GlycoGenesys, Inc. $1.10 BUY

Transcription

D. Paul Cohen, President
21 Manzanita Avenue #1000
San Rafael, CA 94901
www.cohenresearch.com
Telephone: 415.454.6985
Fax: 415.455.0295
E-mail: [email protected]
E-mail: [email protected]
GlycoGenesys, Inc.
(NASDAQ:GLGS)
$1.10
BUY
July 27, 2005
Price Targets
Scenario
Optimistic
Base Case
Pessimistic
Pre-Pharma
Agreement
$6.7
$6.5
$4.4
With Pharma
Agreement
$11.2
$10.8
$7.4
Our Scenarios and valuation analysis are discussed in
Forecast and Valuation sections of the report.
Historical and Forecasted Earnings
FY:
Mar
Jun
Sep
Dec
Fiscal Yr
2002
-0.48
-0.48
-0.42
-0.69
-2.07
2003
-0.30
-0.24
-0.30
-0.34
-1.18
2004
-0.36
-0.30
-0.30
-0.19
-1.15
2005
-0.26
-0.30 E
0.65 E
-0.30 E
-0.19 E
(This report may not be reproduced.)
Page 1 of 71
2006
-0.34 E
-0.13 E
-0.13 E
-0.13 E
-0.61 E
Cohen Independent Research Group
KEY RATIOS
LTM As Of 2004/12
Income From Continuing Operations
Income From Total Operations
Diluted EPS From Continuing Ops.
Diluted EPS From Total Operations
-10,124,716
-10,124,716
-1.15
-1.15
Annual Growth Rates (%)
3Yr Cap. Spending Growth Rate
5Yr Cap. Spending Growth Rate
3Yr R&D Growth Rate
5Yr R&D Growth Rate
103.28
-2.64
13.73
5.31
5-Year Averages
Return on Equity (%)
Return on Assets (%)
Return on Invested Capital (%)
NA
-234.5
-2,337
LTM Ratios As Of 2004/12
Current Ratio
Quick Ratio
Leverage Ratio
Return On Invested Capital (%)
Return On Assets (%)
Price/Book Ratio
Book Value Per Share
Working Capital Per Share
Cash Per Share
Cash Flow Per Share
Free Cash Flow Per Share
Tangible Book Value Per Share
Price/Cash Flow Ratio
Price/Free Cash Flow Ratio
Price/Tangible Book
Page 2 of 71
1.5
1.3
2.3
-752.2
-326.1
5.69
0.13
0.08
0.22
-1.04
-0.85
0.13
-0.7
-0.9
5.69
PRICE AND VOLUME
High Price
Low Price
Close Price
Total Volume
Average Daily Volume
Price Change (%)
Price Change vs Market (%)
Last 4 Weeks
1.39
0.95
1.14
14,125,900
830,900
-3.5
93
5 Day Moving Average
10 Week Moving Average
30 Week Moving Average
Last 13 Weeks
2.29
0.63
0.69
25,555,800
418,900
59.4
149
1.13
1.08
0.96
1.14
1.5
Daily Vol. As % Of 10 Day Avg. Vol.
This Week Vol. Times Week's $ Change ($000s)
This Week's Dollar Volume ($000s)
Weekly Volume As % Of Shares Out.
Liquidity Ratio ($000s)
On-Balance Volume Index Last 4 Weeks (%)
46
-309
2,174
19.14
109.2
354
Last 26 Weeks
2.29
0.63
1.3
29,842,400
240,700
-15.4
80
Last 52 Weeks
3.78
0.63
3
44,154,800
176,600
-63.3
32
200 Day Price Index vs Market (%)
Price Momentum This Week (%)
Price Momentum Prior Week (%)
Beta (60 Month)
Beta (36 Month) Average
Current Market Value
Market Value As % Of Revenues
Reported Shares Out. (2005/05/20) (#)
Balance Sheet Shares Out. (2005/03) (#)
Float (#)
Float As % Of Shares Outstanding
3
This document may not be reproduced
37
114
110
0.96
1.15
11,092,822
0
10,084,384
10,084,384
9,475,599
94
INSTITUTIONAL TRADING
Date
2005/06
2005/05
2005/04
2005/03
2005/02
2005/01
2004/12
2004/11
2004/10
2004/09
2004/08
2004/07
Shares Bought
41,465
41,465
35,600
0
0
69,845
70,746
70,606
11,202
10,302
10,302
4,505
Shares Sold
250,381
250,381
306
422
422
13,458
16,382
16,350
3,033
21,417
56,117
56,117
Shares Held
Institutions (#)
366,257
13
366,257
13
652,522
10
601,901
10
632,230
11
1,501,649
16
523,370
20
436,707
18
304,918
18
325,181
18
307,051
17
309,316
21
SHORT INTEREST TRADING
400,000
12
Short Interest Shares (#)
Short Interest Ratio
350,000
10
300,000
8
250,000
200,000
6
150,000
4
100,000
2
50,000
0
7/
12
/2
00
4
8/
10
/2
00
4
9/
10
/2
00
4
10
/1
2/
20
04
11
/1
0/
20
04
12
/1
0/
20
04
1/
11
/2
00
5
2/
10
/2
00
5
3/
10
/2
00
5
4/
12
/2
00
5
5/
10
/2
00
5
6/
10
/2
00
5
0
4
TABLE OF CONTENTS
KEY RATIOS ................................................................................................................................2
PRICE AND VOLUME..................................................................................................................3
INSTITUTIONAL TRADING .........................................................................................................4
SHORT INTEREST TRADING .....................................................................................................4
THE COMPANY ...........................................................................................................................8
HISTORY ......................................................................................................................................8
Recent Events ............................................................................................................................9
INVESTMENT THESIS...............................................................................................................11
Bull Case ..................................................................................................................................11
Bear Case.................................................................................................................................12
DEMAND DRIVERS ...................................................................................................................12
Market Opportunity ...................................................................................................................13
Colorectal Cancer ..................................................................................................................................14
Pancreatic Cancer .................................................................................................................................14
Prostate Cancer .....................................................................................................................................14
Ovarian Cancer......................................................................................................................................14
Breast Cancer ........................................................................................................................................15
Multiple Myeloma ...................................................................................................................................15
COMPETITION ...........................................................................................................................15
Figure 1: Monoclonal Antibody Mechanisms ................................................................................16
Figure 2: Tumor-Activated Prodrug - Mechanism Sequence (a) .............................................16
Figure 3: Tumor-Activated Prodrug - Mechanism Sequence (b) .............................................16
Figure 4: Tumor-Activated Prodrug - Mechanism Sequence (c) .............................................16
Figure 5: Tumor-Activated Prodrug - Mechanism Sequence (d) .............................................17
Figure 6: The Central Dogma .......................................................................................................18
Figure 7: Antisense Attack ............................................................................................................18
Product Uniqueness and Applications ......................................................................................18
GCS-100 ................................................................................................................................................18
Figure 8: Overall GCS-100 Structure............................................................................................19
Figure 9: Anti-metastasis ..............................................................................................................20
Figure 10: Dose Dependent Tumor Inhibition by GCS-100 (In Vivo) ...........................................20
Figure 11: Anti-Proliferative Action ...............................................................................................20
Figure 12: Schematic of VEGF effect on Vessel Growth..............................................................21
Figure 13: New Vessel Growth (neovascularization).....................................................................21
Figure 14: Extracellular Matrix ......................................................................................................21
Figure 15: Bcl-2 Effect on Mitochondria and Apoptosis.................................................................22
Figure 16: Apoptotic Signaling Triggered by Conventional and Novel Agents .............................22
INTELLECTUAL PROPERTY ....................................................................................................22
U.S............................................................................................................................................22
Wayne State/Karmanos License ...........................................................................................................22
The Platt License ...................................................................................................................................23
Elan License ..........................................................................................................................................23
Combination Therapies..........................................................................................................................23
THE SCIENCE BEHIND THE PRODUCTS................................................................................23
Glycomics .................................................................................................................................23
Carbohydrates ..........................................................................................................................24
Figure 17: Cell Wall Structure ........................................................................................................24
Figure 18: Sequence of Information Travel ...................................................................................24
Figure 19: Structure of Glucose ....................................................................................................25
5
Figure 20: Detailed Structure of Lipid Bilayer of Cell Wall ............................................................25
Lectins ......................................................................................................................................25
Cancer ......................................................................................................................................26
Table 1: Estimated New Cancer Cases and Deaths by Sex for All Sites, US, 2005....................28
Clinical Trials ............................................................................................................................29
Food and Drug Administration Approval Process..................................................................................29
Phase I: ..................................................................................................................................................29
Phase II ..................................................................................................................................................30
Phase III .................................................................................................................................................30
Phase IV.................................................................................................................................................30
Table 2: Testing In Humans..........................................................................................................30
Chart 1: New Drug Development Timeline ...................................................................................31
Source: www.fda.gov/ceder/about .................................................................................................31
GCS-100 Clinical Trials ............................................................................................................31
Chart 2: Clinical Programs ............................................................................................................32
Solid Tumor Program ...............................................................................................................32
Chart 3: Solid Tumor Program GCS-100 ......................................................................................33
Bloodborne Program ................................................................................................................33
Multiple Myeloma......................................................................................................................33
Chart 4: GCS-100 induces apoptosis in Bortezomib-resistant MM patient cells. .........................34
Chart 5: GCS-100 inhibits the adhesion-induced growth of MM cells ...........................................35
Chart 6: GCS-100 inhibits VEGF-induced migration of MM cells .................................................35
Chronic Lymphocytic Leukemia................................................................................................36
Chart 7: GCS-100 Induced Mitochodondrial Depolarization in Human Lymphoma Cell Lines ....36
Chart 8: GCS-100 Kills Isolated Human CLL Cells.......................................................................37
Chart 9: GCS-100 Increases Effect of Standard Chemotherapy..................................................38
Chart 10: GCS-100 Induces Apoptosis Via Caspase-9 ................................................................39
BUSINESS SECTION.................................................................................................................40
Manufacturing...........................................................................................................................40
Patents .....................................................................................................................................40
Legal.........................................................................................................................................40
LIQUIDITY AND LEVERAGE.....................................................................................................41
CAPITALIZATION ......................................................................................................................41
Table 3: Share Dilution..................................................................................................................42
CASH FLOW ..............................................................................................................................42
Table 4: Net Cash Flow from Operations (NCFO) ($ millions) .....................................................42
FORECASTS..............................................................................................................................43
Anticipated Partner Agreement ................................................................................................43
Clinical Trial Timeframe and Expense ......................................................................................44
Table 5: Estimated Clinical Trial Expense ....................................................................................45
Patient Population ....................................................................................................................45
Table 6: Annual Diagnoses in the US ...........................................................................................45
Table 7: Patients Seeking Treatment in US and Europe ..............................................................45
Pricing.......................................................................................................................................45
FINANCIAL FORECASTS .........................................................................................................46
Table 8: Market Share After FDA Approval ..................................................................................46
Table 9: NDA Approval Time Line ................................................................................................47
Table 10: Base Case Royalty Revenue Forecast ($ millions) ......................................................47
Table 11: Optimistic Royalty Revenue Forecast ($ millions) ........................................................47
Table 12: Pessimistic Royalty Revenue Forecast ($ millions) ......................................................48
Table 13: Optimistic Forecast ($ millions).....................................................................................48
Table 14: Base Case Forecast ($ millions) ...................................................................................48
6
Table 15: Pessimistic Forecast ($ millions)...................................................................................49
VALUATION ...............................................................................................................................49
Table 16:
Table 17:
Table 18:
Table 19:
Annual Revenue Growth Rates ....................................................................................49
Compound Annual Growth Rates from 2009 to 2014...................................................50
Price Targets for LFY+2 for 3 Scenarios vs. Long Term Growth Rate.........................50
Price Targets Based on Future Events.........................................................................51
CONCLUSION............................................................................................................................51
MANAGEMENT..........................................................................................................................52
SCIENCE ADVISORY BOARD ..................................................................................................53
INCOME STATEMENT, ANNUAL .............................................................................................56
INCOME STATEMENT, QUARTERLY ......................................................................................57
BALANCE SHEET, ANNUAL ....................................................................................................58
BALANCE SHEET, QUARTERLY .............................................................................................59
STATEMENT OF CHANGES IN CASH, ANNUAL ....................................................................60
STATEMENT OF CHANGES IN CASH, QUARTERLY .............................................................61
Quarterly Liquidity Metrics, Total Assets........................................................................................62
GLOSSARY (STEDMANS MEDICAL DICTIONARY) ...............................................................63
BIBLIOGRAPHY ........................................................................................................................65
7
THE COMPANY
GlycoGenesys, Inc. (http://www.glycogenesys.com) is a biotechnology company located in Boston,
Massachusetts, that specializes in the production of drugs that have their base activity in carbohydrate and
sugar molecules. The company employs 16 people.
The science of glycomics involves the development of molecules such as proteins and lipids which have
carbohydrate and sugar additions attached to them in order to alter their specific function. Carbohydrates and
sugars are only recently being recognized for their full potential in the roles they play in the human body
which include immune regulation, embryogenic development, intracellular signaling and much more. The
Company is working on a new generation of cancer therapies based on carbohydrate biology. Their hope is
for the drug to decrease the rate of progression and possibly stabilize or shrink a tumor with fewer side effects
than current chemotherapeutic regimens. GCS-100, the leading drug candidate, is a complex carbohydrate
that is designed for treatment of several different malignancies. It is intended to treat solid primary tumors,
bloodborne tumors, and metastatic disease, either as a monotherapy treatment or in combination with other
chemotherapeutic regimens. Phase I and Phase II clinical trials on the earlier ethanol-based version of GCS100 were completed. The Company has begun Phase I/II clinical trials for the low ethanol version of GCS100, GCS-100LE.
There has been a large amount of clinical research conducted on GCS-100 as an anticancer agent. Some of
the preliminary findings show that the molecule binds to carbohydrate receptors and can selectively interfere
with cellular metabolism by decreasing cell growth, cell migration, cell adhesion to other cells and
enhancement of apoptosis (programmed cell death). More specifically, the proposed mechanisms of action of
GCS-100 include anti-metastatic activity, anti-angiogenetic activity (cutting off the blood supply), proapoptotic activity, and anti-proliferation activity. Also, the drug can interfere with mitochondrial activity, the
energy factory of a cell, and thus create cell malfunction or even death.
HISTORY
The business was founded in 1992 under the name
IGG International, Inc and was geared toward
carbohydrate therapy in the treatment of patients
with cancer. The company merged with Alvarada,
Inc. (a public shell company) in 1995 and in 1998
changed its name to Safe Science, Inc. In 2001 a
joint venture was formed with Elan Corporation in
the form of Safe Science Newco, Ltd. to advance
the study of GCS-100 in oncology. This venture
was terminated in 2002, and GlycoGenesys
regained all rights to GCS-100.
All
reimbursements due from Elan were paid. In
October 2001, the Company changed its name to
GlycoGenesys.
The company’s subsidiary, SafeScience Products,
Inc., developed products for agricultural
applications such as Elexa, a defense booster,
approved by the US EPA for certain fungal
diseases. Elexa was sold in June 2004, and the
Company retains royalties on product sales. An
insecticidal product for indoor and outdoor pests
was developed and received conditional EPA
approval. This product is for sale and no further
Page 8 of 71
development is occurring. We do not expect any
material revenues from the agriculture subsidiary.
Recent Events
Source: GlycoGenesys, Inc., Reuters
New Discovery Provides Mechanistic Picture of
How GlycoGenesys’ GCS-100 Targets
Malignant Lymphoma Cells and Induces Cell
Death. New Discovery Revealed at the 9th
International Conference on Malignant
Lymphoma in Switzerland
June 15, 2005
GlycoGenesys, Inc.'s GCS-100 was the Subject of
Talk By Dr. Finbarr Cotter At The 9th
International
Conference
On
Malignant
Lymphoma in Lugano, Switzerland. Data shows
how GCS-100, by binding to Galectin-3, targets
and destroys malignant lymphoma and CLL cells
with minimal effect against normal B-cells and
stem cells. The data supports the Company’s
choice of a CLL clinical trial.
GCS-100 receives US Patent
June 1, 2005
U.S. Patent Office Grants Patent for Use of
GlycoGenesys, Inc.'s GCS-100 to Treat
Angiogenesis-Related Diseases
GlycoGenesys, Inc. Closes Second Tranche of
$6,500,000 Financing
May 23, 2005
million private placement. This first closing
resulted in gross proceeds of $2,000,000 from
institutional and accredited investors. In the
closing, investors purchased 2,000 shares of Series
D Preferred Stock and warrants to purchase
2,000,000 shares of common stock at a current
exercise price of $1.23. In the second closing the
Company will issue 4,500 shares of Series D
Preferred Stock and warrants to purchase
4,500,000 shares of common stock for gross
proceeds of $4.5 million.
GlycoGenesys, Inc. Enters Into Definitive
Agreements to Close on $6,500,000 of Funding
From Institutions
March 04, 2005
GlycoGenesys, Inc. announced that it has entered
into definitive agreements to close on gross
proceeds of $6,500,000 from institutions in
exchange for issuance of 6,500 shares of
convertible, redeemable Series D Preferred Stock,
currently convertible into 6,500,000 shares of
common stock, and warrants to purchase
6,500,000 shares of common stock currently at
$1.23. The financing will take place in two
closings. In the first closing, investors will
purchase $2,000,000 of Series D Preferred Stock
and warrants. The second closing, for which
NASDAQ rules requires receipt of shareholder
approval, shall cover the remaining $4,500,000 of
Series D Preferred Stock and warrants.
GlycoGenesys, Inc. Closes Second Tranche of a
$6,500,000 Equity Placement to Institutions and
Accredited Investors; Second Tranche Represents
$4,500,000 in Gross Proceeds
New In Vitro Study of GlycoGenesys’ GCS100LE Yields Promising Data in Chronic
Lymphocytic Leukemia and other B-cell
Cancers. Data Presented at American Society
of Hematology Annual Meeting
GlycoGenesys, Inc. Closes First Tranche of
$6,500,000 Financing
December 7, 2004
March 16, 2005
GlycoGenesys, Inc.’s GCS-100 was the subject of
a poster session presented by Dr. Finbarr Cotter of
Barts School of Medicine, London. The data
showed that GCS-100 induced significant cell
GlycoGenesys, Inc. announced that it has closed
the first tranche of its previously announced $6.5
Page 9 of 71
death of malignant cells via a known apoptotic
pathway while having minimal effect on normal
cells and greatly enhanced the apoptotic effect of
chemotherapy at low doses.
GlycoGenesys, Inc. Announces Scientific
Rational for Developing GCS-100LE for
Potential Treatment of Multiple Myeloma at
American Society of Hematology Annual
Meeting
December 6, 2004
GlycoGenesys, Inc.’s GCS-100 subject of poster
session presented by Dr. Dharminder Chauhan of
Dana-Farber Cancer Institute, Boston. Study
shows that GCS-100LE overcomes drug resistance
of approved therapies and to have synergistic and
additive effects in combination with other drugs
for treatment of multiple myeloma in vitro.
GlycoGenesys, Inc. Announces Victory in
License Dispute with Former CEO
November 11, 2004
GlycoGenesys, Inc. announced that it has received
a favorable decision in final and binding
arbitration proceedings. The arbitration was
brought by the Company against David Platt, its
former CEO, who is now CEO of ProPharmaceuticals, Inc. This favorable ruling
affirms the Company's exclusive rights to the
disputed intellectual property. This intellectual
property relates to GCS-100, the Company's lead
drug candidate.
GlycoGenesys, Inc. Enters Into Definitive
Agreements to Close on $5,000,000 of Funding
From Institutions
July 12, 2004
GlycoGenesys, Inc. announced that it has entered
into definitive agreements to close on gross
proceeds of $5,000,000 from institutions in
exchange for issuance of 10,000,000 shares of
common stock at $.50 and warrants to purchase
8,000,000 shares of common stock at $1.00.
GlycoGenesys, Inc. Initiates Clinical Trial of
GCS-100LE In Multiple Cancers; Company
Plans Phase II Trials Once The Maximum
Tolerated Dose is Reached
May 12, 2004
GlycoGenesys, Inc. announced that it has initiated
a Phase I dose escalation clinical trial in multiple
solid tumor cancer indications evaluating GCS100LE at Sharp Clinical Oncology Research in
San Diego, CA. The Company will determine
appropriate cancer indications for Phase II clinical
trials based on an evaluation of pre-clinical
research and clinical data. Phase II trials are
planned to test GCS-100LE as a monotherapy in
late 2004 or early 2005. The Company plans to
request Fast Track Drug Designation from the
FDA to help expedite the development and
approval process for GCS-100LE as a
monotherapy. In late 2004 or early 2005, the
Company also plans to commence human clinical
testing of GCS-100LE in combination with
approved chemotherapeutic agents.
United States Patent and Trademark Office
Grants GlycoGenesys, Inc. Key Patent for
Expanding Use of Cancer Drug Candidate
February 18, 2004
GlycoGenesys, Inc. announced that the U.S.
Patent and Trademark Office has issued the
Company a U.S. Patent No. 6,680,306 "Method
for Enhancing the Effectiveness of Cancer
Therapies" covering the use of GCS-100 and other
carbohydrates that bind to galectins prior to or in
combination with chemotherapy or surgery for the
treatment of cancer.
Page 10 of 71
to 2022. There are 13 pending U.S. patent
applications.
INVESTMENT THESIS
•
GlycoGenesys is a leader in glycomics
•
The Company’s leading compound, GCS-100,
has shown (1) clinical activity for solid tumors
such as pancreatic and colorectal cancers, and
(2) in vitro activity for blood-borne cancers
such as multiple myeloma and chronic
lymphocytic leukemia (CLL).
•
•
•
•
The Company is in discussions with several
large pharmaceutical companies. We expect
an agreement that includes milestone
payments, royalties and clinical trial financial
support will be announced in FY05.
The IC-50 in vitro test for GCS-100, which
measures the amount of active compound
required to kill 50% of the cancer cells is
extremely favorable.
Phase I/II clinical trials for the high ethanol
version of GCS-100 have already been
completed. The low ethanol version is
currently undergoing Phase I/II dose
escalation clinical trials.
To date, no
maximum tolerated dose has been achieved in
the solid tumor study. The low ethanol
version of GCS-100 allows it to be combined
with existing cancer therapies.
We believe GCS-100 will receive expedited
FDA approval due to its extensive testing and
multiple mechanisms of action.
•
GlycoGenesys owns or has licenses for eight
foreign patents with expiration dates from
2015 to 2017. There are 53 pending foreign
patent applications.
•
World renowned scientists are participating in
the trials and development of GCS-100
including Dr. Kenneth C. Anderson of the
Dana-Farber Cancer Institute, Dr. Finbarr E.
Cotter of Barts & The London Queen Mary
School of Medicine, and Dr. Dan Von Hoff of
the Cancer Center at the University of Arizona
•
Pre-clinical research indicates GCS-100 has
potential to treat solid tumors and blood-borne
cancers.
•
New data showing GCS-100LE having
significant effect on multiple myeloma cells
and certain malignant B cells has led to a new
clinical trial of GCS-100LE for multiple
myeloma patients and soon for patients with
chronic lymphocytic leukemia.
•
GCS-100 has a multifaceted mechanism of
action. This is very significant in receiving
FDA approval.
•
Dose escalation in current clinical trials has
not yet shown a level of toxicity even when
dosage is 8 to 10 times that of the original
GCS-100 clinical trials.
•
If the clinical trials show promising results,
there may be an opportunity for a larger
pharmaceutical firm to consider partnering
with GlycoGenesys or buying the company
outright.
•
There is the strong possibility of GCS-100
receiving expedited approval and ‘Fast Track”
status from the FDA due to its activity and
favorable side effect profile.
Bull Case
•
The science of glycomics has recently shown
promising hope for drug therapy.
•
GlycoGenesys owns or has licenses for 14
U.S. patents with expiration dates from 2013
Page 11 of 71
•
•
•
•
Other anti-cancer agents for blood-borne
diseases have been approved with as little as
90 patients in pivotal clinical trials. GCS-100
has already been tested on 100 solid tumor
cancer patients.
The company is devoting resources to clinical
trials with three indications: multiple
myeloma, chronic lymphocytic leukemia
(CLL) and solid tumors, such as pancreatic
and colorectal cancers.
Since GCS-100 has a multifaceted mechanism
of action, it may have other applications in
other areas such as inflammatory diseases and
disease whose pathophysiology may be
partially based on angiogenesis.
We expect an agreement with a large
pharmaceutical company will occur in FY05.
GCS-100. There is no guarantee that the
company will receive necessary approval to
reach the marketplace.
•
The patent challenge by Platt, the former
CEO, may limit some of the applicability of
the GlycoGenesys patents.
•
Some resources suggest that there are many
other biotechnology companies with more
than 100 drugs currently being tested in more
advanced clinical trials than GCS-100.
•
Many of the competitors have access to larger
sums of capital than GlycoGenesys.
•
GlycoGenesys has sustained significant
financial losses since inception and has not
generated any profit to date.
•
Any litigation and suits that may arise can
affect the company’s financial status which
would have an adverse effect on present and
future research and development.
•
If any of the key personnel leave the
company, there may be a significant impact
on the future course of the company.
•
Future reimbursement from Medicare and
other third party insurers is uncertain and this
may affect the sales of GCS-100.
Bear Case
•
GCS-100 is the main drug of interest for the
Company. There is no wide array of drugs
available for testing. All of the company’s
future currently rests on the success of GCS100.
•
If the ongoing clinical trials do not
demonstrate safety and efficacy, GCS-100
may not get approved.
•
The Company will need to raise additional
funds or form an agreement with a large
pharmaceutical company to continue clinical
trials into 2006.
•
The oncology arena is full of aggressive
competitors when it comes to drug therapy
and if another medicine reports similar
efficacy with less adverse effects and cost,
GCS-100 may not be a leader.
•
The rigorous FDA regulations may slow or
even halt the process towards the marketing of
DEMAND DRIVERS
During the last decade there has been a
tremendous emphasis placed on the study of
proteins and their place in human disease and on
the human genome, which has been finally
mapped in its entirety. In this new century,
scientists have realized that there is a whole other
spectrum involving sugars and carbohydrates in
the treatment of diseases.
This includes
inflammatory diseases as well as malignant
diseases. Since GCS-100 is primarily targeted at
Page 12 of 71
the treatment of cancer patients, we emphasize the
oncology market. Current cancer treatment
modalities include surgery (sometimes radical),
chemotherapy, and radiation. Surgery is often
reserved for patients with early stage disease and
palliative therapy for patients with advanced
disease. Radiation and chemotherapy are very
effective treatments but are limited by their
toxicity to normal cells. This is the crucial point.
If normal cells were not killed by these treatments
then we could theoretically eliminate all cancer
cells in the body through continuous exposure to
radiation or infusion of chemotherapeutic
substances. Unfortunately this is not the case.
Treatments are often dose-limited. This is where
glycomics and GCS-100 make their impact. It is
the low toxicity levels associated with
carbohydrate compounds and their conjugates that
show a tremendous promise for this class of drugs.
More specifically, the multifaceted mechanism of
action of GCS-100 is a like a shining light. The
drug works on several different areas of the human
cell metabolism and has been shown to offer little
toxicity at higher doses. It offers tremendous hope
for patients receiving chemotherapy and extending
their lives without costing a reduced quality of
life. If GCS-100 receives FDA approval it may
very well become a blockbuster drug for the
treatment of the indicated disease(s). Cancer
patients are often more than willing to receive a
medication if it has the potential to help battle
their disease without creating physical turmoil.
Along with this physical turmoil often comes
psychological despair which is another burden the
patient must endure. It is our belief that if GCS100 is approved, it may certainly be one of the
more successful cancer therapy treatments to hit
the market in the past ten years.
Market Opportunity
The anti-cancer drug market is huge and has
endless potential since there is much improvement
to be seen in current therapies. Many of the
chemotherapy agents in use today may be very
effective in treating specific tumors but the need
for high and continuous dosing has a tendency to
cause severe adverse effects for the patient which
significantly reduces their quality of life. The
global cancer market is one of the largest drug
markets in the world currently valued in excess of
$25 billion by some estimates and significant
growth is expected to continue for the next 10 to
15 years. There is tremendous potential for the
developing field of glycomics and the pipeline of
drugs that await trial and testing. The American
Cancer Society estimates that there are in excess
of 30 companies involved in the development of
more than 1,000 new drugs for the treatment of
cancer. Researchers around the globe are
expanding their search for effective therapies and
are beginning to lead to novel forms of treatment.
The traditional chemotherapies are constantly
being improved and new methods are being
developed to make them more efficacious as well
as less toxic.
The combination of carbohydrates and proteins
used in the treatment of disease is creating a
market of its own. The entire science of
glycosylation reactions is showing promise in the
pharmaceutical industry, especially in the
oncology sector. The growth rate of this
therapeutic area is in excess of 20 percent
annually. This is a new field that may create
products which possess lower toxicities and
greater efficacies than existing treatments. Such a
characteristic can open up a vast array of
opportunities. There are a handful of drugs
currently in different phases of clinical trials that
show promise as therapeutic measures for clinical
Page 13 of 71
application.
For example, Aranesp® is one
product that has been created using specific
carbohydrate moieties on a base molecule. It is
currently on the market and has shown
tremendous success.
The potential success of GCS-100 stems from the
fact that it has multiple mechanism of action
which can play a role in cancer therapy. Some of
the tumors it can treat include small cell tumor of
the lung, myelomas, lymphomas, chronic
lymphocytic leukemia, melanomas as well as
other malignancies of the prostate, lung,
colon/rectum, pancreas and liver.
If we look at only the oncology market, it can be
subdivided into each category of tumor. We look
at just a few of the potential markets in cancer. It
has been estimated that breast, prostate, and
colorectal cancer combined comprise a global
market opportunity in excess of $1 billion.
However, if the glycobiology science proves to be
what is being shown now, then the applications to
other diseases can open up many new markets.
Since GCS-100 is being evaluated for
chemotherapeutic purposes, we will concentrate
on a few different markets.
Colorectal Cancer
The American Cancer Society estimates that in
2005 there will be approximately 145,290 people
(male and female) diagnosed with the disease and
about 56,290 (male and female) will succumb to
the disease. Cancers of the colon and rectum are
the third most common type of cancer and the
second most common cause of death in males and
females combined. The lifetime risk of being
diagnosed with cancer of the colon or rectum is
5.9% for men and 5.5% for women in the United
States. Overall, incidence of and mortality from
this disease is 35% higher in men than in women.
Pancreatic Cancer
Pancreatic cancer is the fourth leading cause of
cancer death in men and the fifth leading cause of
cancer in women. Approximately 1 out of 4
patients with cancer of the exocrine pancreas will
live for at least one year after diagnosis. The five
year survival rate is 1 in 25 persons. According to
the American Cancer Society (ACS), in 2005,
32,180 people will be newly diagnosed with
pancreatic cancer and 31,800 people will die of
the disease. This cancer is often diagnosed in the
late stages of disease. Currently, there are a few
drugs including Gemzar® (gemcitabine),
manufactured by Eli Lilly, that is FDA approved
for the treatment of the disease. Other drugs used
are 5-fluorouracil (5-FU), and Mitozytrex®,
manufactured by SuperGen. Since this is a very
aggressive disease and there is only one approved
drug for its treatment, this would offer
GlycoGenesys an excellent opportunity to
penetrate the market using its glycomic
technology.
Prostate Cancer
Prostate cancer is the second most common cancer
in men in the U.S. and is the second leading cause
of cancer death in American men. ACS estimates
that there will be 232,090 new cases diagnosed in
2005 and 30,350 men will die from the disease.
One in six men will be diagnosed with the disease
in their lifetime. 99% of men diagnosed with
prostate cancer survive for 5 years. 92% survive
for 10 years, and 61% survive for 15 years. These
statistics include all stages and grades of the
disease.
Ovarian Cancer
Ovarian cancer is the seventh most common
cancer in women and is the fourth leading cause of
cancer deaths in women. The ACS estimates that
Page 14 of 71
there will be about 22,200 new case of ovarian
cancer in the United States in 2005. About 16,210
women will die of the disease this year. There is
some promising news in that the rate of ovarian
cancer has declined since 1991. The risk of a
woman developing this type of cancer in her
lifetime is 1 in 58 and the risk of getting the
disease and dying from it is 1 in 98.
for cancer therapy. Some of these drugs are
utilizing traditional mechanisms of action and
some are new modalities all together. Some of the
relatively new technologies include glycomics,
monoclonal antibody therapy, antiangiogenic
therapy, gene based therapy, and more. We
mention a few of the potential competitors and a
brief description of their background.
Breast Cancer
•
Pro-Pharmaceuticals, is a biopharmaceutical
company that is involved with the
development
of
carbohydrate-based
compounds that seek to enable existing
chemotherapeutic drugs to be delivered more
accurately and specifically to their targets.
This method of delivery potentially helps to
increase drug efficacy and to reduce drug
adverse effects. The company is trying to
combine its technology with current
chemotherapeutic agent such as 5fluorouracil (5-FU), irinotecan, doxorubicin,
paclitaxel, oxaliplatin, cisplatin, and
bevacizumab. The company utilizes molecules
to target the lectins sites on the cell surface.
Their patented formulation is called “GlycoUpgrade™” and their main drug in testing is
DAVANAT® which is currently being tested
in conjunction with 5-FU for the treatment of
refractory colorectal cancer. DAVANAT /5FU has recently completed phase I trials for
the treatment of patients with advanced solid
malignancies. In 2004, Phase II trials were
initiated for the treatment of patients with
metastatic colon cancer.
•
Seattle Genetics, Inc is a biotechnology
company focused on developing monoclonal
antibody cancer therapies. Their technology
is based on genetically engineered monoclonal
antibodies (mAbs), Antibody-Drug conjugates
(ADCs), and Antibody-Directed Enzyme
Prodrug Therapy (ADEPT).
Breast cancer is the second most common cancer
in women and is the second leading cause of death
for women. The lifetime chance of developing
invasive breast cancer is 1 in 7 (13.4%). Breast
cancer occurs in men and women and in 2005
there will be 1,690 new cases diagnosed in men.
The ACS estimates that there will be 211,240 new
cases diagnosed in the United States in 2005 and
that 40,140 women and 460 men will die from this
disease. Currently there are more that 2 million
women living with a diagnosis of this type of
cancer and these women have been treated. The
good news is that the incidence of, and death rates
from breast cancer has decreased over the past 25
years. This could be due to the fact that more and
more patients are diagnosed at an earlier stage of
disease.
Multiple Myeloma
The ACS estimates that about 15,980 new cases of
multiple myeloma will be diagnosed in 2005 and
that about 11,300 Americans are expected to die
of the disease. The five year survival rate is about
30% with the younger having better chances than
the elderly.
COMPETITION
As previously mentioned, there are more than 300
companies participating in drug research and trial
Page 15 of 71
Figure 1: Monoclonal Antibody Mechanisms
•
ImmunoGen is a biotechnology company that
develops targeted anticancer drugs. Its main
technology, Tumor-Activated Prodrug (TAP)
uses tumor-targeting antibodies to deliver a
drug molecule to tumor cells.
Figure 2: Tumor-Activated Prodrug
Mechanism Sequence (a)
Mechanism Sequence (b)
Source: www.seattlegenetics.com
The company currently has three products
undergoing clinical trials. SGN-30 is a
genetically engineered antibody, currently in
phase II trials for the treatment of systemic
anaplastic large cell lymphoma (ALCL) or
cutaneous (ALCL). SGN-15 is another
antibody-antigen combination that recently
completed a phase II study in combination
with Taxotere®, for the treatment of nonsmall cell ling cancer. SGN-40 is an antibody
that is currently in phase I trials for the
treatment of patients with multiple myeloma
or non-Hodgkin’s lymphoma.
Mechanism Sequence (c)
Page 16 of 71
Mechanism Sequence (d)
treatment of prostate cancer. It is currently in
phase II clinical trials for the treatment of
androgen independent prostate cancer. A
second candidate for immunotherapy is
APC8024, which is currently in a phase I
clinical trial for the treatment of HER-2/neu
positive breast, ovarian, and colorectal
cancers. The company has 15 drugs in its
preclinical development pipeline.
•
Optimer
Pharmaceuticals
is
a
biopharmaceutical company that specializes in
producing late-stage anti-infective products,
cancer drugs, and “disease-modifying” drugs
for osteoarthritis and other antibiotic drugs
based on carbohydrate science.
The
company’s core competence is obtained from
the development of new drugs for the
treatment of diseases that have no current
satisfactory therapy.
Its proprietary
technology is OPOPS ™ and is a computer
aided program to help in the synthesis and
analysis of carbohydrates. There are several
drugs in its pipeline including OPT-99
(prulifloxacin) which is currently undergoing
phase II clinical trials as an antibiotic therapy.
OPT-80 has been granted Fast Tack status by
the FDA and has completed phase I clinical
trials for the treatment of CDAD. Phase II
clinical trials commenced in November 2004.
•
CellTech Group is part of UCB, a
biopharmaceutical company, based in
Brussels Belgium that specializes in drugs
used for central nervous system disorders,
allergy and respiratory disease, inflammatory
disorders, and oncology. Its core
competencies are in antibody technologies
(design, expression, and production) and small
molecule research. Celltech has a growing list
of cancer drugs and concentrates in the areas
of cytotoxic drugs and cytostatic drugs. The
former class uses antibody mediated drug
Source: www.immunogen.com
The company has partnerships with Centocor,
Biogen Idec, Genentech, Aventis, Millennium
Pharmaceuticals, Boehringer Ingelheim, and
Abgenix. These relationships help to expand
ImmunoGen’s technology base and also gives
the company access to large capital. There are
currently two products undergoing clinical
trials: cantuzumab mertansine and huN901DM1. The first is used to treat patients with
gastrointestinal tumors such as colorectal
cancer and pancreatic cancer and the second is
used for non-small cell lung cancers and other
hematological malignancies. The company
licenses its technology to other companies for
their use with their specific antibody
molecules.
•
Dendreon is a biotechnology company
developing targeted therapies for the treatment
of cancer. The company uses several
technology
platforms
including
immunotherapy, monoclonal antibodies, and
small molecules. Dendreon has a small
molecule program focusing on low molecular
weight molecules that modify Trp-p8
function. Trp-p8 is an ion channel that
regulates the flow of calcium into cells. Its
leading product, Provenga® is an
investigational immunotherapy for the
Page 17 of 71
delivery and the latter method is via antiangiogenesis mechanisms. It currently has
BMS 275291 in phase II/III trials for the
treatment of small cell lung cancer. CDP 860
is in phase II trials for the enhanced uptake of
chemotherapeutic agents. CMC-544 is
undergoing pre clinical testing for the
treatment of non-Hodgkin’s lymphoma.
•
Genta is a biopharmaceutical company that
focuses on the identification, development and
commercialization of drugs for the treatment
of cancer patients. The company’s pipeline is
based on RNA/DNA medicines, which
include products that use Antisense, RNA
interference and decoys, and small molecule
technology.
Figure 6: The Central Dogma
Figure 7: Antisense Attack
cancer. The Small Molecules program
produced the lead drug Ganite® (gallium
nitrate injection). This drug received FDA
approval for intravenous treatment of cancer
related hypercalcemia that is resistant to
hydration.
•
Neose is a biopharmaceutical company
focused on improving carbohydrate/protein
therapeutics through the use of enzymes using
its core technologies of GlycoAdvance™ and
GlycoPEGylation™. It is applying these
technologies to its own drug products and to
other products that it is co-developing with
other companies. The GlycoAdvance™
technology is used to complete the natural
processes of protein glycosylation (synthetic
glycosylation reactions are often incomplete)
and the GlycoPEGylation technology™ is
used to attach polyethylene glycol (PEG) to
proteins. The company is currently targeting
versions of erythropoietin (EPO) and
granulocyte stimulating factor (G-CSF) as
candidates for improvement. It is expected to
file investigational new drug (IND)
applications in 2005.
Product Uniqueness and
Applications
GCS-100
The lead drug from the RNA/DNA program is
Genasense® (oblimersen sodium) and it is
currently in late stage clinical trials for the
treatment of melanoma, multiple myeloma,
chronic lymphocytic leukemia, nonsmall cell
cancer, small cell lung cancer, and prostate
GCS-100 is part of a class of drugs known as
lectin inhibitors, more specifically the βgalactoside-binding protein family, which are
being developed to treat several types of cancers
through its actions on lectin-3 receptors. Through
its multifaceted mechanism of action, GCS-100
arrests the progression of the disease by disrupting
the metastatic process. More specifically, GCS100 attaches to cancer cells which contain specific
proteins known as lectins. This attachment is one
of the main reasons for a decrease in aggregation
Page 18 of 71
of cancer cells and thus a decrease in the
metastatic process. Once the metastasis is slowed,
the body’s immune cells can assist in destroying
the cancer cells.
•
Ability to block the spread of cancer cells
(anti-metastatic)
•
Ability to cut off the blood supply to tumor
cells (anti-angiogenic)
GCS-100 is a complex polysaccharide derived
from citrus pectin isolated from the peel and pulp
of citrus fruits through a proprietary hydrolysis
process. Pectins are complex polysaccharides
(large sugar molecules) found in plants and algae.
The vast body of research on GCS-100 has
pointed scientists to postulate that the new drug
candidate can lead to anti-cancer activity via
several different mechanisms. The basic effect is
through a binding to a carbohydrate receptor on
the cell surface which will ultimately lead to an
alteration in cell behavior. These alterations can
affect cellular proliferation, cellular migration,
cellular adhesion, and apoptosis. GCS-100 is
administered to patients via the intravenous route.
•
Ability to trigger programmed cell death (proapoptotic)
•
Ability to disrupt mitochondrial function
The Company produces this compound from a
specific form of natural citrus pectin through a
patent pending process which breaks down the
large pectin carbohydrates into smaller molecules
which are rich in galactose. The specific process
includes pH alteration of the pectin, hydrolysis,
and an ethanol bath. This results in a concentrate
that is used for drug production. Recently, the
Company has created a version of the drug that
has a significantly reduced amount of ethanol
which allows the drug to be administered to
patients at higher dosages. Galactose is very
abundant in biological systems. These small sugar
molecules are what make GCS-100 special in its
ability to bind to other molecules on the cell
surface.
There have been several different mechanisms of
action which have been elucidated from several
pre-clinical trials. These include:
Figure 8: Overall GCS-100 Structure
Overall GCS-100 structure
“Hairy” Region
Galacturonic acid backbone with
interspersed rhamnose
Rhamnose
Smooth Region
Galactose rich branches from rhamnose residues
Chemical techniques are used to characterize GCS-100
These proposed mechanisms are due to the
binding of GCS-100 to a carbohydrate receptor
moiety, such as galectin-3 and other growth
factors such as vascular endothelial growth factor.
In certain types of cancers, the galectin-3 protein
is over expressed and is found on the surface of
cells and within the cells. It has been found that
during active metastasis, this protein is over
expressed and the binding of GCS-100 to galectin3 may help slow the metastatic process. In vitro
experiments show that GCS-100 binds to galectin3 and inhibits biological activity. Animal models
demonstrate that administration of GCS-100 can
decrease the number of metastasis to secondary
sites and /or inhibit the growth of primary tumors
(5). The anti-proliferative action can be seen from
the graph below which shows that GCS-100
inhibits cancer cell proliferation.
Page 19 of 71
Some of the in vivo anti-metastatic activity can be
quantified and visualized in the following graphs.
Figure 11: Anti-Proliferative Action
Figure 9: Anti-metastasis
Anti-proliferative Action
B16F10 in vitro assay
20
GCS-100 groups Vs Control
p<0.05
15
10
GCS-100 IC50 = 60+/-20 ug/ml
5
0
tr
on
C
ol
0
10
00
-1
S
60
30
20
10
m
m
m
m
k
g/
k
g/
k
g/
k
g/
kg
g/
m
0
10
S-
0
10
S-
TX
C
C
G
C
G
C
G
00
-1
S
g
g
g
g
Treatment groups and dose level
Figure 10: Dose Dependent Tumor Inhibition
by GCS-100 (In Vivo)
Dose Dependent Tumor
Inhibition by GCS-100 (In Vivo)
B16F10 subcutaneous model (C57/Bl)
10 mg/kg
600
20 mg/kg
500
M ean tu m o r vo lu m e
This assay demonstrates
that GCS-100
inhibits cancer cell
proliferation
25
C
G
Number of Lung Metastases after 14 days
treatment
Anti-metastasis: GCS-100 inhibition of
B16F10 lung metastasis in C57/B1
(N=10/group)
400
30 mg/kg
300
60 mg/kg
200
CTX 100 mg/kg
100
Control
0
day 7
day 10
day14
day 17
day 20
Days of treatment
Human dose equivalent:
Mouse
Human
10mg/kg = 30mg/m2
20mg/kg = 60mg/m2
30mg/kg = 90mg/m2
60mg/kg = 180mg/m2
Angiogenesis is the process of new blood vessel
formation. It is considered a very important
indicator of malignant growth. This process of
neovascularization occurs in wound repair,
inflammation, tumor growth in malignant
conditions and many other disease states. There
are several circumstances where angiogenesis
occurs and these include states of low oxygen
concentration, low pH (high acidity), active tumor
gene production, and elevated inflammatory
mediator chemicals such as cytokines. The process
begins with the induction of blood vessel
endothelial cells. These cells can be stimulated by
many different growth factors including VEGF.
Vascular endothelial growth factor (VEGF) is a
naturally occurring protein in the body and helps
to promote the growth of new blood vessels
(angiogenesis). Many of the endothelial cells of
the blood vessels contain sugar binding sites
which help to regulate growth of the blood
vessels. GCS-100 is known to inhibit its binding
to endothelial cells, thus inhibiting its activity on
these cells to create new blood vessels. This helps
to decrease the blood flow to cancer cells. This is
one of the mechanisms of anti-angiogenesis.
Also, it is believed that galectin-3 is involved with
angiogenesis and since GCS-100 inhibits the
activity of galectin-3, this may be another
mechanism of anti-angiogenesis activity.
Page 20 of 71
Ultimately, there is a decrease in the formation of
new blood vessels to the malignant cells.
Figure 14: Extracellular Matrix
Figure 12: Schematic of VEGF effect on
Vessel Growth
Figure 13: New Vessel Growth
(neovascularization)
Tumor growth demonstrating progressive vessel regression
correlating with expression patterns of Ang-2 and VEGF. A small
tumor initially grows by coopting existing vessels (A). Ang-2
expression promotes vessel regression (B). Robust angiogenesis is
apparent at the margin of the tumor where VEGF expression is
upregulated (C).
Source:http://www.rndsystems.com/cb/cbsu99/cbsu99a1.html
Apoptosis is the programmed cell death that is
coded into a cells’ genome. It basically signals the
cell to self destruct and this is a very important
requirement in cellular activity and metabolism.
It helps in the control of the aging process and
defense against viral infection and replication. If a
cell did not have a destruct mode preprogrammed
into its genetic composition, then it would
continue to live indefinitely and any disease
process that depends on host survival can become
augmented. Malignant cancer cells have the
ability to inhibit the process of apoptosis by
manufacturing proteins, ‘survival proteins’ that
can bind to cellular organelles such as
mitochondria. One of these survival proteins, Bcl2 prevents the escape of a protein, cytochrome-c,
that triggers a cascade of events leading to cell
death. Bcl-2 also reduces the ability of many
approved chemotherapeutic agents to induce
apoptosis through mitochondrial pathways. (5). It
has been shown that galectin-3 plays a similar role
to Bcl-2 and this may be another site of action for
GCS-100. Pre-clinical research has also shown
that GCS-100 can induce cancer cell apoptosis in
both Bcl-2 over expressing as well as normally
expressing Bcl-2 cancer cell lines. (5) More
recent data which has been presented at the 9th
International
Conference
on
Malignant
Lymphoma in Lugano, Switzerland by Dr. Finbarr
Page 21 of 71
Cotter, has shown that GCS-100 has the ability to
induce programmed cell death in both malignant
cell lines and chronic lymphocytic leukemia cells.
In addition, GCS-100 has not been shown to
induce any significant myelosuppression, an
adverse effect of many current chemotherapeutic
agents in which the bone marrow cell production
is reduced. These findings strengthen the
arguments that GCS-100 can play a significant
role in the treatment of cancer.
Figure 15: Bcl-2 Effect on Mitochondria and
Apoptosis
Three main signals cause the release of
apoptogenic
mitochondrial
mediators:
proapoptotic members of the Bcl-2 family,
elevated levels of intracellular calcium, and
reactive oxygen species. Four mitochondrial
molecules mediating downstream cell-death
pathways have been identified: cytochrome c,
Smac/Diablo, apoptosis-inducing factor, and
endonuclease G. Cytochrome c binds to Apaf-1,
which, together with procaspase 9, forms the
"apoptosome," which activates caspase 9. In turn,
caspase 9 activates caspase 3. Smac/Diablo binds
to inhibitors of activated caspases and causes
further caspase activation. Apoptosis-inducing
factor and endonuclease G mediate caspaseindependent cell-death pathways.
INTELLECTUAL PROPERTY
GlycoGenesys currently owns or license 14 issued
U.S. patents, and 8 foreign patents. Six of the14
U.S. patents relate to GCS-100 and five of the
eight foreign patents relate to GCS-100.
Source: www.nejm.org/cgi/content/full
U.S.
Figure 16: Apoptotic Signaling Triggered by
Conventional and Novel Agents
Apoptotic Signaling Triggered by
Conventional and Novel Agents
GCS-100
Wayne State/Karmanos License
The Company exclusively licenses patents
5,834,442, referred to as “442”, and 5,895,784,
referred to as “784” from Wayne State University
(“WSU”) and the Barbara Ann Karmanos Cancer
Institute (“KCI”). “442”, is titled “Method for
Inhibiting Cancer Metastasis by Oral
Administration of Soluble Modified Citrus Pectin”
and is a treatment modality for the treatment of
prostate cancer via oral administration of the drug.
“784” is titled “Method of Treatment of Cancer by
Oral Administration of Modified Pectin” is a
broad coverage for the use of modified pectin
attaching to cell surface proteins. The terms state
that GlycoGenesys must pay 2% royalties on
Page 22 of 71
product sales, $10,000 per month until FDA
approval (which payments are offset against future
royalties) and up to $3 million in milestone
payments. WSU and KCI have the right (but not
the obligation) to terminate the license if
GlycoGenesys does not receive FDA or equivalent
agency approval to sell GCS-100 by January 1,
2008. (5)
The Platt License
Dr. David Platt, co-founder of GlycoGenesys and
currently CEO of Pro-Pharmaceuticals, offers
exclusive licensure of patent application
08/024,487, “Modified Pectin” and related patent
applications in exchange for a 2% royalty. In
addition the Company also licenses patent
5,681,923 for Tumor Derived Carbohydrate
Protein. This patent is licensed free of royalties.
The aforementioned patent refers to the inhibition
of metastatic tumor cells expressing galactosespecific, carbohydrate-binding polypeptides
through the use of an agent comprising galactose
which is bound to a polymer. (5)
Elan License
GlycoGenesys exclusively licenses from Elan
Corporation one of its proprietary oral drug
delivery technologies for use in cancer patients.
The license is fully paid.
Combination Therapies
U.S. patent 6,680,306 titled “Method for
Enhancing the Effectiveness of Cancer Therapies”
relates to a carbohydrate-based material which has
binding affinity for galectin and can be used in
conjunction with conventional treatments such as
chemotherapy and surgery in the treatment of
cancer.
THE SCIENCE BEHIND THE
PRODUCTS
Glycomics
“Scientists are saying that glycomics could fuel a
revolution in biology to rival that of the human
genome.” (New Scientist, Oct. 2002)
“But even as doctors and drug companies
struggle to interpret and exploit the recent
explosion of data on genes and proteins, yet
another field of biology is waiting to break out:
glycomics. This emerging discipline seeks to do
for sugars and carbohydrates what genomics and
proteomics have done for genes and
proteins−move them into the mainstream of
biomedical research and drug discovery.”
(Technology Review, Oct. 2001)
Glycomics, or more specifically glycobiology, is
the study of the structure, biosynthesis, and
biology of naturally occurring carbohydrates, and
glycans (a polysaccharide or long sugar molecule).
Generally, it refers to the interaction of
carbohydrates with other molecules such as
proteins and lipids. It is a very rapidly growing
field and is becoming of major interest to the
pharmaceutical and biotechnology companies as
well as the rest of the research community. “The
field ranges from the chemistry of carbohydrates
and the enzymology of glycan-modifying proteins
to the functions of glycans in complex biological
systems and their manipulation by a variety of
techniques.” (1)
A glycome is the entire list of sugars that the body
synthesizes. It is gradually being realized by
scientists that sugars as well as proteins and lipids
play a vital role in the daily functioning of a cell.
The glycosylation reaction in which carbohydrates
and sugars become attached to other biologically
active molecules such as proteins and lipids plays
Page 23 of 71
an important role in cell growth, cell
differentiation,
inflammatory
processes,
development of the human embryo, and growth of
malignant cells.
“Many natural bioactive
molecules are glycoconjugates, and the attached
glycans can have dramatic effects on the
biosynthesis, stability, action, and turnover of
these molecules in intact organism. Furthermore,
several human disease states are characterized by
changes in glycan biosynthesis that can be of
diagnostic and /or therapeutic significance.” (2)
Sugars can combine together to make large
molecules known as carbohydrates and cellulose.
Some of their known actions include hormonal
regulation, cellular and protein transport,
embryonic development and organization,
immune regulation, and more. (3)
are used in energy generation, cellular structure,
signaling activities, and more. Carbohydrates are
extremely important in the makeup of complex
organisms.
Figure 17: Cell Wall Structure
The illustration above depicts how the carbohydrate chains, located on
the cellular wall, that act to 'signal' cellular activity through their unique
and specific structures
www.ncbi.nlm.nih.gov/books
Carbohydrates
Carbohydrates can be large and complex
molecules and it is the complexity that gives them
a unique role in the sense that they will allow for
some very specific biological reactions.
Carbohydrates contain atoms of hydrogen,
oxygen, and carbon with different ratios of each
atom. Examples of carbohydrates include sugars
such as dextrose (starch), fructose, and glucose.
These are all known as 6 carbon sugars and have
the atomic ratios in the form of C6H12O6.
Combinations of these individual sugars, known
as polysaccharides can become very complex. The
role of glycans can be simplified into structural
and regulatory/recognition functions.
Sugars can be attached to one another and are then
referred to as oligosaccharides or polysaccharides.
Glycans are situated on the outer surface of a cell
membrane and are able to play a part in the cell’s
interactions with the external environment. They
help to modulate intercellular and intracellular
reactions and interactions. They also serve as
regulatory switches.
Figure 18: Sequence of Information Travel
The basic model of molecular biology is that
functional information flows from DNA to RNA
to proteins as depicted in the sequence below:
DNA→RNA→ Protein→ Cell Organism
In addition, cells require lipids and carbohydrates
to complete their makeup. Both lipids and proteins
Carbohydrates can also be long combinations of
hydroxylated ketones or aldehydes. These can be
hydrolyzed or broken down into smaller
Page 24 of 71
monosaccharides, which are composed of single
sugar units. These monosaccharides can exist in
open or chain formation. The figure below shows
the open and ring forms of galactose. Any
alteration in the orientation of the OH (hydroxyl)
groups around their carbon atoms will result in a
new molecule with different biochemical
properties.
Figure 19: Structure of Glucose
The ring form of the monosaccharides is the usual
form for the branched chains of monosaccharides,
better known as oligosaccharides.
A
polysaccharide is a large molecule composed of
multiple oligosaccharides. A glycoconjugate is a
compound in which one or more mono or
oligosaccharide units is/are linked to a noncarbohydrate molecule.
Figure 20: Detailed Structure of Lipid Bilayer of Cell Wall
Lectins
Lectins are specific proteins (amino acids
combined in sequence) located on the cell’s
surface that have a specific affinity for binding to
carbohydrate units. They can be found in both the
polar and non-polar section of the cell membrane,
and they can be found within the cell. They have
recognition capabilities for carbohydrates only and
they possess areas of charge that makes them ideal
Page 25 of 71
for a structural role in the bi-polar lipid membrane
and are in the class known as glycoproteins. Some
of the lectins role in cellular physiology is
postulated to be that they help to mediate cellular
adhesion (cell to cell) and agglutination. In
addition, lectins are also found in interstitial fluids
outside of cells. It is the specific structure of the
sugar moiety located on these proteins that helps a
cell to defend itself from foreign intruders.
More specifically, a lectin that has a specific
affinity for carbohydrate chains rich in galactose
are known as galectins. There are about 14
galectins which have been identified in humans
that have affinities for certain enzymes
(galactosidases) that breakdown galactose. GCS100 is known to have a binding affinity for a
specific molecule known as galectin-3. This
galectin has been identified and associated with
several different types of cancer. Galectin-3 is
involved with many cellular processes including
protein transport, messenger RNA and transfer
RNA activity (protein synthesis), intercellular
adhesion and more. The important fact about
galectin-3 is that it is overproduced in certain
types of cancer cells. Galectin-3 is a small
carbohydrate-binding protein that has specific
affinity for carbohydrates that are rich in
galactose. There have been noted associations
between levels of galectin-3 and stages of certain
tumors of the colon, stomach, thyroid gland and
certain head and neck tumors.
The method of incorporating a sugar onto a
protein is known as glycosylation and the resulting
structure is referred to as a glycan. Needless to
say that the glycosylation reactions occurring in a
cell can have significant impact on disease
prevention and treatment and that alteration of the
glycosylation processes can create a wide variety
of substances use in medical treatment.
Cancer
Cancer is a disease which is characterized by the
uncontrolled growth of malignant cells (cells
which have become abnormal and have lost
genetic control of many of their metabolic
processes). Normal cells divide and grow in an
orderly way. The problem is that the human
immune system fails to recognize these malignant
cells as foreign bodies and therefore is not
stimulated to attack the cancer cells. This is
unlike other inflammatory or infectious processes
where the body mounts a profound response to
any foreign intruder. Therefore, people who are
afflicted with a malignant tumor require
exogenous (outside) medication to help retard or
arrest the rampant growth of the cancer.
There are two main categories of tumors: solid and
blood-borne. Usually, the earlier a diagnosis is
made, regarding stage of disease, the better the
prognosis. Patients who have been diagnosed
with a malignancy are given a prognosis often
based on the level of metastases present and the
type and grade of tumor that is involved. Some
tumors are amenable to surgical removal, while
others are better treated with chemotherapeutic
agents or radiation therapy. Sometimes just a few
cells may have metastasized to a distant organ
causing a change in the stage of the disease. In
such situations, a surgical option may become
void and the prognosis often deteriorates. The
route of tumor metastasis can be via the blood
(hematogenous spread), the lymphatic system
(lymphatic spread), peritoneal fluid (peritoneal
spread), or direct local invasion. Basically what
occurs is that a cancer cell from the primary tumor
escapes and invades another tissue and begins to
grow within the secondary site. The metastatic site
begins to be occupied and destroyed by the
uncontrolled growth of malignant cells.
Page 26 of 71
Worldwide, there are approximately 10 million
new cases of cancer diagnosed each year and
approximately 6 million deaths from the disease.
The American Cancer Society reports that in 2005,
there will be about 570,000 people who will die
from cancer. Currently cardiovascular disease is
the leading cause of death followed by cancer.
This may very well change with cancer becoming
the most frequent cause of death over the next two
decades. Some scientists are making these claims.
The following table provides some statistical
information of different disease and related facts.
Page 27 of 71
Table 1: Estimated New Cancer Cases and Deaths by Sex for All Sites, US, 2005
Page 28 of 71
There have been many studies indicating that
molecules which block galactose-binding sites
may have the potential to block the proliferation of
cancer cells which over-express galactose
containing sugars. GCS-100 has a large galactose
concentration which provides binding sites to
tumor cells. So, instead of the tumor cell binding
to normal cells, they bind to the drug molecule and
this effectively reduces the binding capacity of the
tumor cell thus preventing it from adhering to
other cells. This mechanism has been shown to
decrease metastasis and tumor emboli in vivo.
Many cancer cells show a change in their
glycosylation patterns and some glycan structures
are known to be good markers to quantify tumor
progression. Cancer cells can change from normal
cells in many different ways. One of the changes
that are commonly seen is an alteration in a
biosynthetic pathway which can lead to rapid
growth and lack of growth control. This lack of
control can lead to properties that cause the cells
to invade other tissues and destroy them. With
these malignant transformations comes a change
in glycosylation. However, to date there has been
no proof of how glycosylation reactions and
changes specifically change the behavior of a
malignant cell.
Most scientists agree that malignant disease often
involves a change in the DNA of a cell including
oncogene and suppressor gene alterations, as well
as mutator genes and influence on apoptotic
pathways. The overall struggle between normal
and tumor cells is ruled by Darwin’s theory of
survival of the fittest. This survival of the
malignant invader can be partially attributed to
glycosylation changes that allow structural change
for the benefit of the cancer cell.
Clinical Trials
Food and Drug Administration
Approval Process
Drugs that will ultimately be use to treat humans
need to be tested in humans before they can be
marketed for the proposed indication. The tests
designed by the FDA are known as clinical trials
and are composed of 4 phases. As the phases
progress, the number of patients enrolled tends to
increase. They determine safety and efficacy,
appropriate dosing, side effects and post
marketing information. “Controlled clinical trials
are the only legal basis for FDA to conclude that a
new drug has shown substantial evidence of
effectiveness” (4)
To begin the process a drug sponsor, usually a
pharmaceutical or biotechnology company,
conducts laboratory research on a chemical
compound and test its effects on laboratory
animals. If they feel that their compound can hold
promise for treatment in humans, then they can
begin the process of applying to the FDA for
approval. The FDA has a panel of scientists,
ethicists, and non-scientific personnel that oversee
new applications and if a sponsor company passes
the review of this panel, then the clinical trial may
begin
The approval process has 3 steps:
•
Preclinical investigation
•
Investigational New Drug (IND) application.
This includes phases I-III clinical trials.
•
New Drug Application (NDA). This includes
FDA review and approval.
Phase I:
These studies assess the most common acute
adverse effects and help to determine the proper
Page 29 of 71
dosing in humans so that they do not experience
major adverse effects. In addition, determination
of the metabolic pathway and the pharmacology is
also clarified. In other words, the metabolites of
the drug are analyzed and their travel into specific
tissues is determined as well as its method of
metabolism. Major hurdles in this phase would
include increased toxicity or safety risks with
increased dosing.
Phase II
Phase IV
These studies are intended to evaluate the drug,
post marketing, so that more information can be
gathered about the effects on patients. The
company is required to conduct post marketing
surveillance and report it to the FDA.
On average, the time from initial molecular
discovery to marketing of a drug is seven years.
Table 2: Testing In Humans
These studies are designed to assess if the drug in
question actually is effective in treating the
disease or condition it is targeting and may be
randomized. If there are several indications for
the drug, then there can be subcategories of this
phase, such as Phase II (a) (b), etc. The number of
enrolled subjects is often several hundred or more
and testing can take more than 12 months.
Phase III
These studies are designed to determine the safety
and efficacy of the investigational drug. It is the
final study before the drug, if approved, goes to
the market. The trial is conducted at several
different clinical sites and information is gathered
so that it can be included in the package insert.
Also, the drug is compared to other similar
medications currently used to treat the same
disease in question.
After Phase III is completed and accepted by the
FDA, the company submits a New Drug
Application for review and approval. This process
involves the complete review of all information
beginning with laboratory development to Phase
III clinical trials and is processed before marketing
is allowed.
Testing in Humans
Number
of
Length Purpose
Patients
Phase 20-100
1
Several Mainly
months safety
Phase Up to
2
several
hundred
Several
months
to 2
years
1-4
Phase Several
3
hundred years
to
several
thousand
Percent of
Drugs
Successfully
Tested*
70 percent
Some short- 33 percent
term safety
but mainly
effectiveness
Safety,
25-30
dosage,
percent
effectiveness
* For example, of 100 drugs for which investigational new drug
applications are submitted to FDA, about 70 will successfully
complete phase 1 trials and go on to phase 2; about 33 of the
original 100 will complete phase 2 and go to phase 3; and 25 to
30 of the original 100 will clear phase 3 (and, on average, about
20 of the original 100 will ultimately be approved for
marketing).
Source: www.fda.gov/ceder/about
Page 30 of 71
Chart 1: New Drug Development Timeline
Source: www.fda.gov/ceder/about
GCS-100 Clinical Trials
Phase I (used to assess toxicity) clinical trials were
completed in 1999 on the high-ethanol version and
the results showed no dose limiting toxicity.
Phase II trials (used to assess safety and efficacy)
were performed for different cancer indications.
Phase II (a), completed in 2001, for colorectal
cancer demonstrated positive clinical activity at
dose levels of 20mg/m2. Specifically, eight of 23
patients, of which 19 were evaluable, experienced
tumor stabilization for periods of 1.6 to 5.6
months before disease state progression was
observed, with one of the eight patients showing a
period of tumor shrinkage. Phase II (a) for
pancreatic cancer, completed in 2002,
demonstrated positive clinical activity at doses
levels of 20mg/m2 (5). Specifically, seven of 20
patients, of which 16 were evaluable, experienced
tumor stabilization for periods of 0.6 months to
13.6 months before disease state progression was
observed, with one of the seven patients showing a
partial response.
Of the seven patients
experiencing tumor stabilization, three did so for a
period of four months or greater. There was no
evidence of dose limiting toxicity in either Phase
II (a) trials.
Given the above data which showed no evidence of dose limiting toxicity, a new Phase I dose escalation trial
was begun in 2002. This trial was conducted at Sharp Clinical Oncology Research Memorial Hospital in San
Diego, California and tested for multiple types of cancer. There were 12 patients that failed standard therapy
and were enrolled at doses ranging from 30mg/m2 to 80mg/m2. Five patients achieved stable disease for a
period of at least three months and one of the five patients remained on GCS-100 for 30 months of treatment
Page 31 of 71
and achieved a durable partial response. None of the patients experienced dose limiting toxicity. (5) A
summary of the clinical programs currently underway, along with projected timeframe for ongoing clinical
trials is outlined below.
Chart 2: Clinical Programs
Clinical Programs
Ph I Dose +
Ph I / II
Solid Tumor
Multiple Myeloma
Ph I / II
CLL
Ph II
Ph II
Ph II
Target
File NDA NDA Granted
Alliance
6/04
1/05
6/05
1/06
6/06
1/07
6/07
1/08
6/08
1/09
Solid Tumor Program
The low-ethanol version of GCS-100 is currently undergoing the Phase I Dose Escalation Study for use as a
monotherapy for solid tumors and a Phase II trial for use in conjunction with other chemotherapeutic agents
(specific indications are yet to be determined) is planned for late 2005/early 2006. The following shows
some of the design of the current Phase I study.
Page 32 of 71
Chart 3: Solid Tumor Program GCS-100
Bloodborne Program
The low-ethanol version of GCS-100 is in a Phase I/II Dose Escalation trial for the treatment of multiple
myeloma (MM) patients and a Phase I/II trial is planned for the evaluation of the drug in the treatment of
Chronic Lymphocytic Leukemia (CLL) in third quarter 2005. The following represent significant result in the
testing of the drug for both MM and CLL patients.
Multiple Myeloma
Phase I/II trial was initiated in March 2005 and is designed to evaluate safety, pharmacokinetics and
dosing/toxicity. The design includes the addition of a steroid, dexamethasone, if patients show progress when
using only GCS-100 or if their disease stabilizes following therapy of four cycles of GCS-100. Phase II,
potentially pivotal, trials are planned for early 2006. The following charts and graphs show some results of
the positive mechanisms of GCS-100.
The following chart shows that for the multiple myeloma cancer cells that do not respond to bortezomid
(Velcade®), a chemotherapeutic agent, GCS-100 has an effect by inducing the death of these cells. It can be
seen that when GCS-100 is added the DNA fragments increase which is an indicator of cell destruction.
Page 33 of 71
Chart 4: GCS-100 induces apoptosis in Bortezomib-resistant MM patient cells.
GCS-100 induces apoptosis in
Bortezomib-resistant MM patient cells
Rel at i ve DNA f r agment at i on
Thal i domi de/ Dex
Ref r act or y
Bor t ezomi b- Ref r act or y
1. 5
1. 0
0. 5
0. 0
GCS- 100 ( 500 μg/ ml )
-
+ -
+-
+
Source: Dana-Farber Cancer Institute
The following two charts (charts 5 & 6) show that GCS-100 can inhibit the growth of multiple myeloma cells
and their migration.
Page 34 of 71
Chart 5: GCS-100 inhibits the adhesion-induced growth of MM cells
GCS-100 inhibits the adhesion-induced
growth of MM cells
24h/3H-thymidine uptake
40000
Control
CPM
30000
490 μg/ml
20000
560 μg/ml
700 μg/ml
10000
840 μg/ml
0
MM.1S
BMSCs
MM.1S + BMSCs
.
Chart 6: GCS-100 inhibits VEGF-induced migration of MM cells
Migration of MM cells
(Fold of Control)
GCS-100 inhibits VEGF-induced
migration of MM cells
GCS-100 (200 μg/ml)
GCS-100 (500 μg/ml)
GCS-100 (μg/ml)
-
-
+
VEGF
-
+
+
+
+
Source: Dana-Farber Cancer Institute
Page 35 of 71
Chronic Lymphocytic Leukemia
The trials for CLL are expected to begin in the third quarter of 2005 and will begin with Phase I/II dose
escalation studies to evaluate the safety, pharmacokinetics and dosing/toxicity of the drug for this indication.
Some of the rationale for beginning these studies is based on data at Barts & the London, Queen Mary School
of Medicine. It has been shown that GCS-100 induces mitochondrial depolarization in human lymphoma cell
lines, causes the death of isolated human CLL cells, induces apoptosis, and also, when combined with
etoposide, a chemotherapeutic agent used in the treatment of CLL, induces apoptosis with greater effect than
either treatment alone. These experimental findings surely lead the way to further clinical trial testing.
This chart shows that Human Lymphoma Cells lose the ability to undergo programmed cell death like many
other cancers. The addition of GCS-100 increases the cell death through a mitochondrial pathway. The
mitochondria are the power plant of the cell.
Chart 7: GCS-100 Induced Mitochodondrial Depolarization in Human Lymphoma Cell Lines
GCS-100 Induced Mitochodondrial Depolarization
in Human Lymphoma Cell Lines
1
0.9
0.8
0.7
Percent of apoptotic ce lls
0.6
Dohh2
Sud4
0.5
Ramos
RamBcl2
0.4
Bcl-2 Overexpression:
DoHH2, Sud4,
RamosBcl-2
0.3
0.2
Bcl-2 Normal
Expression:
Ramos
0.1
0
CONTROL
Phosphate buffered saline
80ug
GCS-100 Vs Controls
Source: Barts & The London, Queen Mary School of Medicine
Page 36 of 71
This chart shows that the addition of GCS-100 alone to a sample of CLL cells induces their cell death.
Chart 8: GCS-100 Kills Isolated Human CLL Cells
GCS-100 Kills Isolated Human CLL Cells
GCS-100 effects on fresh isolated human CLL
(n=7 AAD, 24hr)
50
% of apoptotic cells
45
40
35
30
25
20
CON
10
20
30
40
50
60
GCS-100 (ug/ml)
This chart is showing that a chemotherapeutic agent without GCS-100 induces a small number of cells to
undergo programmed cell death compared to the addition of GCS-100 in increasing concentrations (yellow,
pink, and blue lines) which shows significantly higher percentages of dying cells.
Page 37 of 71
Chart 9: GCS-100 Increases Effect of Standard Chemotherapy
GCS-100 Increases Effect
of Standard Chemotherapy
GCS-100 synergistic effect with Etoposide:
Induces apoptosis in lymphoma cell line DOHH2
90
GCS-100 6hr/DiOC6/PI
80
70
60
GCS-100 20ug/ ml
50
GCS-100 40ug/ ml
40
GCS-100 80ug/ ml
30
No GCS-100
20
10
0
con
0
0.001
0.01
0.1
1
VP-16 (uM, 20hr)
This chart is showing that if an inhibitor of caspase (caspase is an enzyme that is involved with programmed
cell death or apoptosis) is introduced into the cells that have been exposed to GCS-100, then the cell death
rate declines. Basically it shows that GCS-100 works through the caspase-9 cell death pathway.
Page 38 of 71
Chart 10: GC S-100 Induces Apoptosis Via Caspase-9
GCS-100 Induces Apoptosis Via Caspase-9
Caspase-9 inhibitor abolishes GCS-100 effect (DOHH2,
MC540/7-AAD)
60
50
40
control
30
Caspase-9
inhibitor
20
10
0
0
10
20
40
60
80
GCS-100 (ug/m l, 20hr)
Page 39 of 71
BUSINESS SECTION
Manufacturing
GCS-100 is a complex carbohydrate, a
polysaccharide that is derived from citrus pectin
through a proprietary hydrolysis process. The
manufacturing process uses ethanol. Early
versions of GCS-100 did not remove the ethanol
from the final product. Realizing the potential
market for GCS-100 as a compliment to existing
cancer therapies, the ethanol component became a
potential hindrance. This is because certain other
cancer therapies have high concentrations of
ethanol, and when combined with early versions
of GCS-100, the total ethanol amount could cause
problems. Since GCS-100 is water soluble, it does
not require ethanol in the final product. The
current manufacturing process still uses ethanol,
but takes the ethanol out of the end product. The
current GCS-100 drug candidate undergoing
additional clinical trials is the low ethanol version
that contains less than 1% ethanol.
The raw materials for manufacturing GCS-100 are
readily available and inexpensive, and the
manufacturing process is relatively simple. The
Company uses three contract manufacturers that
meet GMP standards, required by the FDA for
clinical trials.
Patents
The Company owns, or is the exclusive licensee
for 14 patents issued in the US. Expiration dates
range from 2013 to 2022. Six of these patents
relate to GCS-100. The Company also has eight
foreign patents, five which relate to GCS-100 and
expire from 2015 to 2017.
Additionally,
GlycoGenesys has 13 patents pending in the US,
and 53 pending foreign patents.
In 2001, the Company executed an agreement with
Wayne State University and the Barbara Ann
Karmanos Cancer Institute for world-wide patent
rights to and intellectual property related to GCS100. GlycoGenesys has made licensee payments
of $1.9 million and will make additional payments
of $3 million upon reaching commercialization
milestones. These payments are $500,000 upon
initiation of Phase III clinical trials, $1 million
upon NDA submission and $1.5 million upon
FDA approval.
Legal
The former Chairman and CEO, David Platt, has
granted the Company an exclusive worldwide
license for all products he has developed while
with the Company including patents and patent
applications related to GCS-100. This agreement
entitles David Platt to a 2% royalty payment of
GCS-100 product net sales, with a minimum of
$50,000 paid per year.
In January 2004, the Company notified David
Platt, former Chairman and CEO of its intention to
seek arbitration in the alleged breaches of the
license agreement between the Company and
David Platt. In May 2000, Platt had resigned from
the Company and shortly thereafter formed ProPharmaceuticals, which filed a patent application
for Davant®, a carbohydrate compound that binds
to galectins and is used with cancer therapies. In
November 2004, the arbitrator issued a decision in
favor of the Company, affirming its exclusive
rights to the licensed intellectual property.
Also in January 2004, David Platt filed a suit
against the Company, seeking damages for alleged
breach of its severance agreement with him. In
February and June 2004, the Company filed
several counterclaims for misappropriation of
proprietary rights and deceptive acts, and seeks
monetary damages and injunctive relief to prevent
Page 40 of 71
Pro-Pharmaceuticals from engaging in the use of
polysaccharides for cancer treatment and to assign
its rights to Davanat to the Company.
In January 2005, Pro-Pharmaceuticals made a
request to the US Patent and Trademark Office to
reexamine the Company’s patent issued in January
2004 (‘306 Patent). The ‘306 Patent broadly
claims the use of carbohydrates that bind to
galectins, including GCS-100 in combination with
chemotherapy or surgery for the treatment of
cancer. Patent re-examinations are frequently
requested to try to protect products that may be
adversely affected by existing patents.
It is possible the Company’s ‘306 Patent may be
revised from the US Patent office to narrow the
scope of the patent. We do not believe any change
from the US Patent office will affect our forecasts.
LIQUIDITY AND LEVERAGE
The Company’s cash balances have declined in the last few quarters, along with working capital. The balance
sheet is very liquid as indicated by the liquidity ratios.
Current Ratio
Cash / Total Assets
Current Assets / Total Assets
Working Capital ($mil)
12/31/03
2.57
80.6%
88.1%
2.13
03/31/04
3.31
86.4%
90.6%
3.72
06/30/04
1.71
76.2%
82.7%
1.11
09/30/04
2.55
85.5%
89.8%
2.93
12/31/04
1.47
72.3%
83.2%
0.82
03/31/05
1.04
77.1%
84.2%
0.10
The decline in working capital and total cash balances indicates the Company needs financing. With the
promising technology that has completed multiple Phase I and Phase II clinical trials, we do not believe the
Company will have any difficulty in obtaining financing.
GlycoGenesys has no debt outstanding, and has not had any long term liabilities since 2001.
CAPITALIZATION
The Company has primarily been financed by
equity offerings, with total proceeds of
approximately $82 million to date. In December,
2004, the Company had a 1-for-6 reverse stock
split, and reduced the amount of shares
outstanding from approximately 60 million to 10
million. Total authorized common shares are now
75.0 million shares, plus 5 million shares of
preferred stock. Net equity financings were
approximately $8.8 million in 2004, and $4.17
million in 2003.
In March, 2005, the Company entered into a
private placement agreement with several
investors for 6,500 shares of convertible preferred
shares, priced at $1,000 per share. This Series D
convertible preferred is convertible into 1,000
shares of common and was issued with a warrant
to purchase 1,000 shares of common at $1.23 per
share for five years. After the first anniversary
date, March 2006, if the stock is trading above
$1.75 with sufficient volume over a 20 day period,
the Company can force conversion. Dividends of
8% are payable in cash or preferred shares at the
Company’s option.
Page 41 of 71
The first tranche of 2,000 preferred shares were
issued in 1Q05. The remaining 4,500 shares were
issued in 2Q05. Total net proceeds were over $6
million. Exercise of warrants from this financing
will raise $8 million.
The total amount of Series D convertible preferred
shares authorized is 10,000 shares. There are
6,000 authorized and 3,471 issued shares of Series
B convertible preferred shares. There are 7,500
authorized and 6,153 issued shares of Series A
convertible preferred shares.
The following table outlines the total dilution
based on shares and options outstanding as of
4Q04 along with additional shares resulting from
the recent financing.
Table 3: Share Dilution
CASH FLOW
We create our Net Cash Flow from Operations
(NCFO) to analyze cash flow. NCFO uses
Income Statement and Balance Sheet data items to
reconstruct how cash is generated and used in the
operations of the business. We start with revenues
and adjust it for the change in receivables to
determine the Gross Cash Collections. Cost of
goods sold, SG&A and R&D are summed to
determine Total Operating Expenses. Then we
look at the changes in all working capital accounts
except receivables and cash to determine how
much cash was used or generated in managing the
current assets and current liabilities. Netting the
working capital cash requirements/generation with
operating expenses and then subtracting from
Gross Cash Collections gives us the NCFO.
Share Dilution
Shares Outstand, 1Q05
4Q04 Dilution From:
Warrants
Options
Preferred Conversion
1Q05, 2Q05 Financing:
Preferred Conversion
Warrants
Total
Shares
(milllions)
10.08
Percent
of Total
35.1%
3.6
0.32
1.71
12.5%
1.1%
6.0%
6.5
6.5
28.71
22.6%
22.6%
100.0%
Table 4: Net Cash Flow from Operations (NCFO)
($ millions)
Gross Cash Collections from Operations
Total Operating Expenses
Total Changes in Working Capital
Net Cash Flow from Operations (NCFO)
03/31/04
0.00
2.66
(0.30)
(2.36)
Changes in Working Capital is computed as an
expense item, such that a negative value for
Change in Working Capital, ex Cash and
06/30/04
0.00
2.67
0.01
(2.68)
09/30/04
0.00
2.70
(0.31)
(2.39)
12/31/04
0.00
2.19
0.24
(2.43)
03/31/05
0.00
2.52
(0.97)
(1.55)
Receivables, is a generator of cash. When the
NCFO is negative, it is a good indicator of the
cash burn rate for the company before capital
Page 42 of 71
expenditures and interest expense. According to
the NCFO analysis, the cash burn rate for GLGS
has been $2.3 to $2.6 million per quarter. With
minimal capital expenditures and no interest
payments, this is very close to the actual total cash
burn. The reduction in the NCFO in 1Q05 was the
result of an increase in payables and accrued
expenses. Such changes in working capital
accounts are typically unsustainable and may
reverse itself in the coming quarters.
The Company has $2.5 million in cash as of
3/31/05, and with additional financing in 2Q05,
has enough cash for the next two quarters. We
expect the Company will announce an agreement
with a large pharmaceutical company by the end
of the third quarter. Without an agreement by the
beginning of 4Q05, the Company will need to
raise additional funds.
FORECASTS
Anticipated Partner Agreement
We expect the Company will finalize an
agreement with one or several pharmaceutical
companies who desire to gain a market share in
the oncology market for blood borne diseases and
solid tumors. Management indicates they are in
discussion with several potential partners.
There are several reasons why a partner would be
interested in GlycoGenesys technology.
•
The GCS-100 with ethanol has already shown
activity against solid tumors such as
pancreatic cancer. GCS -100 has completed
Phase I and Phase II clinical trials.
•
The GCS-100 with low ethanol (LE) has
shown its capacity to work in vitro with
existing drug therapies.
•
Current testing on GCS-100 LE is being
conducted at doses of 8 to 10 times that of the
initial GCS-100 clinical trials and is well
tolerated.
•
The parameters to obtain orphan drug status
are applicable for GCS-100 in each of the
indications (multiple myeloma, CLL and
pancreatic cancer).
This creates an
environment for expedited FDA approval.
•
Manufacturing costs for GCS-100 LE is likely
to be low, which creates an opportunity for
high profit margins for a partner with
responsibility to manufacture the compound.
•
Orphan drugs require less marketing expense
due to the lower number of patients that
receive the therapy. This further enhances the
profitability.
•
There are four separate active mechanisms by
which GCS-100 addresses cancer cells.
It is difficult to precisely identify the terms of an
agreement with a large pharmaceutical company,
however the general nature of it will be for
milestone payments and a royalty. We expect the
Company will initially receive $5 to $10 million
for each indication and an additional $5 to $10
million each upon NDA filing and FDA approval.
At the higher end of upfront and milestone
payments, we forecast a 25% royalty. Our
forecasts assume the low end of upfront and
milestone payments, and a 30% royalty. Such an
agreement reduces the risk of the large
pharmaceutical partner. Another component of
these agreements is for the partner to financially
support Phase II and Phase III trials. Since the
existing evidence from GCS-100 clinical trials
indicate good activity with minimal side effects,
we expect FDA approval before Phase III is
complete. In our forecasts, we assume the
pharmaceutical partner will pay for 70% of the
Phase II clinical trials and if FDA approval is not
Page 43 of 71
received before a Phase III trial, then the partner
will shoulder all the costs of the Phase III clinical
trial.
•
GCS-100 is not a synthetic compound and its
multiple mechanisms of action are defined.
•
The existing CLL therapy, CAMPATH, is a
monoclonal antibody and was approved by the
FDA with only 90 patients studied. GCS-100
has already had 100 solid tumor patients in its
clinical trial history.
•
Current therapies for pancreatic cancer, a solid
tumor for which GCS-100 is tested, only
prolong the average life after diagnosis from
4.5 months to 7 months.
We believe companies such as Johnson &
Johnson, Novartis, Roche, Genentech and BristolMeyers Squibb may be interested in GCS-100.
Clinical Trial Timeframe and
Expense
The timeframe for the clinical trials is highlighted
above in graphical form. We expect the relatively
quick timeline for clinical trials and FDA approval
for several reasons.
•
Blood borne diseases are inherently easier to
test. There is no required biopsy or scan to
determine how the disease is reacting to
therapy. Blood samples, which are easily
retrieved and analyzed, indicate how well the
therapy is working.
•
GCS-100 has already shown its activity in
solid tumors for pancreatic cancer in the initial
Phase I and Phase II clinical trials.
•
The low ethanol version of GCS-100, GCS100 LE is designed to work well with existing
therapies.
•
Multiple myeloma and CLL may both qualify
for orphan drug status. Although there is
existing treatments for each disease, most
patients develop resistance to existing
treatments, which creates the need for
additional treatments.
•
Velcade, the only drug therapy for multiple
myeloma that has demonstrated a significant
survival advantage versus standard therapy,
was approved in an accelerated FDA review.
GCS-100 has shown its effectiveness in
Velcade resistant patents.
The initial Phase I and Phase I/II clinical trials are
estimated to cost about $4 million in total, or $1.3
million each, with approximately 25 to 30 patients
for each trial. The Phase II trials are expected to
cost about $11 million in total with an estimate of
$8.5 million for multiple myeloma and $2.5
million for solid tumors. Solid tumor expense per
patient is estimated higher because of required
biopsies and scans to determine efficacy. The
multiple myeloma trial will have more patients
enrolled than the solid tumor trial because of its
planned pivotal design. Based on the timeline
graph, we equally weight the cost of the clinical
trials over their duration. The following table
highlights the additional expense for the clinical
trials through FY06.
Page 44 of 71
Table 5: Estimated Clinical Trial Expense
($ thousands)
Indicaton
Multiple Myeloma
CLL
Solid Tumor
Total
2Q05
450
333
783
3Q05
450
200
4Q05
200
450
650
650
Patient Population
The number of new diagnoses per year for each of
the initial diseases for which GCS-100 is in trial or
are planned is highlighted here.
Table 6: Annual Diagnoses in the US
Indicaton
Multiple Myeloma
CLL
Pancreatic
New Diagnoses
Per Year
15,270
8,190
30,000
We use pancreatic cancer as the solid tumor
indication since this is most likely to be the initial
indication for GCS-100 in non- blood borne
diseases. Ovarian cancer is another potential
indication or off label use for GCS-100 after FDA
approval with a similar incident of diagnoses per
year.
Patients with blood borne diseases can live for five
to 20 years after initial diagnoses if the disease is
treated. It is common for the treated disease to go
into remission and then come out of remission,
when additional therapy is required. Worldwide,
there are approximately 100,000 known cases for
multiple myeloma and 55,000 cases of CLL. Of
these, approximately 80% are treatment seeking
patients in US and Europe. Blood borne cancers
are relatively rare in people of Asian descent.
1Q06
2,125
450
625
3,200
2Q06
2,125
200
625
2,950
3Q06
2,125
4Q06
2,125
625
2,750
625
2,750
For pancreatic cancer, approximately 55,000 seek
treatment annually in the US and Europe. This
patient population is not much higher than the
annual diagnoses per year because the disease is
typically fatal within the first year. Current
treatments only prolong survival rates 2.5 months.
To be conservative with our projections of the
addressable patient population for GCS-100, we
reduce the annual number of patients seeking
treatment, as outlined in the following table.
Table 7: Patients Seeking Treatment
in US and Europe
Indicaton
Multiple Myeloma
CLL
Pancreatic
Patients
Treated
60,000
44,000
55,000
Pricing
Drug pricing is based on the efficacy, side effect
profile and the number of mechanisms of activity
for the active ingredient. GCS-100 is known to
have four mechanisms of action. The four
mechanisms are:
•
Apoptotic
•
Anti-proliferative
•
Anti-metastatic
•
Anti-angiogenic
Page 45 of 71
The process for each of these mechanisms is
described in the Science Section. Preliminary
evidence indicates that the side effect profile will
be very favorable. Current versions of GCS-100
LE used in clinical trials are at concentrations of
160 mg to 200mg and no maximum tolerated dose
level has yet been indicated. Earlier Phase I and
Phase II clinical trials on GCS-100 were at 20mg
dosing. Higher dosing in vitro has demonstrated
higher efficacy, and management indicates their
satisfaction with the progress to date on the Phase
I solid tumor clinical trials. This indicates to us
that efficacy is very good, and side effects are
minimal.
It is not unusual for orphan drugs to be priced at
$50,000 to $100,000 for annual treatments. The
FDA determines if a therapy receives orphan drug
status based on several parameters. Initially, the
drug must address a patient population less than
200,000.
The effects of the disease are
devastating, typically leading to death, and there
are no existing remedies. Although there are some
treatments for the indications the Company is
working on, existing therapies are inadequate, and
orphan drug parameters are applicable to GCS100. The low patient population for orphan
diseases and devastating human deterioration that
results has had several effects on the
pharmaceutical market. Insurance coverage is
available due to the low incidence, and FDA
approval is typically much quicker. It is not
unusual for FDA approval before Phase III clinical
trials are complete.
Since the characteristics for multiple myeloma,
CLL and pancreatic cancer all fit the orphan drug
parameters, and GCS-100 has multiple
mechanisms of action, very good activity and an
anticipated favorable side effect profile, we expect
pricing will be the $20,000 to $30,000 range per
treatment schedule. For forecasting we use the
lower end of this range, $20,000 for an annual
treatment.
FINANCIAL FORECASTS
We begin our financial forecasts by identifying the
amount of revenues in the initial five years after
FDA approval for each indication. We create a
base case scenario that assumes GCS-100 will be
used by 20% of the patient population seeking
treatment within five years after product
introduction. We also create an optimistic
scenario and pessimistic scenarios with higher and
lower market shares, respectively. The following
table outlines the market share used in our
forecasting for the three scenarios. The market
share data is based on the total number of patients
seeking treatment, outlined above and itemized in
Table 7.
Table 8: Market Share After FDA Approval
Scenario
Optimistic
Base Case
Pessimistic
Y1
4.0%
3.0%
3.0%
Y2
10.0%
7.0%
6.0%
Y3
15.0%
12.0%
9.0%
Y4
20.0%
16.0%
12.0%
Y5
25.0%
20.0%
15.0%
The timing for our estimated approval is based on receiving approval before Phase III for each indication. We
believe this is highly likely due to the favorable side effects profile to date the known mechanisms of action,
the very low IC-50 in vitro tests, and a partnership with a pharmaceutical company that is experienced in
Page 46 of 71
receiving NDA approvals. The table below identifies a realistic approval schedule for GCS-100 for each of
the three indications we are forecasting.
Table 9: NDA Approval Time Line
Scenario
Optimistic
Base Case
Pessimistic
Indicaton
Multiple Myeloma
CLL
Pancreatic
Multiple Myeloma
CLL
Pancreatic
Multiple Myeloma
CLL
Pancreatic
1H08
Approval
Approval
2H08
1H09
2H09
1H10
2H10
Approval
Approval
Approval
Approval
Approval
Approval
Approval
Milestone payments and onset of royalties received from sales of GCS-100 are affected by the date of NDA
filing, and NDA approval. The following tables outline the gross revenues from sale of GCS-100 and net
revenues to GlycoGenesys based on our expectations of a 30% royalty as outlined above. These forecasts
identify the gross revenues of GCS-100 in each market for the first five years after the product is launched.
Table 10: Base Case Royalty Revenue Forecast
($ millions)
Gross Revenues
Multiple Myeloma
CLL
Pancreatic
Net Revenues
Multiple Myeloma
CLL
Pancreatic
Y1
36.00
26.40
33.00
Y2
84.00
61.60
77.00
Y3
144.00
105.60
132.00
Y4
192.00
140.80
176.00
Y5
240.00
176.00
220.00
10.8
7.92
9.9
25.2
18.48
23.1
43.2
31.68
39.6
57.6
42.24
52.8
72
52.8
66
Table 11: Optimistic Royalty Revenue Forecast
($ millions)
Total Revenues
Multiple Myeloma
CLL
Pancreatic
Net Revenues
Multiple Myeloma
CLL
Pancreatic
Y1
48.00
35.20
44.00
Y2
120.00
88.00
110.00
Y3
180.00
132.00
165.00
Y4
240.00
176.00
220.00
Y5
300.00
220.00
275.00
14.4
10.56
13.2
36
26.4
33
54
39.6
49.5
72
52.8
66
90
66
82.5
Page 47 of 71
Table 12: Pessimistic Royalty Revenue Forecast
($ millions)
Total Revenues
Multiple Myeloma
CLL
Pancreatic
Net Revenues
Multiple Myeloma
CLL
Pancreatic
Y1
36.00
26.40
33.00
Y2
72.00
52.80
66.00
Y3
108.00
79.20
99.00
Y4
144.00
105.60
132.00
Y5
180.00
132.00
165.00
10.8
7.92
9.9
21.6
15.84
19.8
32.4
23.76
29.7
43.2
31.68
39.6
54
39.6
49.5
The December 2002 joint venture termination agreement with Elan provides Elan with a royalty on revenues
of GCS-100, offset by development costs incurred by GlycoGenesys. The Company states in the 2004 10K
that “the fair value of the development costs to be reimbursed by Elan approximates the fair value of the
estimated future royalty payments [to Elan].” Our forecasts assume that no net additional royalty payment
will be made to Elan.
To create the actual financial forecast for each scenario, we combine our milestone payment forecast and the
royalty obligations of the Company to determine revenues and operating income for each scenario. The
timing of FDA approval determines the onset of revenues and royalties due to Barbara Ann Karmanos Cancer
Institute and Platt. We assume minimal capital expenditures and depreciation due to the lack of marketing
and manufacturing expenses. We also factor in the financial support from the pharmaceutical partner(s) to
cover 70% of the clinical trial costs. We do not forecast any taxes will be paid during our forecast time
through 2009 due to net losses carried forward.
Our financial forecasts for the next five years are shown below. Although we only display a financial forecast
through FY09, the growth beyond FY09 is an important component to the valuation of GlycoGenesys. The
parameters for that growth are described above, and the incorporation of the long term growth beyond FY09
is discussed in Valuation.
Table 13: Optimistic Forecast
($ millions)
Revenues
Operating Income
Free Cash Flow
FY05
10.0
-1.9
-2.0
FY06
0.0
-14.4
-14.5
FY07
10.0
-5.0
-5.3
FY08
40.0
22.0
21.1
FY09
74.0
53.2
52.3
FY08
20.8
3.4
3.0
FY09
43.1
23.8
23.4
Table 14: Base Case Forecast
($ millions)
Revenues
Operating Income
Free Cash Flow
FY05
10.0
-1.9
-2.0
FY06
0.0
-14.4
-14.5
FY07
5.0
-10.0
-10.3
Page 48 of 71
Table 15: Pessimistic Forecast
($ millions)
FY05
10.0
-1.9
-2.0
Revenues
Operating Income
Free Cash Flow
VALUATION
We calculate a fair value range for the stock price
based on the free cash flow projections for each
scenario. We discount the future cash flows using
a present value formulation. An important
component of discounting future cash flows is the
discount rate used in calculations. We determine
an appropriate discount rate beginning with the
current long term treasury rate and adjusting it for
(a) the equity risk premium, and (b) the volatility
of the stock. The Company’s beta, or measure of
stock volatility relative to the market is 0.94. We
believe the volatility will increase in the next few
years as more efficacy and safety information
from clinical trials becomes public. The stock
price of many small growth companies have a
volatility of two to three times that of the market.
For this reason, we increase the Company’s beta
to 3.0. We also adjust the current long term bond
FY06
0.0
-14.4
-14.5
FY07
0.0
-15.0
-15.3
FY08
20.4
3.2
2.8
FY09
34.1
15.2
14.8
rate, 4.0%, up to 5.0% in anticipation of higher
interest rates in the next 24 months. Each of these
adjustments increases the discount rate used in our
valuation analysis, which reduces the resulting
price targets. The resulting discount rate we use in
our valuation analysis for GlycoGenesys is 17.0%.
This conversely describes the required rate of
return for investors to purchase the stock.
Another important component of present value
analyses for stock valuation is determining the
growth rate investors will attribute to the company
at the end of the forecast time period. All
forecasted cash flows through 2009 are inherently
factored in to our valuation. Since revenue and
free cash flow growth from GCS-100 indications
will continue to grow beyond 2009, we assess the
magnitude of this growth based on our forecasts
outlined above. The following tables outline the
expected revenue growth after the 2009.
Table 16: Annual Revenue Growth Rates
Scenario
Optimistic
Base Case
Pessimistic
FY09
85.2%
107.3%
67.3%
FY10
57.7%
77.6%
54.7%
FY11
42.3%
46.7%
44.7%
FY12
28.7%
36.9%
37.5%
FY13
7.7%
15.4%
22.1%
FY14
3.6%
7.4%
7.7%
Our forecasts assume that market penetration for each indication will not change after the initial five years
after FDA approval. Incorporating the post 5-year no-growth assumption into the five years after the forecast
timeframe (through 2009) we calculate the following compounded annual revenue growth rates.
Page 49 of 71
Table 17: Compound Annual Growth Rates from 2009 to 2014
Scenario
Optimistic
Base Case
Pessimistic
5 Year Cmpd
Growth
26.4%
34.6%
32.3%
These compound annual revenue growth rates are more conservative than earnings or free cash flow growth
for the same time period. We use these conservative growth rates in our valuation model as our long term
sustainable growth rates beyond 2009. Actual growth during from 2005 through 2009 for revenues, earnings
and free cash flow will be much higher. The compound revenue growth rates outlined here provide a proxy
for the sustainable growth rate over an extended time frame.
Our analysis indicates we should focus on slightly different growth rates for each scenario. The optimistic
scenario has the lower sustainable growth rate post 2009 because more revenues are recorded through 2009
compared to the other scenarios. The pessimistic scenario has a lower growth rate than the base case because
of the lower market penetration forecast inherent in the pessimistic forecast. The following chart and table
outlines our stock price forecasts based on the different forecast scenarios and the sustainable growth rate.
Table 18: Price Targets for LFY+2 for 3 Scenarios vs. Long Term Growth Rate
844.Price Targets for LFY+2 for 3 Scenarios
Vs. Long Term Growth Rate
$60.0
$50.0
$40.0
$30.0
$20.0
$10.0
Long Term Growth Rate
$0.0
20%
25%
30%
$36.7
$44.7
$52.7
Base
$31.5
$37.3
$43.1
Pessimistic
$23.1
$27.4
$31.8
Optimistic
35%
We focus on the price target for the end of FY06. The share count used in our analysis is 23.45 million, our
forecasted weighted average shares for FY06. Currently there are 10 million shares outstanding. We assume
conversion of the preferred Series D and execution of warrants. As outlined in the growth rate discussion, our
valuation analysis uses different sustainable growth rates for the three scenarios.
Page 50 of 71
This range of target prices is based on 100% certainty that our forecast for FDA approval of GCS-100 for
each indication as outlined in our scenario analysis will occur. The market never awards a biotech company
with a compound in Phase I and Phase II clinical trials with 100% certainty that the product will make it to
market. Our forecasts also assume the FDA decides to expedite approval of GCS-100. Since GCS-100
approval is less than certain at this time, we assign probabilities to determine an appropriate price target for
the next 12 to 18 months.
Before GlycoGenesys has an agreement with a pharmaceutical partner that will assist in financing future
clinical trials, we believe the market will only award the stock a 15% probability of GCS-100 approval. Once
a partner agreement is announced, investors will respond favorably that an entity “in the know” has decided to
pursue the GlycoGenesys technology. At that time we believe a 25% probability is appropriate. As more
favorable clinical data becomes available in 2006, we believe the probability of FDA approval will be 33%.
When Phase II studies are complete and the NDA is filed in 2007, we expect the market will assign a 50% to
60% probability to GCS-100 approval. The following table outlines our price targets based events expected
to occur in the next 18 months.
Table 19: Price Targets Based on Future Events
Event
Timeframe
Scenario
Optimistic
Base Case
Pessimistic
Pre-Pharma
Agreement
2005
Pharma
Agreement
2005
Clinical
Trial Data
2006
$6.7
$6.5
$4.4
$11.2
$10.8
$7.4
$14.8
$14.2
$9.8
We believe an appropriate target price for 2005 is in the $6.5 to $10.8 range based on favorable clinical trial
data and an agreement with a pharmaceutical partner. This target price rises in 2006 when favorable data
from clinical trials is released.
One take away from this analysis is the current stock price reflects a scenario that is worse than our
pessimistic forecast. We believe the current stock price offers a good buying opportunity.
CONCLUSION
prescribed with other existing medications that
have high ethanol content.
GlycoGenesys is on the forefront of the glycomics
applications in cancer therapy. The Phase I and
Phase II clinical trials completed for the high
ethanol version of GCS-100 displayed favorable
activity with minimal side effects for solid tumor
cancers.
A low ethanol version is now
progressing through the clinical trials. The lower
ethanol version will enable GCS-100 to be
Well known experts in the field of blood-borne
cancers have demonstrated interest in GCS-100.
Dr. Kenneth Anderson’s associate at the DanaFarber Cancer Institute (Harvard) presented an
abstract in December 2004 discussing the activity
of GCS-100 in the treatment of multiple myeloma
pre-clinically.
Page 51 of 71
We believe management has the appropriate plans
to bring GCS-100 to markets where the FDA is
highly likely to allow an expedited approval
process. The Company needs to form an
agreement with a large pharmaceutical company
within a few quarters or it will need additional
financing to complete the Phase II clinical trials.
www.cohenresearch.com
Email: [email protected],
[email protected]
Catalysts for the stock in 2005 are (a)
commencement of the Phase I/II clinical trial for
CLL, (b) results from Phase I clinical trial for
solid tumors, (c) an agreement with large
pharmaceutical company, (d) preliminary data
from the Phase I/II clinical trial for multiple
myeloma. In 2006 we expect the catalysts will be
(a) results from the Phase I/II trial for CLL and (b)
commencement of Phase II trials for each of the
three indications.
Bradley J Carver, President and CEO
Bradley J Carver, 44, the Chief Executive Officer
since June 2000, has been President and Treasurer
and a member of the Board of Directors of the
Company since March 1995 and has been the
President, Chief Financial Officer, Treasurer and a
member of the Board of Directors of IGG since
February 1993. Mr. Carver is a Class III director
whose term expires in 2007. Mr. Carver was
elected interim Chairman of the Board of
Directors in February 2003. Mr. Carver has been
President, Chief Financial Officer, Treasurer and a
member of the Board of Directors of SafeScience
Products, Inc., a wholly owned subsidiary of the
Company since its inception in June 1995. Mr.
Carver received a Bachelor of Arts degree in
management from Michigan State University in
1983.
We believe the stock has been a weak performer
in the past year due to (1) the patent challenge by
former CEO, (2) the need for funding, and (3) the
required clinical trials for the LE version of GCS100 effectively minimize the results of the original
Phase I/II clinical trials on the higher ethanol
version of GCS-100.
We believe the current stock price represents an
opportune entry point for participating in the
emerging glycomics field. We believe the
challenge by the former CEO will have minimal or
no effect on the Company, and pre-clinical data on
GCS-100 LE is impressive. Previously completed
Phase I/II trials provide additional data to potential
pharmaceutical partners. If our forecast for events
in 2005 unfold, the current stock price offers
tremendous value. The stock is appropriate for
long term growth investors who wish to
participate in new therapies for the treatment of
cancer.
GG/Cohen Independent Research Group
Tel: (415) 454-6985
MANAGEMENT
John W. Burns, SVP, CFO and Corporate
Secretary
John W. Burns, 59, has been the Company's Chief
Financial Officer since January 2000, Senior Vice
President since March 2001 and a Class I Director,
whose term expires in 2008, since June 2002.
Prior thereto, Mr. Burns was the CFO/Senior Vice
President, Finance & Business Operations for
South Shore Hospital, a regional healthcare
services provider based in South Weymouth, MA,
from February 1993 to February 1999. Prior
thereto,
Mr.
Burns
was
the
Vice
President/Treasurer and a subsidiary CFO/Vice
President, Finance for Eastern Enterprises, a
NYSE-listed company engaged in energy and
marine transportation. Mr. Burns has also held
Page 52 of 71
corporate finance and treasury positions with
Allied-Signal, Citicorp Investment Bank, and
International Paper. Mr. Burns holds a Master of
Business Administration in Finance from New
York University and a Doctor of Philosophy
degree in Mathematics from Stevens Institute of
Technology.
Boston, MA and received his Bachelor of Arts
degree from Wesleyan University, Middletown,
CT.
Frederick E. Pierce, II, VP Business
Development
Frederick E. Pierce, II, 43, has been the
Company's Vice President of Business
Development since August 2002 and the
Company's Vice President of Finance and Investor
Relations since June 1998. Prior to joining the
Company, .Mr. Pierce was at Lehman Brothers,
where he was the New England private client
services liaison to healthcare investment banking.
Prior thereto, Mr. Pierce had over seven years
experience at Kidder Peabody and Merrill Lynch
representing and/or advising major biotechnology
and medical device companies. Mr. Pierce
received a Bachelor of Science degree in
chemistry from Hampshire College.
Bruce R. Zetter, Ph.D.
Dr. Zetter is the Charles Nowiszewski Professor of
Cancer Biology at the Harvard Medical School
and Vice President for Research and Chief
Scientific Officer at Children’s Hospital in
Boston, MA. Dr. Zetter has won numerous awards
for his work in the field of cancer research
including a Faculty Research Award from the
American Cancer Society and the MERIT award
from the US National Cancer Institute. Dr. Zetter
is regarded internationally as a leader in the
research of tumor progression, cancer diagnosis,
cancer metastasis, and tumor angiogenesis.
William O. Fabbri, General Counsel
William O. Fabbri, 36, has been the Company's
General Counsel since September 2002. Prior to
joining the Company, Mr. Fabbri was employed
by the international law firm of McDermott, Will
& Emery, where he worked in the corporate
department since 1996.
Mr. Fabbri has extensive experience in corporate
and securities law, public company reporting
requirements and shareholder communications. He
has structured and negotiated strategic licensing
agreements, commercial contracts, and was
actively involved in securities offerings as well as
merger and acquisition activities.
Mr. Fabbri holds a Juris Doctor, magna cum
laude, from Boston University School of Law,
SCIENCE ADVISORY
BOARD
Visit Dr. Zetter's laboratory at The Zetter Lab.
David R. Elmaleh Ph.D
Dr. Elmaleh is the Director, Contrast Media
Chemistry, Division of Radiological Sciences at
Massachusetts General Hospital and an Associate
Professor of Radiology at Harvard Medical School
in Boston, MA. Dr. Elmaleh has made numerous
contributions to the fields of nuclear medicine,
PET and SPECT (single photon emission
computerized tomography). Dr Elmaleh has
developed novel approaches such as labeled
antisense attached to vectors and purine receptor
specific ligands for imaging and treating infection,
tumors and cardiovascular disorders. He is a
named inventor on 10 issued patents and has more
than 20 patents pending, serves on multiple
scientific advisory boards and has authored or
coauthored 100 publications.
Page 53 of 71
Daniel D. Von Hoff, M.D.
Dr. Von Hoff is currently Professor of Medicine,
Molecular and Cellular Biology and Pathology
and Member of the Cancer Center at the
University of Arizona and Director of the Arizona
Health Services Center’s Cancer Therapeutic
Program and Translational Drug Development
Division of the Translational Genomics Research
Institute. Dr. Von Hoff also serves as Chief
Scientific Officer for US Oncology. He has
published more than 480 papers, 122 book
chapters, and more than 822 abstracts.
Dr. Von Hoff is the past President of the American
Association for Cancer Research, a Fellow of the
American College of Physicians, and a member
and past board member of the American Society
of Clinical Oncology. He is a founder and board
member of ILEX Oncology, Inc. He is also
founder and the Editor Emeritus of Investigational
New Drugs - The Journal of New Anticancer
Agents; and, Editor of Molecular Cancer
Therapeutics.
Philip Wayne Kantoff, M.D.
Dr. Kantoff is a Professor of Medicine at the
Harvard Medical School. He is also the Chief of
the Division of Solid Tumor Oncology, and
Director of its Lank Center for Genitourinary
Oncology at the Dana Farber Cancer Institute and
Brigham and Women's Hospital. He is also Leader
of the Prostate Cancer Program at the DanaFarber/Harvard Cancer Center. The DanaFarber/Harvard Cancer Center is the largest
collaborative effort in the world in the war on
cancer.
Dr. Kantoff is a four-time winner of the
CaPCURE Foundation Research Award, and from
1997 through 2003 has received grant funding
from the CaPCURE Foundation Award Therapy
Consortium. He is the Director of the Dana Farber
Harvard Cancer Center SPORE in Prostate
Cancer, a multi-million dollar 5 year grant
sponsored by the NCI. In addition, he has served
on the editorial boards of Journal of Clinical
Oncology, Urologic Oncology, Prostate Cancer
and Prostatic Disease, Oncology: Index &
Reviews, and served as Editor in Chief of The
Prostate Journal from 1998-2002. He has also
authored or co-authored several books and texts,
including approximately 214 original articles,
abstracts, editorials, reviews and text chapters.
Paul J. Vilk, R.Ph., RAC
Mr. Vilk is Vce President of Regulatory Affairs
for Spectrum Pharmaceuticals, Inc. where he
directs the regulatory and compliance functions
for a public oncology drug development company.
He is an experienced regulatory affairs
professional and project manager specializing in
oncology, metabolic and infectious diseases. Prior
to joining Spectrum he was Vice President,
Program Management and Regulatory Affairs for
the Sabin Vaccine Institute and Vice President,
Regulatory Affairs for Beacon Laboratories. In
addition he has held regulatory affairs director
level positions for Pro-Neuron, Inc. and Ilex
Oncology, Inc. He has also provided regulatory
consultancy to several organizations including
SuperGen, Inc. and BioStratum, Inc. In addition to
his industrial experience, Mr. Vilk made notable
regulatory contributions to the Cancer Therapy
Evaluation Program, National Cancer Institute,
NIH during many years of government service. He
is a retired Captain of the US Public Health
Service Commissioned Corp, is a licensed
pharmacist in New York and Maryland and is
Regulatory Affairs Certified.
Peter H. Seeberger
Dr. Seeberger is a professor of chemistry at the
Swiss Federal Institute of Technology (ETH) in
Zurich and an affiliate professor at the Burnham
Page 54 of 71
Institute in LaJolla, California.
Professor
Seeberger is the Editor of Chemistry & Biology
and serves on the editorial advisory boards of
several other journals. Previously, Dr. Seeberger
was a postdoctoral fellowship at the SloanKettering Institute for Cancer Research in New
York City and the Firmenich Associate Professor
of Chemistry at the Massachusetts Institute of
Technology. His research interests focus on the
interface of chemistry and biology, in particular on
the role of complex carbohydrates and
glycoconjugates in information transfer in
biological systems. His group has developed new
methods for the automated solid-phase synthesis
of
complex
carbohydrates
and
glycosaminoglycans that serve as molecular tools.
Other interests include synthetic methodology,
total synthesis, immunology, and biochemical and
biophysical studies of carbohydrates.
Among awards he has received are the
Technology Review Top 100 Young Innovator
Award (1999), the Edgerton Award (2002), an
Arthur C. Cope Young Scholar Award from the
American Chemical Society (2003), Otto-Klung
Weberbank Prize for Chemistry (2004),
Carbohydrate Research Award for Creativity in
Carbohydrate Chemistry (2005) and he was named
a GlaxoSmithKline Chemistry Scholar (2002) and
Alfred P. Sloan Fellow (2002).
Page 55 of 71
INCOME STATEMENT, ANNUAL
($ millions)
Net Sales
COGS
Depreciation
Gross Profit
S,G&A
Research & Development
EBITDA
Interest Expense (-)
Operating Income
Non-Operating Income (Expense) (+)
Pretax Income
Provision for Income Taxes (-)
Minority Interest (-)
Investment Gains/Losses (+)
Other Income (+)
Income from Continuing Operations
Extras & Discontinued Operations (+)
Net Income
Basic Earnings Per Share
Diluted Net EPS
Diluted EPS (Before Non-recur items)
Common Dividend
Dividend per Share
Average Basic Shares
Average Diluted Shares
12/31/02
0.00
0.00
0.00
0.00
3.84
1.96
-15.91
0.00
-5.80
0.00
-5.80
0.00
0.00
0.00
-4.31
-10.11
-2.73
-12.84
-2.07
-2.07
-2.07
0.00
0.00
6.19
6.19
Reported
12/31/03
0.00
0.00
0.00
0.00
3.57
4.08
-15.27
0.00
-7.65
0.00
-7.65
0.00
0.00
0.00
0.03
-7.62
-0.43
-8.05
-1.18
-1.18
-1.18
0.00
0.00
6.81
6.81
12/31/04
0.00
0.00
0.00
0.00
5.06
5.16
-20.34
0.00
-10.22
0.00
-10.22
0.00
0.00
0.00
0.09
-10.13
-0.45
-10.58
-1.15
-1.15
-1.15
0.00
0.00
9.22
9.22
Page 56 of 71
Estimated
12/31/05
12/31/06
10.00
0.00
0.00
0.00
0.40
1.60
10.00
0.00
4.20
4.40
7.72
10.00
1.11
-10.40
0.00
0.00
-1.92
-14.40
0.00
0.00
-1.92
-14.40
0.00
0.00
0.00
0.00
0.00
0.00
0.01
0.00
-1.91
-14.40
-0.12
0.00
-2.03
-14.40
-0.20
-0.61
-0.20
-0.61
-0.19
-0.61
0.00
0.00
0.00
0.00
10.25
23.45
10.25
23.45
INCOME STATEMENT, QUARTERLY
($ millions)
Net Sales
COGS
Depreciation
Gross Profit
S,G&A
Research & Development
EBITDA
Interest Expense (-)
Operating Income
Non-Operating Income (Expense) (+)
Pretax Income
Provision for Income Taxes (-)
Minority Interest (-)
Investment Gains/Losses (+)
Other Income (+)
Income from Continuing Operations
Extras & Discontinued Operations (+)
Net Income
Basic Earnings Per Share
Diluted Net EPS
Diluted EPS (Before Non-recur items)
Common Dividend
Dividend per Share
Average Basic Shares
Average Diluted Shares
03/31/04 06/30/04 09/30/04 12/31/04 03/31/05
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
1.28
1.45
1.34
0.99
1.00
1.38
1.22
1.36
1.20
1.52
-5.31
-7.93
-10.65
-12.31
-5.03
0.00
0.00
0.00
0.00
0.00
-2.66
-2.67
-2.70
-2.19
-2.52
0.00
0.00
0.00
0.00
0.00
-2.66
-2.67
-2.70
-2.19
-2.52
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.01
0.06
0.01
0.01
0.01
-2.65
-2.61
-2.69
-2.18
-2.51
-0.11
-0.11
-0.12
-0.11
-0.12
-2.76
-2.72
-2.80
-2.30
-2.63
-0.36
-0.30
-0.30
-0.19
-0.26
0.00
0.00
0.00
0.00
0.00
-0.36
-0.30
-0.30
-0.19
-0.26
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
8.27
8.45
10.08
9.22
10.08
8.27
8.45
10.08
9.22
10.08
6/30/05
0.00
0.00
0.00
0.00
1.00
2.00
-2.00
0.00
-3.00
0.00
-3.00
0.00
0.00
0.00
0.00
-3.00
0.00
-3.00
-0.30
-0.30
-0.30
0.00
0.00
10.10
10.10
Page 57 of 71
9/30/05 12/31/05
10.00
0.00
0.00
0.00
0.00
0.40
10.00
0.00
1.20
1.00
2.10
2.10
7.70
-2.10
0.00
0.00
6.70
-3.10
0.00
0.00
6.70
-3.10
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
6.70
-3.10
0.00
0.00
6.70
-3.10
0.65
-0.30
0.65
-0.30
0.65
-0.30
0.00
0.00
0.00
0.00
10.30
10.50
10.30
10.50
3/31/06
0.00
0.00
0.40
0.00
1.10
2.50
-2.60
0.00
-3.60
0.00
-3.60
0.00
0.00
0.00
0.00
-3.60
0.00
-3.60
-0.34
-0.34
-0.34
0.00
0.00
10.70
10.70
6/30/06
0.00
0.00
0.40
0.00
1.10
2.50
-2.60
0.00
-3.60
0.00
-3.60
0.00
0.00
0.00
0.00
-3.60
0.00
-3.60
-0.13
-0.13
-0.13
0.00
0.00
26.70
26.70
9/30/06 12/31/06
0.00
0.00
0.00
0.00
0.40
0.40
0.00
0.00
1.10
1.10
2.50
2.50
-2.60
-2.60
0.00
0.00
-3.60
-3.60
0.00
0.00
-3.60
-3.60
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
-3.60
-3.60
0.00
0.00
-3.60
-3.60
-0.13
-0.13
-0.13
-0.13
-0.13
-0.13
0.00
0.00
0.00
0.00
27.70
28.70
27.70
28.70
BALANCE SHEET, ANNUAL
($ millions)
Assets
Cash & Marketable Securities
Receivables
Inventories
Notes Receivable
Other Current Assets
Total Current Assets
Gross Property/Plant/Equipment
Accumulated Depreciation
Net Property/Plant/Equipment
Investments & Advances
Deferred Charges
Intangibles
Other Non-Current Assets
Other Assets
Total Assets
Liabilities & Shareholders Equity
Accounts Payable
Notes Payable
Current Long-Term Debt
Current Capital Leases
Accrued Expenses
Income Taxes Payable
Other Current Liabilities
Total Current Liabilities
Mortgages
Deferred Charges
Non-Current Capital Leases
Minority Interest
Convertible Debt
Total Long-Term Debt
Other Long-Term Liabilities
Total Long Term Liabilities
Total Liabilities
Preferred Stock
Net Common Stock
Capital Surplus
Retained Earnings
Other Equity Adjustments
Common Equity
Treasury Stock
Shareholders' Equity
Total Liabilities and Equity
12/31/00
2.55
2.00
0.00
0.00
0.28
4.83
0.76
(0.32)
0.44
0.00
0.00
0.00
0.00
0.51
5.78
1.36
0.00
0.00
0.00
0.80
0.00
0.91
3.07
0.00
0.00
0.00
0.00
0.00
0.00
0.87
0.00
3.94
0.00
0.24
45.57
(43.96)
(0.00)
1.85
0.00
1.85
5.78
12/31/01
12/31/02
12/31/03
12/31/04
7.98
6.30
3.19
2.24
0.18
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.27
0.33
0.30
0.34
8.43
6.63
3.49
2.58
0.78
0.96
1.00
1.16
(0.44)
(0.58)
(0.69)
(0.80)
0.34
0.38
0.31
0.36
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.12
0.12
0.16
0.16
8.89
7.13
3.96
3.10
1.09
0.00
0.00
0.00
1.30
0.00
0.33
2.72
0.00
0.00
0.00
0.00
0.00
0.00
15.09
0.00
17.81
0.00
0.34
57.43
(66.69)
(0.00)
(8.92)
0.00
(8.92)
8.89
Page 58 of 71
0.59
0.00
0.00
0.00
0.35
0.00
0.15
1.09
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
1.09
0.00
0.37
82.47
(76.80)
(0.00)
6.04
0.00
6.04
7.13
0.81
0.00
0.00
0.00
0.49
0.00
0.06
1.36
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
1.36
0.00
0.08
86.94
(84.42)
0.00
2.60
0.00
2.60
3.96
1.31
0.00
0.00
0.00
0.45
0.00
0.00
1.76
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
1.76
0.00
0.10
95.79
(94.55)
(0.00)
1.34
0.00
1.34
3.10
BALANCE SHEET, QUARTERLY
($ millions)
Assets
Cash & Marketable Securities
Receivables
Inventories
Notes Receivable
Other Current Assets
Total Current Assets
Gross Property/Plant/Equipment
Accumulated Depreciation
Net Property/Plant/Equipment
Investments & Advances
Deferred Charges
Intangibles
Other Non-Current Assets
Other Assets
Total Assets
Liabilities & Shareholder’s Equity
Accounts Payable
Notes Payable
Current Long-Term Debt
Current Capital Leases
Accrued Expenses
Income Taxes Payable
Other Current Liabilities
Total Current Liabilities
Mortgages
Deferred Charges
Non-Current Capital Leases
Minority Interest
Convertible Debt
Total Long-Term Debt
Other Long-Term Liabilities
Total Long Term Liabilities
Total Liabilities
Preferred Stock
Net Common Stock
Capital Surplus
Retained Earnings
Other Equity Adjustments
Common Equity
Treasury Stock
Shareholders' Equity
Total Liabilities and Equity
09/30/03 12/31/03
03/31/04 06/30/04 09/30/04
12/31/04 03/31/05
4.7
0.0
0.0
0.0
0.4
5.1
1.1
(0.7)
0.4
0.0
0.0
0.0
0.0
0.1
5.6
3.2
0.0
0.0
0.0
0.3
3.5
1.0
(0.7)
0.3
0.0
0.0
0.0
0.0
0.2
4.0
5.1
0.0
0.0
0.0
0.3
5.3
1.1
(0.7)
0.4
0.0
0.0
0.0
0.0
0.2
5.9
2.5
0.0
0.0
0.0
0.2
2.7
1.1
(0.7)
0.4
0.0
0.0
0.0
0.0
0.2
3.2
4.6
0.0
0.0
0.0
0.2
4.8
1.2
(0.8)
0.4
0.0
0.0
0.0
0.0
0.2
5.4
2.2
0.0
0.0
0.0
0.3
2.6
1.2
(0.8)
0.4
0.0
0.0
0.0
0.0
0.2
3.1
2.5
0.0
0.0
0.0
0.2
2.7
1.2
(0.8)
0.4
0.0
0.0
0.0
0.0
0.2
3.2
0.4
0.0
0.0
0.0
0.3
0.0
0.1
0.9
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.9
0.0
0.5
86.3
(82.0)
0.0
4.8
0.0
4.8
5.6
0.8
0.0
0.0
0.0
0.5
0.0
0.1
1.4
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
1.4
0.0
0.5
86.6
(84.4)
0.0
2.6
0.0
2.6
4.0
1.0
0.0
0.0
0.0
0.6
0.0
0.0
1.6
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
1.6
0.0
0.5
90.9
(87.1)
0.0
4.3
0.0
4.3
5.9
1.1
0.0
0.0
0.0
0.5
0.0
0.0
1.6
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
1.6
0.0
0.5
91.0
(89.7)
(0.0)
1.8
(0.2)
1.7
3.2
1.5
0.0
0.0
0.0
0.4
0.0
0.0
1.9
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
1.9
0.0
0.6
95.3
(92.4)
0.0
3.5
0.0
3.5
5.4
1.3
0.0
0.0
0.0
0.5
0.0
0.0
1.8
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
1.8
0.0
0.1
95.8
(94.6)
(0.0)
1.3
0.0
1.3
3.1
2.0
0.0
0.0
0.0
0.6
0.0
0.0
2.6
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
2.6
0.0
0.1
97.6
(97.1)
0.0
0.6
0.0
0.6
3.2
Page 59 of 71
STATEMENT OF CHANGES IN CASH, ANNUAL
($ millions)
Net Income ($mil)
Depreciation ($mil)
Cash from Discontinued Oper ($mil)
Net Other Adjustments ($mil)
Net Ch in Oper Assets and Liabilities
Net Cash from Oper Activities $mil
12/31/00
(17.27)
0.16
0
3.82
0
(13.29)
12/31/01
(22.73)
0.11
0.00
14.68
0.00
(7.94)
12/31/02
(10.11)
0.14
0.00
1.58
0.00
(8.39)
12/31/03
(7.62)
0.13
0.00
0.44
0.00
(7.05)
12/31/04
(10.12)
0.13
0.00
0.41
(0.04)
(9.58)
Property/Plant/Equipment ($mil)
Subsidiaries ($mil)
Investments ($mil)
Cash Inflow from Invest Activites $mil
Net Cash by Invest Activities $mil
(0.14)
0.00
0.00
(0.25)
(0.39)
(0.02)
0.00
0.00
0.32
0.30
(0.18)
0.00
0.00
0.00
(0.18)
(0.18)
0.00
(0.04)
0.00
(0.22)
(0.18)
0.00
0.00
0.00
(0.18)
Issuance of Equity Shares ($mil)
Issuance of Debt Securities ($mil)
Bank and Other Borrowings ($mil)
Dividends and Distributions ($mil)
Other Cash from Finan Activities $mil
Net Cash by Finan Activities ($mil)
12.85
0.00
0.00
0.00
0
12.85
9.86
0.00
0.00
0.00
3.21
13.07
5.23
0.00
0.00
0.00
1.67
6.90
3.78
0.00
0.00
0.00
0.39
4.17
8.80
0.00
0.00
0.00
0.01
8.81
Exchange Rate Effect ($mil)
Net Change in Cash ($mil)
Beginning Cash ($mil)
Ending Cash ($mil)
0.00
(0.83)
3.38
2.55
0.00
5.43
2.55
7.98
0.00
(1.68)
7.98
6.30
0.00
(3.11)
6.30
3.19
0.00
(0.95)
3.19
2.24
Page 60 of 71
STATEMENT OF CHANGES IN CASH, QUARTERLY
($ millions)
Actual Quarterly Data, not YTD data
Net Income
Depreciation
Cash from Discontinued Oper
Net Other Adjustments
Net Ch in Oper Assets and Liabilities
Net Cash from Oper Activities
09/30/03
12/31/03 03/31/04 06/30/04 09/30/04 12/31/04 03/31/05
(1.83)
(2.43)
(2.65)
(2.61)
(2.69)
(2.17)
(2.51)
0.04
0.02
0.03
0.03
0.03
0.04
0.03
0.00
0.00
0.00
0.00
0.00
0.00
0.00
(0.45)
0.71
0.29
0.02
0.31
(0.21)
0.96
0.00
0.00
0.00
0.00
0.00
0.00
0.00
(2.24)
(1.70)
(2.33)
(2.56)
(2.35)
(2.34)
(1.52)
Property/Plant/Equipment
Subsidiaries
Investments
Cash Inflow from Invest Activites
Net Cash by Invest Activities
0.00
0.00
0.00
0.00
0.00
(0.03)
0.00
(0.04)
0.00
(0.07)
(0.11)
0.00
0.00
0.00
(0.11)
(0.04)
0.00
0.00
0.00
(0.04)
(0.02)
0.00
0.00
0.00
(0.02)
(0.01)
0.00
0.00
0.00
(0.01)
(0.01)
0.00
0.00
0.00
(0.01)
Issuance of Equity Shares
Issuance of Debt Securities
Bank and Other Borrowings
Dividends and Distributions
Other Cash from Finan Activities
Net Cash by Finan Activities
3.78
0.00
0.00
0.00
0.16
3.94
0.00
0.00
0.00
0.00
0.23
0.23
4.31
0.00
0.00
0.00
0.01
4.32
0.00
0.00
0.00
0.00
0.00
0.00
4.49
0.00
0.00
0.00
(0.01)
4.48
0.00
0.00
0.00
0.00
0.01
0.01
1.77
0.00
0.00
0.00
0.00
1.77
Exchange Rate Effect
Net Change in Cash
Beginning Cash
Ending Cash
0.00
1.70
3.04
4.74
0.00
(1.54)
4.74
3.19
0.00
1.88
3.19
5.07
0.00
(2.60)
5.07
2.47
0.00
2.11
2.47
4.58
0.00
(2.34)
4.58
2.24
0.00
0.24
2.24
2.48
Page 61 of 71
This chart indicates the Company’s strong liquidity position.
Quarterly Liquidity Metrics, Total Assets
Quarterly Liquidity Metrics, Total Assets
03/31/05
12/31/04
09/30/04
06/30/04
03/31/04
12/31/03
09/30/03
06/30/03
03/31/03
12/31/02
09/30/02
06/30/02
100%
90%
80%
70%
60%
50%
40%
30%
20%
10%
0%
Cash / Total Assets
Current Assets / Total Assets
Receivables / Total Assets
Inventory / Total Assets
Page 62 of 71
GLOSSARY (STEDMANS MEDICAL DICTIONARY)
Anemia—any condition in which the number of
red blood cells, the amount of hemoglobin in 100
ml of blood, and/or the volume of packed red
blood cells are less than normal. Anemia is
frequently manifested by pallor of the skin and
mucous membranes, shortness of breath,
palpitations of the heart, soft systolic murmurs,
lethargy, and fatigability.
Angiogenesis Factor—a substance of 2000 to
20,000 MW which is secreted by macrophages
and stimulates neovascularization in healing
wounds or in the stroma of tumors.
Carbohydrate—class name for the aldehydic or
ketonic derivatives of polyhydric alcohols. Such
compounds have formulas that may be written
Cn(H2O)n, although they are not true hydrates.
The
group
includes
simple
sugars
(monosaccharides, disaccharides, etc.), as well as
macromolecular (polymeric) substances such as
starch, glycogen, and cellulose polysaccharides.
Carcinoma— any of the various types of
malignant neoplasm derived from epithelial tissue,
Carcinomas are identified histologically on the
basis of invasiveness and the changes that indicate
anaplasia, i.e., loss of polarity of nuclei, loss of
orderly maturation of cells (especially in
squamous cell type), variation in the size and
shape of cells, hyperchromatism of nuclei (with
clumping of chromatin), and increase in the
nuclear-cytoplasmic ratio.
Chemotherapy— treatment of disease by means
of chemical substances or drugs; usually used in
reference to neoplastic disease.
Cytotoxic— detrimental or destructive to cells,
causing cell death.
Deoxyribonucleic Acid (DNA)— the type of
nucleic acid containing deoxyribose as the sugar
component and found principally in the nuclei
(chromatin, chromosomes) and mitochondria of
animal and plant cells, usually loosely bound to
protein (hence the term deoxyribonucleoprotein).
DNA may be open-ended or circular, single- or
double-stranded, and many forms are known, the
most commonly described of which is doublestranded. Chromosomes are composed of doublestranded DNA; mitochondrial DNA is circular.
Galectins— a type of lectin that attaches to
molecules that affect cell growth and development
Glycoconjugates—a general class of sugarcontaining macromolecules of the body including
glycolipids, glycoproteins, and proteoglycans.
They are carbohydrates which are linked to a nonsugar structure (lipid or protein).
Glycan— a polysaccharide
Glycoscience— the study of carbohydrates and
their use in biological systems
Lectins—a protein of primarily plant (usually
seed) origin that binds glycoproteins on the
surface of cells causing agglutination and
precipitation. They help form receptor sites on a
cell surface
Leukemia— progressive proliferation of
abnormal leukocytes found in hemopoietic tissues,
other organs, and usually in the blood in increased
numbers. Leukemia is classified by the dominant
Page 63 of 71
cell type, and by duration from onset to death.
This occurs in acute leukemia within a few months
in most cases, and is associated with acute
symptoms including severe anemia, hemorrhages,
and slight enlargement of lymph nodes or the
spleen. The duration of chronic leukemia exceeds
one year, with a gradual onset of symptoms of
anemia or marked enlargement of spleen, liver, or
lymph nodes.
Lipids—a group of organic compounds which
contains oils and fatty substances.
often effected through the –SH groups of two
sulfur-containing L-cysteinyl residues, as well as
by noncovalent forces (hydrogen bonds, lipophilic
attractions, etc.).
Ribonucleic Acid (RNA) — a macromolecule
consisting of ribonucleoside residues connected by
phosphate bonds, concerned in the control of
cellular chemical process, especially protein
synthesis. RNA is found in all cells, in both nuclei
and cytoplasm, and also in many viruses.
Metastasis—The spread of a disease process from
one part of the body to another part of the body
Monosaccharides—Simple sugars
Neoplasm— an abnormal tissue that grows by
cellular proliferation more rapidly than normal and
continues to grow after the stimuli that initiated
the new growth cease. Neoplasms show partial or
complete lack of structural organization and
functional coordination with the normal tissue,
and usually form a distinct mass of tissue which
may be either benign (benign tumor) or malignant
(cancer).
Polysaccharide— a carbohydrate containing a
large number of saccharide groups; e.g., starch.
Protein— macromolecules consisting of long
sequences of )-amino acids [H2N–CHR–COOH]
in peptide (amide) linkage (elimination of H2O
between the )-NH2 and )-COOH of successive
residues). Protein is three-fourths of the dry
weight of most cell matter and is involved in
structures,
hormones,
enzymes,
muscle
contraction, immunological response, and
essential life functions. The amino acids involved
are generally the 20 )-amino acids (glycine, Lalanine, etc.) recognized by the genetic code.
Cross-links yielding globular forms of protein are
Page 64 of 71
BIBLIOGRAPHY
1. http://www.ncbi.nlm.nih.gov/books/bv.fcgi?rid=glyco.section.57
2. Essentials of Glycobiology Varki, Ajit, Cummings, Richard Esko, Jeffrey Freeze, Hudson, Hart,
Gerald, Marth, Jamey et. al 2002
3. http://www.worldwidewords.org/turnsofphrase/tp-gly1.htm
4. http://www.fda.gov/fdac/special/newdrug/testing.html
5. GlycoGenesys Annual Report, 2003
6. http://content.nejm.org/cgi/content/full/348/14/1365?hits=20&where=fulltext&andorexactfulltext
=and&searchterm=caspase+9&sortspec=Score%2Bdesc%2BPUBDATE_SORTDATE%2Bdesc
&excludeflag=TWEEK_element&searchid=1119379378326_5812&FIRSTINDEX=0&journalco
de=nejm
Page 65 of 71
Disclaimer:
This report/release is for informational purposes only. All information contained herein is based on public information. Cohen Independent Research
Group (CIRG) is a registered investment advisor that distributes contracted third party independent research from outside securities analysts. CIRG
issues two types of reports: fundamental research reports that contain securities recommendations, and statistical data reports from The Cohen
Financial and Valuation Model, and other statistical reports that do not recommend any security purchase (Buy), Hold/Neutral No Recommendation or
Sell. CIRG’s contracted analysts issue certain securities recommendations for fundamental research reports under NASD Rule 2711 defined as: Buy,
Hold/Neutral or Sell recommendations. The Cohen Financial and Valuation Model contains statistical data derived from SEC filings. This Model does
not recommend the Purchase (Buy), Hold, Sale, No Recommendation or Short Sale of any security. CIRG purchases certain financial data derived
from SEC filings and data compiled by other vendors. CIRG and its data vendors do not warranty that such SEC filing data and other compiled data is
accurate. CIRG advises recipients of all such data to be validated from the issuing company including all statistical information derived from SEC
filings contained herein. Neither CIRG nor any data vendor shall be held liable for any misinformation contained in any SEC filing data or compiled
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Model assume full responsibility for the accuracy of all SEC filing data and compiled data from other sources, and are urged to confirm that data with
the specific issuing company. For fundamental research reports, CIRG’s outside contract analysts may at their option, assign a No Recommendation to
certain research reports without opinion or rating, also published for informational purposes only. Under no circumstances is this report/release to be
used or considered as an offer to sell or a solicitation of any offer to buy any security or other debt instruments, or any options, futures or other
derivatives related to such securities herein. CIRG and its affiliates may trade for its own account, and own related securities of the issuer for any of
CIRG’s managed accounts as required under the provisions of NASD Rule 2711. CIRG or its affiliates, directors, officers and employees, may have a
long or short position in securities of the issuer or related investments as required by NASD Rule 2711, and may effect securities transactions with
CIRG clients through Direct Access Partners, Ltd. Investors interested in purchasing securities are urged to read the Prospectus, 10K, 10Q other
relevant public documents in full, and to conduct their own research and due diligence. CIRG’s outside contracted analysts reserve the right to change
their opinion at any point in time as they deem necessary. There is no guarantee that the target price for the stock will be met or that predicted business
results for the company will be met. Analysts engaged by CIRG are responsible for the preparation and substance of CIRG’s research reports. CIRG
does not supervise any outside contracted analyst and does not guarantee this report to be error-free or factually accurate. Conclusions prepared by
outside contracted analysts are deemed to be reasonable at the time of issuance of the report. All decisions are made solely by the outside contracted
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way related to the specific recommendations or views contained in this research report/release or note, nor is it related to price performance or volume
of shares traded in the referenced security. CIRG or its affiliates may from time to time perform consulting or other services for, or solicit consulting
or other business from any entity mentioned in this report/release. This research report/release has been prepared for general circulation and is
circulated for general information only. It does not have regard to the specific investment objective, financial situation, suitability, and the particular
need of any specific person who may receive this report/release. Investors should seek financial advice regarding the appropriateness of investing in
any securities or investment strategies discussed or recommended in this report/release and should understand that statements regarding future
prospects may not be realized. Investors should note that income from such securities, if any, may fluctuate and that each security's price or value may
rise or fall substantially. Accordingly, investors may receive back less than originally invested. Past performance is not indicative of future
performance. CIRG has not entered into a soft dollar agreement with the referred to company. CIRG does not currently have an investment banking
relationship with the company, or a finder’s fee agreement with the company. The Private Securities Litigation Reform Act of 1995 provides investors
a ‘safe harbor’ in regard to forward-looking statements. CIRG cautions all investors that such forward-looking statements in this report are not
guarantees of future performance. Unknown risk, including bankruptcy, uncertainties, as well as other uncontrollable or unknown factors may cause
actual results to materially differ from the results, performance or expectations expressed or implied by such forward-looking statement. CIRG urges
all potential investors to perform comprehensive due-diligence prior to making any investment. CIRG and its data vendors do not assume any
responsibility or liability for any investor decision made as a result of reading this report/release or accessing financial data from CIRG’s various data
vendors. This report/release has been prepared in accordance with the Securities and Exchange Commission's rules and amendments, Oct 23, 2000,
regarding 17 CFR Parts, 240, 243 and 249, (Selective Disclosure and Insider Trading), Regulation FD (Fair Disclosure), 10b5-1, 10b5-2, and NASD
Rules 2250, 2420, 2710 and 2711. The company has paid to CIRG $26,500 for the contracted period of research coverage. This document shall not be
copied nor reproduced in any form without the expressed written and authorized consent of CIRG. Copyright: CIRG and D. Paul Cohen
Recommendations: BUY 98%, SELL 2%
Page 66 of 71
Notes:
Page 67 of 71
Notes:
Page 68 of 71
Notes:
Page 69 of 71
Notes:
Page 70 of 71
Notes:
Page 71 of 71

GlycoGenesys, Inc. $1.10 BUY

Transcription

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