West Coast Editor

Almost exactly one year to the day after antisense firm AVI BioPharma Inc.'s stock shot up on news about its stem cell patents, positive preclinical findings against avian H5N1 influenza and human strains sent the company's shares on another skyward ride.

AVI's stock (NASDAQ:AVII) closed Friday at $7.58, up $1.69, or 28.7 percent.

Denis Burger, president and CEO of Portland, Ore.-based AVI, credited a "slow buildup of meeting benchmarks and timelines" during the past year for the dramatic price jump on the latest news.

"Over the last 12 months or so, we had pretty good news, and we got nothing, no reactions," he said, adding that AVI is "not betting that it can cure cancer. It's betting that we can influence infection and cardiovascular disease" - a much easier claim for investors to accept.

Reni Benjamin, analyst with Rodman & Renshaw in New York, said momentum had been building over the past few weeks.

"It's a stock that has been down for the majority of 2005," he said. "The news flow has been pretty good, and management has been starting to execute on their milestones well, which was a problem before. A lot of momentum investors have been coming into the stock during the last two weeks."

Three independent labs confirmed AVI's Neugene works in preclinical models against various flu strains. At Mahidol University in Bangkok, Thailand, P. Puthavathana confirmed NeuGene antisense efficacy against an H5N1 viral isolate in her assay system. Darwyn Kobasa at the Public Health Agency of Canada in Winnipeg completed an initial dose-response study in cell culture showing NeuGene efficacy against both the H1N1 and H3N2 strains. At Oregon State University in Corvallis, Manoj Pastey confirmed efficacy using the same NeuGene antisense agents against the H7N7 and H3N8 strains.

Together, the data back up efficacy previously reported against the H1N1 strain by doctors at the Massachusetts Institute of Technology in Boston.

"We're very confident that we are on the right track," Burger said. The company is filing an investigational new drug application and expects to be "into Phase I studies by the end of this year." Infectious-disease trials "go very quickly," he noted. "You can run Phase I and Phase II studies in just a few months."

The Neugene antisense approach works against flu by targeting genetic regions of the virus that are highly conserved between six viral subtypes that cause human disease, including three subtypes that caused pandemics in the 20th century - the 1918 Spanish flu (H1N1), the 1957 Asian flu (H2N2) and the 1968 Hong Kong flu (H3N2) - as well as three subtypes of avian flu that have been reported to afflict humans (H5N1, H7N7 and H9N2).

"We have quite extensive experience with single-strand RNA viruses," Burger said, adding that taking aim at conserved regions makes Neugene compounds stealthy.

"Our antisense polymer is not found in nature and is not recognized by any enzymes in the body, so it can travel unnoticed and doesn't stick to plasma proteins or activate receptors, which means much less of a burden to cross cell membranes and get to where the targets are," he said.

"Viruses can change subtleties on their protein coats all the time, and the [flu] vaccine has to be retooled almost every year," Burger pointed out, but that problem goes away with a genetic approach, especially toward conserved regions.

Efficacy against the avian strains turned out to be a bonus.

"We started [the flu program] about 18 months ago, before avian was an issue," Burger said.

Overall - at least so far - the Neugene technology has given AVI an uncommon measure of success in the casualty-strewn antisense field.

"Isis and Lilly failed a couple of times," Burger recalled. "Genta and Aventis failed, as did Hybridon and its partners" - all of which makes partnering more of a challenge for AVI. "Drug companies have said, Lilly is pretty sophisticated, how did they fail? Aventis knows something about cancer, how did they fail with Genta?'"

Still, AVI is "diligently working" and expects partnerships this year, Burger told BioWorld Today, adding that the flu and hepatitis C virus programs are among those for which deals will be sought. The company has about two years' worth of cash and occupies its strongest financial position ever, he said.

The key, with antisense as with monoclonal antibodies, is to get the chemistry right, he said.

"From the late 1980s, for about three or four years, we avoided going into the clinic," Burger said. Although AVI scientists saw the potential of antisense, "it needed to be a lot more refined to meet pharmaceutical parameters - stability, safety, ease of manufacture, etc."

Meanwhile, the likes of Carlsbad, Calif.-based Isis Pharmaceuticals Inc.; Hybridon Inc., of Cambridge, Mass. (now called Idera Pharmaceuticals Inc.); and Genta Inc., of Berkeley Heights, N.J.; "rushed to the clinic with second-generation process," he said. AVI didn't feel comfortable doing so until the mid-1990s.

About a year ago, the firm's stock jumped more than 100 percent following news that one stem cell patent had been issued and another allowed, just as legislators said they would be considering funds for new state initiatives. (See BioWorld Today, Jan. 20, 2005.)

"It's still preclinical, but we've recently made enough progress that we're moving into animal and non-human primates in Australia," Burger said.

The company published promising Ebola-specific Neugene results in collaboration with the U.S. Army Medical Research Institute of Infectious Diseases in Public Library of Science (PLoS) Pathogens.

Also this month, AVI offered favorable safety and pharmacokinetic results from the first part of a Phase I/II trial in chronic, active HCV. The study is designed to measure AVI-4065, a daily, subcutaneously administered Neugene compound, in healthy volunteers and HCV patients. Results from the first phase suggested that the target dosage for efficacy will fall between 100 mg and 300 mg.

Under an IND for West Nile virus, AVI has a Neugene compound at the Phase Ib efficacy stage, Burger said.

Benjamin pointed out that "each of the [antisense] technologies have done well up to a certain point in the clinic, and even first-generation antisense showed promising Phase II results." Still, he is a "firm believer in the technology. We had this company at a hold' rating for over a year, and put it under review' in November. It's definitely a different chemistry."

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