West Coast Editor

Iomai Corp.'s Phase I flop with its influenza-vaccine patch knocked shares down 40 percent, and sent researchers back to the drawing board - armed, at least, with data that their adjuvant to the vaccine, called LT, helped response.

At the end of trading Friday, Iomai's stock (NASDAQ:IOMI) traded at $2.54, down $1.70. The goal was to show the patch worked as well as injected vaccine, but the patch fell short.

Stanley Erck, president and CEO of Gaithersburg, Md.-based Iomai, told investors during a conference call that the company will keep working on its needle-free approach, possibly using a whole virus rather than the split virus in the patch.

"We've been talking to multiple potential partners, including the partner who provided us antigen for this trial, which is Solvay [Pharmaceuticals Inc., of Marietta, Ga.]," Erck said, though Iomai had not yet discussed the Phase I results with Solvay Friday.

"Our efforts will rely upon finding a good partner to provide antigen going forward," he added, though Iomai does have in-house efforts under way. "There are companies who have worked with whole viruses, but basically everybody works with the whole virus, because in the production process, you make a whole virus and then split it," he noted.

Gregory Glenn, chief scientific officer of Iomai, said whole virus is "not in favor in the injected world" but does have strong immunogenic properties.

Split virus is "an old technology where you inactivate the virus and use detergents to disrupt it, and that results in a very heterogeneous mixture of material, from large particles to small proteins," Glenn said. The LT adjuvant is "highly homogenous," he added, and amounts to "little immunogenic balls" that can deliver efficiently.

"We think the heterogeneity of the flu split virus makes it inefficiently delivered," Glenn said, and Iomai might explore "virus-like particles and other types of, I think, promising antigens. Some of those types of particles we can make internally."

Meanwhile, Erck said, the firm's highest priority is its immune stimulant booster patch for pandemic flu, expected to enter its first study in the second half of this year. Iomai also will be providing the government with an outline of a plan under which 150 million doses might be manufactured over six months, which could lead to a further contract.

In January, Iomai got $14.5 million by way of a contract that runs through March of next year with the U.S. Department of Health and Human Services, and if a product is developed through licensure over the next five years or so, Iomai might take in about $128 million, plus the fixed fee, from HHS. (See BioWorld Today, Jan. 18, 2007.)

Also in the second half of this year, Iomai will start Phase II trials with a patch that boosts injected vaccine in the elderly, and in the third quarter, the firm will disclose results from a Phase II field-logistics study evaluating how best to proceed with a pivotal Phase III trial testing a travelers' diarrhea vaccine.

In Phase II trials with the diarrhea vaccine at four different doses, as well as a placebo patch, antibody levels were checked at 21 days and 42 days. Interim results showed that almost all subjects in the four different dosing groups responded to the vaccine, with even the lowest dose of the vaccine patch applied to the arm evoking a response in more than 95 percent.

Before this year, Iomai's revenues have been limited to federal grants, and only one grant was active during the first quarter. Under the January HHS deal, Iomai recognized about $1.6 million.

The company went public last year in a $35 million initial offering of 5 million shares at $7 per share. As of March 31, Iomai had about $34.5 million in cash and cash equivalents.