IT
EM 2. MANAGEMENT'S DISCUSSION AND
ANALYSIS OR PLAN OF OPERATION
The
following discussion and analysis should be read in conjunction with our
unaudited financial statements and related notes included in this report. This
report contains "forward-looking statements" within the meaning of the Private
Securities Litigation Reform Act of 1995. The statements contained in this
report that are not historic in nature, particularly those that utilize
terminology such as "may," "will," "should," "expects," "anticipates,"
"estimates," "believes," or "plans" or comparable terminology are
forward-looking statements based on current expectations and
assumptions.
Various
risks and uncertainties could cause actual results to differ materially from
those expressed in forward-looking statements. All forward-looking statements in
this document are based on information currently available to us as of the date
of this report, and we assume no obligation to update any forward-looking
statements. Forward-looking statements involve known and unknown risks,
uncertainties and other factors that may cause the actual results to differ
materially from any future results, performance or achievements expressed or
implied by such forward-looking statements.
OUR
CORPORATE HISTORY
NanoViricides,
Inc. was incorporated under the laws of the State of Colorado on July 25, 2000
as Edot-com.com, Inc
.
and was organized for the purpose of conducting internet retail sales. On
April 1, 2005, Edot-com.com, Inc.
was incorporated under
the laws of the State of Nevada for the purpose of re-domiciling the Company as
a Nevada corporation, Edot-com.com (Nevada). On April 15, 2005, Edot-com.com
(Colorado) and Edot-com.com (Nevada) were merged and Edot-com.com, Inc.,
(ECMM)
a Nevada
corporation, became the surviving entity. On April 15, 2005, the authorized
shares of common stock was increased to 300,000,000 shares at $.001 par value
and the Company effected a 3.2 - 1 forward stock split effective May 12,
2005.
On June
1, 2005, Edot-com.com, Inc. acquired NanoViricides, Inc., a privately owned
Florida corporation (“NVI”), pursuant to an Agreement and Plan of Share Exchange
(the “Exchange”). NVI was incorporated under the laws of the State of Florida on
May 12, 2005 and its sole asset was comprised of a licensing agreement with
TheraCour Pharma, Inc. (“TheraCour,” an approximately 30% shareholder of NVI)
for rights to develop and commercialize novel and specifically targeted drugs
based on TheraCour's targeting technologies, against a number of human viral
diseases. (For financial accounting purposes, the acquisition was a reverse
acquisition of the Company by NVI, under the purchase method of accounting, and
was treated as a recapitalization with NVI as the acquirer). Upon consummation
of the Exchange, ECMM adopted the business plan of NVI.
Pursuant
to the terms of the Exchange, ECMM acquired NVI in exchange for an aggregate of
80,000,000 newly issued shares of ECMM common stock, resulting in an aggregate
of 100,000,000 shares of ECMM common stock issued and outstanding. As a result
of the Exchange, NVI became a wholly-owned subsidiary of ECMM. The ECMM shares
were issued to the NVI Shareholders on a pro rata basis, on the basis of 4,000
shares of the ECMM Common Stock for each share of NVI common stock held by such
NVI Shareholder at the time of the Exchange.
On June
28, 2005, NVI was merged into its parent ECMM and the separate
corporate existence of NVI ceased. Effective on the same date, Edot-com.com,
Inc., changed its name to NanoViricides, Inc. and its stock symbol on the Pink
Sheets to “NNVC. The Company submitted a Form-10SB to the SEC to
become a reporting company on November 14, 2006. The Company’s filing
status became effective in March, 2007. On June 28, 2007, the company
became quotable on The OTC Bulletin Board under the symbol NNVC.OB.
The
Company is considered a development stage company at this time.
Management’s
Plan of Operation
NanoViricides,
Inc. (the “Company”), is an early developmental stage nano-biopharmaceutical
company engaged in the discovery, development and commercialization of
anti-viral therapeutics. The Company has no customers, products or revenues to
date, and may never achieve revenues or profitable operations. Our drugs are
based on several patents, patent applications, provisional patent applications,
and other proprietary intellectual property held by TheraCour Pharma, Inc., one
of the Company’s principal shareholders, from which we have licensed, in
perpetuity, the right to develop drug candidates for the treatment of
the following human viral diseases: Human Immunodeficiency Virus (HIV/AIDS),
Influenza including Asian Bird Flu Virus, Herpes Simplex Virus (HSV), Hepatitis
C Virus (HCV), Hepatitis B Virus (HBV), and Rabies. The Company and TheraCour
have agreed, in principle, to a Licensing Agreement to include additional virus
types among the virus types the Company is permitted to manufacture, use, and
offer for sale, and for payment of a license fee to TheraCour. The Company has
entered into an Additional License Agreement with TheraCour granting the Company
the exclusive licenses in perpetuity for technologies developed by TheraCour for
the additional virus types for Dengue viruses, Japanese Encephalitis virus, West
Nile Virus, Viruses causing viral Conjunctivitis (a disease of the eye) and
Ocular Herpes, and Ebola/Marburg viruses.
We are
seeking to add to our existing portfolio of products through our internal
discovery pre-clinical development programs and through an in-licensing
strategy. We focus our laboratory research and pre-clinical programs on specific
anti-viral solutions.
The
Company has incurred significant operating losses since its inception resulting
in an accumulated deficit of $13,652,172 at December 31, 2009. For the six
months ended December 31, 2009 the Company had a net loss of$1,656,637. Such
losses are expected to continue for the foreseeable future and until such time,
if ever, as the Company is able to attain sales levels sufficient to support its
operations.
To date,
we have engaged in organizational activities; sourcing compounds and materials;
developing novel compounds and nanomaterials, and experimentation with studies
on cell cultures and animals. We have generated funding through the issuances of
debt and private placement of common stock. We have not generated any
revenues and we do not expect to generate revenues in the near future. We may
not be successful in developing our drugs and start selling our products when
planned, or that we will become profitable in the future. We have incurred net
losses in each fiscal period since inception of our operations. The Company
currently has no long term debt.
NanoViricides
Technologies, Products in Development, and Collaborations
Pharmaceutical
drug development is an expensive and long duration proposition. Management’s
plan is to develop each of our nanoviricides® to the necessary stage(s) and then
engage into co-development relationships with other pharmaceutical companies.
Such co-development relationships usually may entail upfront payments,
milestones payments, cost-sharing, and eventual revenue-sharing, including
royalty on sales. There is no guarantee that we will be able to negotiate
agreements that are financially beneficial to the Company at the present stage.
Management plans to continue to raise additional funds as needed for our
continuing drug development efforts on public markets.
The
Company currently has several drug development programs. Our drug development
programs with large commercial interest include (1) Influenzas, (2) HIV, (3)
topical eye drops for viral diseases of the external eye, and (4) Herpes “cold
sores” and genital Herpes. In addition, the Company believes that, as the holder
of potentially paradigm-shifting antiviral drug development technologies, it has
a social responsibility to develop drugs against diseases affecting large
segments of worldwide populations. In our Social Responsibility programs, we are
developing drugs against Neglected Tropical Diseases (NTDs) caused by viruses
such as Dengue viruses and Rabies. The Company also has BioSecurity programs
that include drug development against hemorrhagic fever viruses such as
Ebola/Marburg, and a unique technology that we call “ADIF” to combat natural or
bioterrorism attacks by novel viruses as happened with SARS and may happen with
engineered viruses. The Company plans to perform its NTD and BioSecurity R&D
and drug development in collaboration with institutes of renown and with public
funding, in order to minimize the strain on our resources. The Company believes
that this work provides direct benefits to our commercially important programs.
A grant application for developing a broad-spectrum nanoviricide against
hemorrhagic fever viruses such as Ebola/Marburg and Dengue is currently pending
with the Department of Defense.
Our
development model is to employ collaborations with academic labs, government
labs, as well as external service providers in order to minimize our capital
requirements. We currently have collaborations with the Center for Disease
Control and Prevention (CDC) and the National (Central) Institute of Hygiene and
Epidemiology (NIHE) (Vietnam) for Rabies, with NIHE for H5N1 Avian Flu, the
Walter Reed Army Institute of Research (WRAIR) for Dengue family viruses, the
Eva Harris Lab at the University of California Berkeley for Dengue, United
States Army Medical Institute of Infectious Diseases (USAMRIID) for
Ebola/Marburg family of hemorrhagic viruses, and the Long Island Jewish Medical
System, Feinstein Institute of Medical Research (LIJMS) for viral eye diseases
such as epidemic kerato-conjunctivitis (EKC) and herpes keratitis. In
addition, our HIV and common influenza studies were subcontracted to KARD
Scientific, Inc., USA. Some of the biological testing work for Herpes Virus
infection of the eye was subcontracted to TheVac, LLC, laboratories at the
Louisiana Emerging Technology Center located within the Louisiana State
University (LSU) campus in collaboration with the LSU School of Veterinary
Medicine. We have recently signed a Master Service Agreement to subcontract
evaluation of nanoviricide drug candidates against various diseases including
Influenzas and HIV with the Southern Research Institute, Infectious Diseases
Division, Frederick, MD (SRI-F), a well known contract research organization
that performs preclinical testing. Initially, we plan to perform
additional testing of influenza dug candidates including High-Path or Highly
Pathogenic Avian Influenzas (i.e. HPAI) at SRI-F. In addition to H5N1, several
H9N and H7N influenza virus subtypes are highly pathogenic and have caused or
have the potential to cause severe influenza epidemics. We also plan
to perform additional testing of our HIV drug candidates at SRI-F.
We have
additional collaborations in the process of formalization for work on Dengue
viruses, HIV, Viral Conjunctivitis, HSV “cold sores” and genital herpes, and
other viruses. We typically employ more than one external laboratory to perform
testing for a particular disease agent in order to limit possible laboratory
level bias.
We have
developed lead drug candidates against a number of viral diseases.
Proof-of-principle efficacy studies in animals have been conducted successfully
in many of these.
Nanoviricides
are designed to work by binding to and eliminating virus particles from the
blood-stream, just as antibodies do, only potentially much better. This is
expected to result in reduction in viremia. A nanoviricide is constructed by
chemically attaching a ligand designed to bind to virus particle, to a polymeric
material that forms a flexible nanomicelle by self-assembly. If antibodies are
known to affect a viral disease, it is possible to construct a nanoviricide
against it, and there can be a general expectation of some success, depending
upon the ligand chosen. We can choose a ligand from any of a number of chemical
classes, including small chemicals, peptides, or antibody fragments or even
whole antibodies.
The
NanoViricides’ Concept and Antiviral Strategy
The
Company owns an exclusive worldwide license in perpetuity to technology that
enables the creation of nanoviricides. A “nanoviricide” is a flexible nano-scale
material approximately a few billionths of a meter in size, comparable to the
size of a virus particle, which is chemically programmed by a “ligand” to
specifically target and attack a particular type of virus. A nanoviricide also
is capable of simultaneously delivering a devastating payload of active
pharmaceutical ingredients (API) into the virus particle, to destroy its genome
(RNA/DNA).
A
nanoviricide is designed to “look like” the portion of a cell membrane with the
cell receptor to which a virus particle binds, in a sense. This biomimetic
approach is expected to fool the virus into binding to the nanoviricide, and in
an attempt to “enter” it, it is thought that the virus particle may get
destroyed. This is because viruses have developed ways of uncoating themselves
once they enter a cell, in order to expose the viral genomic material so that it
can hijack the cellular machinery to make its own copies. We call this the
“passive view” of how a nanoviricide may work.
A
nanoviricide is designed as a flexible material, that self-assembles, at about
the same size scale as a typical virus particle. The flexible material we use is
one type of a special polymeric material called TheraCour®, invented by the
Company’s founders. It assembles in solution into a flexible ball, somewhat like
a ball of hair. We call this a nanoviricide micelle, or “nanomicelle” for short.
On first contact with a virus particle, a nanoviricide micelle may bind to a
virus particle because of specific interaction between a ligand attached to the
nanoviricide and the glycoproteins on the virus surface. This may cause the
flexible nanoviricide to reach very close to the virus surface, leading to
additional ligands binding to additional viral coat proteins, in a mode called
“cooperative binding”. Cooperative binding is a well known natural
process that forms the basis of biological recognition such as antibody-antigen
binding, DNA hybridization, and protein assembly, among others. Eventually it is
thought that the interior of the nanomicelle, which is lipidic (oil-like) in
nature, would fuse with the exterior lipidic coat of the virus particle. This
lipidic fusion is also a well known natural process. Such fusion may lead to the
flexible nanomicelle spreading onto the virus surface much like an oil-slick
covering a golf ball. In the process, the coat proteins that the virus uses for
binding to cells may be expected to become unavailable, and are also likely to
even get stripped off completely. The virus particle would then be rendered
incapable of binding to a cell, and thus no longer infectious or capable of
causing disease or of making copies of itself. We call this the “active view” of
how a nanoviricide may work.
Nanoviricides
thus are designed to employ the “Bind-Encapsulate-Destroy” strategy, which is
akin to the “Find-Encircle-Destroy” war strategy that has been successfully
employed historically in many wars.
Antibodies
are a major defense of humans and animals against viruses. After a person is
infected by one particular virus, he/she develops antibodies against the virus.
The infection is fully controlled after a strong antibody response develops.
Subsequent exposure to the same virus does not cause disease. However,
antibodies by themselves do not destroy a virus particle. After a few antibodies
bind to a virus particle, several processes must take place that eventually lead
to destruction of the virus particle. Many viruses have developed ways of
dysregulating this complex immune response cascade.
Nanoviricides,
on the other hand, are designed as “programmed nanomachines” capable of
executing the entire strategy of “Bind-Encapsulate-Destroy” without any
dependence on or assistance from the human immune system.
Antibodies
also may be too specific to a particular virus strain, and thus viruses evade
antibodies by changing their external surface. Vaccines create antibodies in the
recipient, in order to protect the person. Vaccines are thus limited by the
nature of antibodies, and tend to be very specific to particular strains or
groups of strains of a virus. This is why a new seasonal vaccine must be
formulated for influenza every year. This is also why a novel influenza strain
such as bird flu (H5N1) or the 2009 ”Swine flu” virus cannot be defended against
by existing vaccines. In addition, novel vaccines against the novel
strain cannot be developed and manufactured in time, as was
demonstrated during the 2009 “swine Flu” pandemic.
Despite
all evolutionary/spontaneous changes such as mutations, re-assortments,
recombinations, etc., a particular virus retains its ability to bind to the same
cell receptor features on the cell surface at the same sites. In designing a
nanoviricide, we pay particular attention to the design and selection of a
ligand. We generally choose a ligand that mimics the cell surface features to
which all virus strains of a particular virus are known to bind. We therefore
believe that a resistant viral strain against a nanoviricide would be far less
likely to occur than resistance development against any other antiviral agent
strategy. If, however, such resistance does occur, a new nanoviricide can be
developed by changing the ligand appropriately.
We
designed the nanoviricides to act by a novel set of multiple, concerted
,
mechanisms. However, being
so novel, our drugs are not directly comparable to existing anti-viral
therapies. Thus, the safety and efficacy of the nanoviricides needs to be
established by experimentation, and cannot be anticipated on the basis of any
similar information regarding existing drugs.
It is
important to realize that the flexible nanoviricides nanomedicines show
substantial advantages over hard sphere nanoparticles in this antiviral drug
application. Hard sphere nanomaterials such as dendritic materials (dendrimers),
nanogold shells, silica, gold or titanium nanospheres, polymeric particles,
etc., were never designed to be capable of completely enveloping and
neutralizing the virus particle.
The
Company does not claim to be creating a cure for viral diseases. The Company's
objectives are to create the best possible anti-viral nanoviricides and then
subject these compounds to rigorous laboratory and animal testing towards US FDA
and international regulatory approvals. Our long-term research efforts are aimed
at augmenting the nanoviricides that we currently have in development with
additional therapeutic agents to produce further improved anti-viral agents in
the future.
The
Company plans to develop several drugs through the preclinical studies and
clinical trial phases with the goal of eventually obtaining approval from the
United States Food and Drug Administration (“FDA”) and International regulatory
agencies for these drugs. The Company plans, when appropriate, to seek
regulatory approvals in several international markets, including developed
markets such as Europe, Japan, Canada, Australia, and Emerging Regions such as
Southeast Asia, India, China, Central and South America, as well as the African
subcontinent. The seeking of these regulatory approvals would only come when and
if one or more of our drugs, now in early stage of pre-clinical development, has
significantly advanced through the US FDA regulatory process. If and as these
advances occur, the Company may attempt to partner with more established
pharmaceutical companies to advance the various drugs through the approval
process.
There can
be no assurance that the Company will be able to develop effective
nanoviricides, or if developed, that we will have sufficient resources to be
able to successfully manufacture and market these products to commence
revenue-generating operations.
There can
be no assurance that other developments in the field would not impact our
business plan adversely. For example, successful creation and availability of an
effective vaccine may reduce the potential market size for a particular viral
disease.
The
Company's headquarters are currently in West Haven, Connecticut.
We plan
on undertaking the development of drugs against other viruses when adequate
financing becomes available. The Company's ability to achieve progress in the
drugs in development is dependent upon available financing and upon the
Company's ability to raise capital. The Company will negotiate with
TheraCour to obtain licenses for additional viral diseases as necessary.
However, there can be no assurance that TheraCour will agree to license these
materials to the Company, or to do so on terms that are favorable to the
Company.
The total
market size of drugs for the programs in which we already have lead drug
candidates are estimated to be over $40B in 2013.
“H1N1
Swine Flu”, Common Influenzas, High Path Avian Influenzas, Bird Flu, Epidemic
and Pandemic Influenzas
Our
FluCide program lead drug candidate has shown efficacies animals that far exceed
that of known drugs such as oseltamivir (Tamiflu®, Roche) against common
influenza in an animal model. Until last year, we had three different drug
development programs for influenzas: FluCide for common influenzas, FluCide-HP
for highly pathogenic influenzas, and AviFluCide specific to H5N1 bird flu. We
have consolidated all three of our influenza drug programs into a single,
broadly active, yet highly effective, pan-influenza FluCide program. The new
FluCide is expected to be highly active against all influenzas, including highly
pathogenic strains such as H5N1, the novel H1N1/2009 Mexico/California “Swine
Flu” epidemic strain, H3N2, H7N, and H9N among others. We are currently
developing a single drug for all influenzas, whether pandemic, epidemic,
seasonal, novel, emerging, human, swine, or avian. We anticipate significant
cost savings as well as simplification in regulatory and eventual marketing
efforts by consolidating these drug programs.
Recently,
with additional SAR (structure-activity-relationship) studies, we have been able
to develop influenza virus binding ligands that are expected to be superior to
the previously used ligands in FluCide-HP. The new ligands are designed to be
closer mimics of the sialic acid receptors (than the previously employed ones),
yet capable of binding to influenza virus hemagglutinin proteins that use either
the “avian” or the “human” types of sialic acid receptors. Pigs are known to be
a “mixing vessel” species, exhibiting both avian and human types of sialic acid
receptors, and thereby re-assortment (mixing) of genetic material from influenza
strains, subtypes, or types, with different host specificities can occur readily
in pigs. We are actively seeking partnerships, collaborations and government
funding for our anti-influenza drug program.
Viral
Diseases of the Eye: Viral Conjunctivitis, Viral Keratitis – Eye
Drops
We are
developing a nanoviricide against adenoviral Epidemic Kerato-Conjunctivits
(EKC). EKC is a severe disease of the eye which in some people causes long term
or permanent blurred vision. In an animal study, our EKCCide lead candidate was
shown to rapidly resolve the clinical signs of the disease, when treatment was
started after infection had set in. The clinical success included demonstration
that no SEI’s (immunoprecipitates) were formed in treated animals, as opposed to
control group. SEI’s are known to be the cause of blurred vision. There are
currently no approved drugs available against EKC, and it is an active field of
drug development research. There are about 2.5 million cases of EKC annually in
the USA alone.
The
Company is not aware of any animal studies of anti-EKC drug candidates that have
demonstrated resolution of clinical disease. Based on these successful results,
we expanded our program to develop a single broad-spectrum nanoviricide
treatment effective against most of the viruses causing external eye diseases,
including viral conjunctivitis and viral keratitis. A large majority of external
eye viral infections are caused by adenoviruses or herpes simplex viruses
(mainly HSV-1).
We have
now successfully developed drug candidates that are effective against both
adenoviruses and against HSV-1, viruses that cause most of the viral diseases of
the external eye. Additional animal testing against HSV-1 infection of the eye
is being commissioned at two independent external research centers.
HSV and
some adenoviruses cause most of the cases of keratitis, a serious infection of
the cornea (approximately 250,000 US cases/year). Importantly, HSV infection can
lead to corneal scarring that may necessitate corneal
transplantation. In addition, some adenoviruses cause a majority of
conjunctivitis cases (“Pink eye”). The remaining cases of
conjunctivitis are caused by bacteria and are treatable with topical
antibiotics. Currently there are no effective treatments for viral
diseases of the exterior portion of the eye.
The
nanoviricide eye drug candidate is formulated as simple eye drops.
The total
market for viral conjunctivitis and keratitis is estimated to be in the billions
of dollars. The incidence of severe herpes keratitis is estimated to
be 250,000 cases per year in the USA. In Japan, where EKC is a
reportable disease, it is estimated that there are at least one million cases
per year. The number of cases of non-specific conjunctivitis (pink
eye) is considered to be far greater, possibly into the tens of millions in the
US and hundreds of millions worldwide.
The
Company reported on February 27, 2009 that it entered into a Material Transfer
Agreement with a major pharmaceutical company. Pursuant to the terms
of the agreement, the Company is not authorized to disclose the identity or the
terms of the Agreement, except for securities reporting purposes. The
pharmaceutical company will evaluate one of the Company’s compounds as a drug
candidate for certain viral infections of the external eye. The
Agreement also provides that following evaluation, should the pharmaceutical
company so elect, the parties may enter into good faith negotiations for an
exclusive, worldwide license for drug development and commercialization of the
eye drug candidate. The initial phase of evaluation was completed
recently.
On May 6,
2009, the Company entered into a Clinical Study Agreement with TheVac, LLC, a
company affiliated with the Emerging Technology Center of the Louisiana State
University. At present, TheVac is performing biological testing of anti-herpes
nanoviricides. TheVac is conducting studies on the effect of anti-herpes
nanoviricide drug candidates developed for use against herpes cold sores and
genital herpes in cell culture models. In addition, TheVac is also conducting
studies on the effect of anti-herpes nanoviricides drug candidates in a mouse
model of herpes keratitis. Professor Gus Kousoulas and his team at Louisiana
State University have validated and published on this animal model extensively
in peer-reviewed scientific journals.
HIV
Our very
first animal studies in the standard SCID-hu mice against HIV-I have
demonstrated that our primary nanoviricide drug candidate, HIVCide, as well as
several other nanoviricide drug candidates were found to be superior
to the three-drug oral cocktail (HAART) that is the current standard of
care.
We
designed the anti-HIV nanoviricides using rational drug design principles. The
ligands we have designed in the case of HIV-1 are thought to be broadly
neutralizing. In-silico modeling indicates that our ligands dock to the
conserved CD4 binding site of gp120 of HIV-1. We have even observed successful
docking of some of our ligands with gp120 of the HIV-1 JRFL strain which is
thought to be resistant to HAART.
Resistance
to HAART eventually leads to AIDS. It is possible that HIVCide can be used in
addition to HAART to obtain even stronger beneficial effects, resulting in a
“functional cure” of HIV. We believe that the term “Functional Cure”
of HIV may be defined as: The HIV genome integrates into certain human cells
that go into hiding or dormancy for several years. While dormant, the HIV genome
does not produce HIV virus particles or HIV proteins to any significant extent
and are thought to remain unaffected by current anti-HIV drugs. The current
standard treatment results in very low levels of HIV viremia, but the immune
cells (CD4+ T cells and CD8+T cells) count eventually begins decreasing at a
slow rate. The HAART therapy must be continued for the life of the
patient. A more effective therapy could result in complete loss of
HIV from the blood stream. This may eliminate the slow loss of
healthy immune cell populations, and allow immune system function to return to
normal. Patients may then enjoy a normal life without further daily
treatment, until an episode occurs which mobilizes the “sleeping” cells
containing the HIV genome in addition to eliminating HIV particles. Such a
therapy would be called a “functional cure” against HIV. A total cure of HIV
would require elimination of the dormant cell pool containing the HIV genome.
Research in the field of reactivating the dormant pool of HIV infected cells is
encouraging. If these cells can be reactivated, and simultaneously the HIV
viremia controlled, researchers have proposed that this could lead to reduction
in the dormant infected cell pool. If their hypotheses are correct, HIVCide
could lead to an eventual cure, possibly in combination with other
drugs.
Nanoviricides
act by a different mechanism than other approved anti-HIV therapeutics. The
Company believes, therefore, that by combining a nanoviricide with current
therapy, a functional cure of HIV may be already achievable. However, there is
no way to predict whether such a treatment would be successful at providing a
functional cure of HIV at present.
Additional
studies in cell cultures are planned to be conducted in the next six months. We
have executed a Master Service Agreement (MSA) with Southern Research Institute,
Infectious Diseases Division, Frederick, MD (SRI-F) to conduct these studies.
SRI-F is a well established Contract Research Organization (CRO) that has
developed, conducted, and published in scientific journals on standardized study
protocols for various mechanisms of anti-HIV action, including microbicides,
antibodies, and small chemical therapeutics. We are also planning additional
animal studies of these drug candidates. We are also planning
additional animal model studies of the HIVCide lead drug candidate.
HIVCide
is expected to be a significant anti-HIV candidate, acting by a novel mechanism
of action and a first-in-class therapeutic, based on current preliminary
data. We intend to develop it further.
Herpes
“Cold Sores” and Genital Herpes
We have
developed nanoviricide drug candidates that are capable of attacking the herpes
virus that causes cold sores and genital herpes. These drug candidates are
designed so that they can be easily formulated as a skin cream or gel
formulation in order to be able to apply readily to cold sores or genital
lesions caused by herpes.
We have
successfully tested these drug candidates in a cell culture model for
effectiveness against Herpes Simplex Virus (HSV-1) infection. This
testing was conducted by TheVac, LLC laboratories at the Louisiana Emerging
Technology Center located within the Louisiana State University (LSU) campus in
collaboration with the LSU School of Veterinary Medicine.
Four
different nanoviricides showed greater than 10,000-fold (>99.99% or 4-logs)
reduction in virus quantity compared to untreated controls in a cell culture
assay employing the LSU proprietary green-fluorescent-protein-tagged (GFP)
modified HSV-1 McKrae strain.
These
nanoviricide drug candidates are designed to act against all herpes simplex
virus strains, including HSV-1 and HSV-2. The Company has commissioned
additional in vitro studies to confirm the results. Animal studies have also
been scheduled.
Herpes
simplex virus (HSV) causes “cold sores” or “fever blisters”, the incidence of
which is second only to the common cold (100 million recurrences annually in the
US alone). In addition, genital herpes prevalence is 67 million infected
individuals in the US alone. This represents 20% of the US population infected
with symptomatic, recurrent disease. It is also believed that a large fraction
of infected individuals remain asymptomatic. Seroprevalence (people with
antibodies) in general French population is about 67% for HSV-1 and 17% for
HSV-2. It is estimated that worldwide incidence and infection rates are very
similar to these high proportions of infection prevalence.
Existing
therapies for herpes virus infections include acyclovir and drugs chemically
related to it (e.g. gancyclovir, valcyclovir, others). These drugs, nucleoside
analogs, act by inhibiting viral DNA synthesis. However, there is known drug
toxicity due to interference with human metabolism. Currently, there is no cure
for herpes infection.
Nanoviricides
are designed to act by a novel and distinctly different mechanism compared to
existing drugs. Nanoviricides are designed to mimic the human cell surface to
which the virus binds. Our results suggest that a nanoviricide could become a
highly sought after drug against HSV.
Neglected
Tropical Diseases and Biosecurity/Biodefense Programs
Ebola,
Marburg, Dengue
We have
obtained significant positive results against Ebola, although the Ebola virus
produces a soluble glycoprotein decoy that may be capable of avoiding certain of
our virus-binding ligands.
In the
absence of public funding, the Company’s ability to develop these drugs is very
limited. This is a low-priority project for the Company.
Dengue
We are
currently working on developing anti-Dengue therapeutics. Dengue is an important
NTD. According to the Centers for Disease Control and Prevention in
Atlanta (CDC), dengue fever risk is about 1 illness per 1,000 US travelers, and
it is the most common cause of fever in returned travelers from the Caribbean,
Central America, and South Central Asia. The CDC has also noted "dengue is the
most important mosquito-borne viral disease affecting humans. Each
year, tens of millions of cases of DF occur and, depending on the year, up to
hundreds of thousands of cases of Dengue hemorrhagic fever (DHF)." Dengue fever
is also called “break-bone fever”. The first or primary dengue infection has
very low fatality rates associated with it. However, when a person is infected
with a different type of dengue virus afterwards, the person is at risk of
developing Dengue Hemorrhagic Fever (DHF), or Severe Dengue fever. The fatality
rate associated with DHF/Severe Dengue may be as high as 10%. There is currently
no vaccine or cure for dengue, which causes high fever, muscular pain,
headaches, vomiting, and in some cases skin rash. WHO estimates that 2.5 billion
people are at risk of dengue fever or of DHF out of a total world population of
6.6 billion. Dengue viruses are carried by
Aedes aegypti
mosquito, which
is gaining ground northwards as the global climate warms up. There have been
several cases of Dengue in the southern regions of the USA.
Dengue
and dengue hemorrhagic fever/dengue shock syndrome are emerging as serious
global health problems. Dengue is endemic in large parts of the world. It now
threatens over 3 billion people world-wide or 40% of world population, and is
considered a re-emerging threat in the United States. Dengue is officially
considered a “neglected tropical disease” by the World Health Organization.
About 50-100 million people are infected by dengue virus every year. In fact,
just recently, the government of Cali, Columbia declared a dengue emergency
because of the number of dengue infections and deaths. Globalization and warming
climates along with changes in the ecology of the virus-carrying mosquito are
accelerating the spread of the virus. Without proper treatment, DHF fatality
rates can exceed 20%. (
Source: WHO Dengue and
dengue haemorrhagic fever Fact Sheet No. 117, March 2009
;
http://www.who.int/mediacentre/factsheets/fs117/en/
)
The
Company signed a Research and Development agreement with Professor Eva Harris’
Lab at the University of California Berkeley for nanoviricides
against dengue viruses. Dr. Eva Harris is a Professor of Infectious Diseases at
UC Berkeley. She is a leading researcher in the field of dengue. Her group has
developed a unique animal model for dengue virus infection and
disease that effectively emulates the pathology seen in humans. In
particular, the critical problem of dengue virus infection, called
“Antibody-Dependent Enhancement” (ADE), is reproduced in this animal model. When
a person who was previously infected with one serotype of dengue virus is later
infected by a different serotype, the antibodies produced by the immune system
can lead to increased severity of the second dengue infection, instead of
controlling it. ADE thus can lead to severe dengue disease or dengue hemorrhagic
fever (DHF).
The
Company has developed a library of small chemical ligands that bind to dengue
virus envelope proteins using in silico studies. Using these ligands, a number
of candidate nanoviricides that are capable of attacking the dengue virus have
been developed. The Company believes that these nanoviricide drug candidates
mimic the natural, common attachment function by which the four different dengue
virus serotypes bind to the body’s host cells. If this proves to be correct, the
Company believes that a nanoviricide drug under development can be expected to
be a broad-spectrum anti-dengue antiviral treatment capable of attacking all
four dengue virus serotypes and their variant strains.
Currently
there are no approved vaccines for the prevention of dengue, nor drugs for
treatment of dengue virus infection. The worldwide market size for an effective
anti-dengue treatment may be as large as that for Hepatitis C virus treatment,
or in the billions of dollars, based on current population exposure
data.
Rabies
Our
RabiCide program has resulted in candidates that have enabled survival of 20% to
30% of infected animals after disease has set in, using a particular animal
model. Further testing is in progress in a different experimental model. We
believe that if this testing succeeds, it may be the first ever therapeutic
against rabies. Currently, rabies is a uniformly lethal disease with only
prophylactic medications available, which are comprised of human antibodies,
monoclonal antibody mixtures, and rabies vaccine virus strains. The potential
market size for a rabies drug worldwide has been estimated at $300M to $500M. In
absence of public funding, the Company’s ability to develop these drugs is very
limited.
Advanced
Technologies: ADIF Technologies
We
believe that our technologies and capabilities at attacking different viruses
are fairly well demonstrated. In addition, we have developed
“Accurate-Drug-In-Field” or ADIF technologies that may show efficacy in treating
epidemics like H5N1, SARS or Ebola by developing a targeted therapeutic in the
field to prevent the spread of the disease.
ADIF
technology does not require any knowledge of the molecular biology of the virus,
or even its specific identification. An accurate drug, specifically targeted at
the virus, can be developed in the field, from nanomicelles stockpiled
beforehand. This enables a rapid response timeframe of as short as 3 weeks for
initial drug doses, and potentially less than 3 months for sufficient doses to
curb the spread of the virus outside the affected area. Thus ADIF technologies
are applicable to novel, or engineered viruses, or emerging infections whether
natural or man-made. This technology may have significant applications in the
Biodefense area. We believe that this is the only technology that can enable
humans to combat novel viruses before they spread disease.
We have
already demonstrated the ADIF technology capabilities
successfully.
The
Strength of Our Drug Pipeline
Between
the two ends of the spectrum of specific antivirals developed during peace-time
effort, and the specific antivirals developed as a “war-like” effort (ADIF), we
have also demonstrated the capability of developing broad-spectrum
nanoviricides. Broad-spectrum nanoviricides are based on the validated
scientific fact that a large number of virus families employ the same cell
surface receptor. Our nanoviricides are designed as “cell biomimetics,” meaning
that the nanoviricides “look like” a cell to the virus. The
nanoviricide carries a portion of the broad-spectrum receptor on the nanomicelle
surface that the virus attaches to and is then entrapped or dismantled by the
nanoviricide. Such broad-spectrum nanoviricides could be stockpiled to enable
treatment of many infectious agents with very few drugs, and thus would be
valuable to worldwide disease programs, and Strategic National Stockpiling
efforts.
We
believe that the Company has a strong, wide and deep pipeline of drugs. However,
with relatively meager financial resources, the Company continues to juggle
prioritization of the various programs, and program achievements. We are also
working on bolstering our infrastructure with the objective of enabling us to
file pre-IND applications for some of our drug candidates with the FDA. The
Company has received significant interest from major pharmaceutical companies in
its Viral Eye Diseases drug candidate, and HIVCide and FluCide programs to date,
and we expect interest to increase in other programs as well. There is no
guarantee that this interest would result in any financially lucrative
co-development agreements.
All of
our programs are currently at the pre-clinical stage. We have established
preliminary proof of efficacy in cell culture and animal models, and we have
conducted preliminary safety studies that have indicated that all of our
nanoviricides are safe in the animal models as tested. We continue to
work on further experiments necessary for development of our various drug
candidates as FDA approvable drugs.
Last
year, we added two commercially important drug candidates to our pipeline,
namely HIVCide and EKCCide.
This
year, we have greatly expanded the scope of our eye anti-viral treatment to
develop drug candidate eye drops against potentially all viruses infecting the
exterior portion of the eye. Our EKCCide program has now evolved into the
broad-spectrum eye drops antiviral program, which is expected to lead to a
significant expansion in marketability as well as market size if
successful.
A
nanoviricide against Herpes cold sores and genital herpes is a new addition to
our pipeline of drug candidates this year. The market size for herpes simplex
virus treatments is in excess of $2 billion annually.
In
addition, we simplified our anti-influenza drug programs because of the high
efficacies of our new drug candidates into a single pan-Influenza broadly acting
new FluCide. This single drug is being developed for all influenza indications
including seasonal influenzas, highly pathogenic influenzas, bird flu, and novel
epidemic influenzas such as the current novel H1N1/2009. We believe that this
will reduce development costs significantly. This is also expected to help us
gain expanded market share and easier market acceptance, including stockpiling,
when a drug is approved. Emergency Use Authorization can occur under
circumstances such as the current epidemic under certain conditions after an IND
has been filed, prior to a full FDA approval. We are not at the stage of
submitting the necessary applications to the FDA as yet.
Further
we have also begun biological testing in the Dengue antivirals program. The
Company has developed a library of small chemical ligands that bind to dengue
virus envelope proteins using in silico studies. Using these ligands, a number
of candidate nanoviricides that are capable of attacking the dengue virus have
been developed. The Company believes that these nanoviricide drug candidates
mimic the natural, common attachment function by which the four different dengue
virus serotypes bind to the body’s host cells. If this proves to be correct, the
Company believes that a nanoviricide drug under development can be expected to
be a broad-spectrum anti-dengue antiviral treatment capable of attacking all
four dengue virus serotypes and their variant strains.
We are
developing nanoviricides for different routes of administration, choosing the
best option based on a viral disease pathology. Thus, we are developing eye drop
formulation for the viral diseases of the external eye. We are developing skin
cream and gel formulations for topical application of nanoviricides against oral
and genital herpes. Other drugs candidates including FluCide and HIVCide are
currently being developed as injectables. We believe that it will be possible in
the future to develop aerosols for influenza and nasal sprays for common colds
and similar diseases. This is possible because nanoviricides have been designed
so that they can be formulated in many different ways.
Liquidity
and Capital Resources
Requirement for Additional
Capital
We
currently have sufficient cash reserves to achieve all of our budgeted plans
through December 31, 2010, and we will need to obtain additional financing to
finance studies necessary for an investigational new drug (“IND”) filing with
the FDA.
As of
December 31, 2009 we had a cash and cash equivalent balance of $4,032,863 which
can support operations through December 31, 2010, at our current projected rate
of spending.
However,
in addition to current funds allocated to capital costs and staffing, and in
accordance with our business plan, we have also budgeted for additional capital
costs and staffing costs of approximately $2 million dollars and an additional
$3 million dollars for additional scientific studies in support of an IND filing
with the FDA, for the upcoming twenty-four months. If we are unable
to obtain this additional financing, our business plan will be
delayed.
We
anticipate that we will incur the following expenses over the next twelve
months:
1 Research
and Development subcontractor costs of $1,500,000: Including planned costs of
$1,200,000 for in-vivo and in-vitro studies for pan-influenza
FluCide, NanoViricide eye drops against EKC and other Ocular viral
deceases, HIVCide, and NanoViricides against genital and ocular Herpes, planned
for the next twelve months ending December 31, 2010. The Company has allocated
the planned costs of $1,200,000 evenly over the four drug
candidates.
2 Corporate
overhead of $750,000: This amount includes budgeted office salaries, legal,
accounting and other costs expected to be incurred by being a public reporting
company.
3 Capital
costs of $250,000: This is the estimated cost for equipment and laboratory
improvements expected during the next twelve months ending December 31,
2010.
4 Staffing
costs of $1,000,000: This is the estimated cost of hiring additional scientific
staff and consulting firms to assist with FDA compliance, material
characterization, pharmaco-kinetic, pharmaco-dynamic and toxicology studies, and
other items related to FDA compliance, as required for development of necessary
data for filing an Investigational New Drug Application (IND) with the United
States Food and Drug Administration.
The
Company will be unable to proceed with its planned drug development progress,
meet its administrative expense requirements, capital costs, and staffing costs
after about December 31, 2010 without obtaining additional financing of
approximately $3,000,000 to $5,000,000. If we are unable to obtain
additional financing, our business plan will be significantly delayed or
curtailed. The Company continues to re-prioritize its objectives and
delay certain drug development programs until we can raise sufficient funding
that enables further development of the drugs with the goal of filing an
Investigational New Drug application (IND) to the FDA.
The
Company does not have any arrangements in place, at this time, for equity or
other financing for these further needs of $3-5 million beyond minimum
operations. However, the Company is in discussions with certain
investors who would provide such capital. If we are unable to obtain
additional financing, our business plan will be significantly
delayed.
The
Company has limited experience with pharmaceutical drug development. Thus, our
budget estimates are not based on experience, but rather based on advice given
by our associates and consultants. As such these budget estimates may not be
accurate. In addition, the actual work to be performed is not known at this
time, other than a broad outline, as is normal with any scientific work. As
further work is performed, additional work may become necessary or change in
plans or workload may occur. Such changes may have an adverse impact on our
estimated budget. Such changes may also have an adverse impact on our projected
timeline of drug development.
We
believe that this coming year's work-plan will lead us to obtain certain
information about the safety and efficacy of some of the drugs under development
in animal models. If our studies are not successful, we will have to develop
additional drug candidates and perform further studies. If our studies are
successful, then we expect to be able to undertake further studies in animal
models to obtain necessary data regarding the pharmaco-kinetic and
pharmaco-dynamic profiles of our drug candidates. We believe these data will
then enable us to file an Investigational New Drug (IND) application, towards
the goal of obtaining FDA approval for testing the drugs in human
patients.
Most
pharmaceutical companies expect 4 to 10 years of study to be required before a
drug candidate reaches the IND stage. We believe that because we are working in
the infectious agents area, our studies will have objective response end points,
and will be of relatively short durations. Our business plan is based on these
assumptions. If we find that we have underestimated the time duration of our
studies, or we have to undertake additional studies, due to various reasons
within or outside of our control, this will grossly and adversely impact both
our timelines and our financing requirements.
Management
intends to use capital and debt financing, as required, to fund the Company’s
operations. There can be no assurance that the Company will be able to obtain
the additional capital resources necessary to fund its anticipated obligations
for the next twelve months.
The
Company is considered to be a development stage company and will continue in the
development stage until it generates revenues from the sales of its products or
services.