
SynZyme is developing a second generation hemoglobin-based blood substitute
with reduced vasoconstriction and is in the pre-clinical study stage, having not
been tested in humans yet. In animal studies, their product, HemoZyme, failed to
be effective in reducing mortality. Sangart is also developing a second
generation hemoglobin-based blood substitute with reduced vasoconstriction, and
is in Phase II clinical studies in Sweden. Their product, Hemospan, does not
address inflammatory toxicity and their product has reduced capability for the
delivery of oxygen which is one of the primary uses of hemoglobin in red blood
cells.
We believe we have a unique competitive advantage over other products under
testing or under development since we believe HemoTech is the only product that
addresses all aspects of the intrinsic toxicity (which are vasoconstriction,
oxidative stress and inflammatory reactions) of hemoglobin. We believe the lack
of toxicity in HemoTech is due to the chemical modification of the hemoglobin in
our product. Furthermore, we believe its bovine-derived red blood cell product
provides HemoTech with an additional competitive edge over products developed
from outdated human red blood cells or from perfluorochemicals (which are
synthetic chemical blood substitutes), because bovine blood is safer, more
readily available, more convenient and more cost effective.
Governmental Regulation
There are six primary phases of FDA clinical trials, leading up to FDA
approval: pre-clinical laboratory studies, clinical studies, Phase I safety
studies, Phase II efficacy studies, Phase III extensive clinical testing and new
drug application (NDA) or biological license application.
During the pre-clinical laboratory studies, a compound is studied to
establish its bioavailability, absorption, distribution, metabolism and
elimination in animals in order to establish pre-clinical parameters for safety
and efficacy. During the clinical studies phase, the results of the pre-clinical
trials are submitted to the FDA for review before the drug is tested in humans.
During the Phase I safety studies, the drug is tested on healthy human
volunteers to confirm that it is sufficiently safe to proceed with further
testing in a larger group of patients. Phase I testing is conducted with the
FDA's approval. During Phase II efficacy studies, the drug is tested in
volunteers who have the disease or condition that the drug has been developed to
treat in order to determine whether the drug is active, proper dosage and safety
at the selected dosage level. During Phase III extensive clinical testing, the
drug is tested on patients to verify Phase II results, prove the drug's
performance on a larger number of patients and demonstrate that the drug is
better than existing treatments. Once those studies have been completed, the
drug is submitted to the FDA for approval. At such time, the FDA may require
additional studies to be completed.
We believe that its combination of European IND and African human clinical
data may be sufficient to submit an IND application to the FDA and commence
Phase I clinical trials, although there can be no assurance that additional
pre-clinical studies may not be necessary or that subsequent pre-clinical or
clinical trials will support the findings of earlier trials, including the
European and African trials. Our management believes that we can prepare the
results of the European IND for filing in the United States by the end of 2005.
After an IND application is filed, the FDA may comment on the filing and request
additional information. If no comments are made, the IND application will be
automatically approved after 30 days.
We anticipate proposing that Phase I clinical trials be conducted on 40-50
healthy volunteers to determine toxicity of the compound and would be expected
to take 10 months to establish our protocols and to receive FDA clearance to
commence the trials, which we could currently estimate would run for
approximately six months,
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although there can be no assurance that the trials would not take longer. If we
receive approval to progress to Phase II clinical trials, we could select a low
risk patient population for its Phase IIA study: orthopedic elective surgery
patients. This patient population tends to be in generally good health and is
undergoing a non-critical procedure, thus the risk of complications in the trial
are minimized.
Our initial strategy is to continue with a Phase IIB study in orthopedic
surgery and begin additional Phase II studies in other indications based on
successful initial clinical data in the orthopedic Phase IIB trial.
If we are able to consummate future financings in a timely manner, of which
there can be no assurance, we believe we will be able to complete the six phases
of FDA approval by August 2012, although there can be no assurance, which would
approximate the time the patent it has licensed from Texas Tech would expire.
Marketing and Sales
We are primarily focused on research and development of our HemoTech product
and do not have, nor do we anticipate having in the near future, any marketing
activities or revenues from sales.
Manufacturing
Currently, we do not have any manufacturing or distribution capabilities.
Research and Development
We spent $0 on research and development for the year ended December 31, 2003
and $232,000 for the year ended December 31, 2004. On December 13, 2004, we
funded phase 2 of our sponsored research program with Texas Tech in the amount
of $230,503. Through the third quarter of 2004, we were principally devoted to
evaluating the HemoTech technology, negotiating and entering into our license
agreement and sponsored research agreements with Texas Tech, hiring employees
and consultants, establishing our Board of Advisors, developing a business plan,
raising capital, and engaging in other organizational and infrastructure
development. Until the consummation of our October 2004 private placement, we
did not have the financial resources to engage in any significant research and
development activities. However, we used part of the proceeds of our October
2004 private placement to fund stage 2 of our sponsored research agreement with
Texas Tech, representing our first significant expenditure of resources on the
research and development of HemoTech. The stage 2 program is intended to upgrade
the HemoTech production facility, expand the HemoTech intellectual property and
use the material and information contained in the European IND in the creation
of a U.S. IND. We currently intend to focus substantially all of our efforts and
resources to the development, testing, and commercialization of our HemoTech
product.
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