By Mary Welch
Meditech Pharmaceuticals Inc. has emerged from a dormant stage and secured a $30 million financing agreement from an institutional investor, with the proceeds going to complete final tests on its proposed over-the-counter drug Zorex, as well as for other operating expenses.
"We were founded in 1982 to develop and market microbiological drugs, particularly in the fields of enveloped viruses like herpes and Epstein-Barr," said Gerald Kern, Meditech's CEO. "Then we went dormant. About six years ago we came out of our suspended animation and became involved with Immune Network Research Ltd., which was interested in what we had been working on. They ran some tests and found that our compounds are active. They will be submitting the findings for publication and we found an investor."
Vancouver, British Columbia-based Immune Network purchased exclusive licenses to both drugs. When it obtained the licenses in May, the company paid Meditech an advance licensing fee of $100,000.
Kern would not identify the institutional investor. However, he said the financing will last "at least until we have products on the market, and we expect to have Zorex on the market next year." The company, which trades over the counter, has 136 million shares outstanding, some of which are represented in this financing.
The financial agreement calls for a private equity line for the purchase of common stock, and is limited to a percentage of dollar trading volume.
Meditech, of Scottsdale, Ariz., has focused its efforts on two drugs, Viraplex and Zorex (formerly known as MTCH-24). Viraplex has been shown to be effective against several types of tumors, including those associated with breast, ovarian, lung and prostate cancer. The drug had been in various testing stages at the National Cancer Institute, but testing was suspended until a more soluble form could be found. Recent developments in testing at the School of Pharmacy in London indicate the solubility problem may have been solved, the company said.
Testing for Viraplex may be started again as a result of the financing, the company said.
The initial indication for Zorex will be herpes simplex virus 1 infections of the lips, mouth and face. The active ingredient in Zorex is readily available in over-the-counter products developed by other companies, but in a different dosage and delivery system.
The active ingredient of Zorex in those products is not present in sufficient concentrations to render it useful as an antimicrobial agent, the company said. Meditech said it has formulated topical products in concentrations sufficient to render it effective.
Testing done by the Immune Network indicated that Zorex is active against both herpes simplex viruses 1 and 2 and is less cytotoxic than other compounds in its class. The laboratory report stated that "preliminarily, Zorex is active as a potent antiviral microbicide at levels at least two-fold lower than those causing cytotoxicity."
Among the drug's potential other uses are to treat viruses such as cytomegalovirus, as well as bacteria such as streptococcus and staphylococcus.
Meditech's stock (OTCBB:MDCH) closed Thursday at 42 cents, up 3 cents.