West Coast Editor
With a 38 percent ownership stake already, Nutra Pharma Corp. is buying the rest of ReceptoPharm, which will allow the latter to move ahead with clinical work testing its lead compound against multiple sclerosis, HIV and adrenomyeloneuropathy.
"We've been consolidating [ReceptoPharm] for the past two years anyway," said Rik Deitsch, CEO of Boca Raton, Fla.-based Nutra Pharma, which will get full control of ReceptoPharm in exchange for 14 million shares of Nutra Pharma's common stock, plus giving as many as 14 million more shares when milestones are met.
Nutra Pharma's stock (OTC BB:NPHC) closed Monday at 16 cents, down 1 cent, which puts the potential value of the deal at about $4.5 million.
Deitsch said his firm considers itself "the business side of biotechnology." Many start-ups are "poorly capitalized or poorly managed, usually both," but contain gems in their pipelines, he told BioWorld Today.
"They just need a little bit of direction and money, and they can be huge," Deitsch said, citing ReceptoPharm as an example. After putting about $2 million into the firm, Nutra Pharma decided to take it all the way in house.
In May, the Medicines Health and Regulatory Agency within the British Department of Health gave its go-ahead for clinical trials in adrenomyeloneuropathy, a rare inherited metabolic disorder that can lead to neurological disability. ReceptoPharm's RPI-78M, derived from cobra venom, was found to be safe and well tolerated in a 2003 study in the UK.
"We, in essence, denature the peptide so it's no longer toxic," Deitsch said, noting that research into cobra venom, which began in China, has been ongoing since the 1930s and 1940s, and the extract once was viewed as a potential treatment for polio.
Murray Sanders "picked up the research again in the 1970s, but it didn't progress very well," since the push was guided by scientists, "who didn't have any business knowledge about how to get a drug to the marketplace."
The upcoming ReceptoPharm trial, set to begin by the end of the summer, is intended to provide more safety data in support of other trials, such as Phase I/II studies of the drug in MS to better understand its gene modulation.
"Once we finish Phase II, the stock valuation should reflect that, and then we can raise money," Deitsch said.
Earlier in the year, preclinical data showed RPI-78M to be effective in preventing the onset of disability in acute and chronic models of MS, and blocked the infiltration of immune cells into the central nervous system.
"Certainly with something like HIV, because it's so huge, we'll seek a licensing partner for that, but we feel we can probably handle MS marketing ourselves," Deitsch said.
The third indication, adrenomyeloneuropathy, afflicts people who lack an enzyme that breaks down a type of long-chain fatty acid. Typically manifesting between ages 21 and 35, the disease brings symptoms that may include leg stiffness, progressive spastic paraparesis (stiffness, weakness and/or paralysis) of the lower extremities and ataxia (unsteady or clumsy movement).
"The symptoms are very much like MS," though the disease itself is much different, Deitsch said. Although only about 10,000 patients are believed to exist globally, no approved treatment exists, so ReceptoPharm might eventually own the indication.
Among the intellectual property rights licensed from Bio Therapeutics Inc. - formerly known as Phylomed Inc., of Plantation, Fla., and bought by Nutra Pharma in summer 2002 - is U.S. Patent No. 6,670,148, which was granted in December 2003, with nine claims. The patent describes the method for preparing a bioactive peptide found in cobra venom, in a stable, inactivated form, by treating the peptide with ozone. (See BioWorld Today, May 1, 2002.)
Nutra Pharma also has rights to technology contained in a pending patent application for the further development of bioactive peptides in cobra venom for use in the treatment of HIV and MS.
The company's subsidiary, Designer Diagnostics, develops diagnostic test kits for identifying infectious diseases such as tuberculosis and Mycobacterium avium-intracellulare. Recently, Designer Diagnostics signed a letter of intent to supply the World Health Organization with TB test kits.
"In three to five days, we can tell you if you have TB, what type and how to treat it," said Deitsch, adding that sales from all the diagnostic kits are expected to be between $1 million and $3 million this year, and between $10 million and $15 million next year - enough to fund ReceptoPharm's efforts.
As of March 31, Nutra Pharma had about $276,000 in cash with about 69 million shares outstanding.