Staff Writer

Samaritan Pharmaceuticals Inc. got a much-needed $10 million cash infusion by partnering with Pharmaplaz Ltd. for development and commercialization of the Phase II HIV drug SP-01A.

The news lifted Samaritan's stock (AMEX:LIV) 22 percent, or 6 cents, to close at 31 cents on Wednesday. The shares have traded under a buck for more than two years.

Las Vegas-based Samaritan received $1.4 million of its up-front payment at closing; the remaining $8.6 million is due Sept. 16. In exchange, Athlone, Ireland-based Pharmaplaz will assume clinical development and manufacturing of SP-01A, leveraging experience gained through several years of producing the drug and other Samaritan pipeline products under a supply collaboration. The two companies plan to co-market SP-01A and share revenues equally if the drug is approved.

While most marketed HIV drugs are anti-retroviral, SP-01A is a viral-entry inhibitor designed to decrease intracellular cholesterol and prevent HIV from entering cells. The viral-entry inhibitor Fuzeon (enfuvirtide, Trimeris Inc. and F. Hoffmann-La Roche Ltd.) is already on the market, and competing products like Genentech Inc.'s TNX-355 (acquired through Tanox Inc.) and Genzyme Corp.'s AMD070 (acquired through AnorMED Inc.) are in the clinic.

Yet Richard Brown, head of investor relations at Samaritan, said SP-01A differs from the competition in that it conditions the entire cell membrane rather than "just one or two receptors."

In a 10-day Phase II monotherapy study, SP-01A caused a viral load reduction in 55 percent of drug-resistant patients. The company has not yet released data from a recently completed 28-day monotherapy trial intended to achieve a greater reduction. Yet a Phase Ib/IIa trial in patients on background anti-retroviral drugs achieved a reduction greater than 1.0 log in 80 percent of the patients and reduced viral load by an average of 1.34 log10 copies/ml at the highest dose. Plans for a Phase III trial in combination with anti-retroviral drugs are in the works.

Passing off future SP-01A development costs to Pharmaplaz should help Samaritan manage its burn rate, which Brown estimated at $3.5 million, excluding research and development costs. As of Sept. 30, Samaritan reported cash reserves of only $2.1 million, yet Brown pointed to Samaritan's in-licensing strategy, which he anticipates will provide sufficient revenue to "cover the burn rate by the middle of next year."

Samaritan has licensed Mediterranean or Middle Eastern marketing rights for nine products, including morphine sulfate (Molteni Pharmaceuticals Inc.) and Elaprase (idursulfase, Shire plc). The company's sales force has yet to produce revenues with any of the licensed products, but Brown said Samaritan "will probably become a revenue-producing company this year." He added that Amphocil (amphotericin B cholesteryl sulfate complex for injection, Three Rivers Pharmaceuticals Inc.) recently received pricing approval in Greece and should begin to generate revenue "in the coming weeks and months."

The SP-01A deal also will allow Samaritan to focus on its pipeline, which includes some 300 compounds involved in cholesterol biosynthesis and protection of the cell mitochondria. Chief among those is Alzheimer's drug SP-233, for which Samaritan has filed an investigational new drug application and is obtaining additional information requested by the FDA prior to starting clinical trials. Other products moving toward IND are SP-1000, a peptide for cardiovascular disease, and SP-10, a viral-entry inhibitor for hepatitis C virus.

"Partnering SP-01A gives us the capital we need to get the pipeline further a lot quicker," Brown said. "We operate on a very tight budget - we've developed the whole pipeline on about $40 million."