ConjuChem Inc. is an early stage biotechnology company and its primary business purpose is the development and use of its novel in vivo bioconjugation technology to develop improved therapeutic drugs.

The Company was incorporated in 1997. In November 2000 it completed its initial public offering of shares.

ConjuChem is located in Montreal, Canada and employs 45 people, 90% of whom are in research and development. 

The management team is headed by CEO Jacques Lapointe whose previous experience includes positions such as President and Chief Executive Officer of Glaxo Wellcome in both Canada and the UK and President and Chief Operating Officer of BioChem Pharma Inc.

Current price: $12.29 (02/17/04)

52 week range $0.3-12.88

Average volume: 455,742 (3mo)

Market Cap: $486.7 mm

EPS: $-0.92

P/E: -13.13

Revenue (‘03): $1.0 mm

Expenses (‘03): $23.0 mm

Net Loss (‘03): $27.6 mm

Cash: $41.9 mm

Burn Rate (mm/mo): $2.0

Months of cash: 21

Long term debt: $22.3mm

DAC: opioid trials fail-AugustDAC:TI trial fails-AugustCEO resigns- September

DAC:GLP-1 formulation problems

Preliminary DAC:GLP-1Phase I/II data(& Jaques Lapointe appointed CEO) Final I/II

DAC:GLP-1 data

Announcement of year end results

Phase II begins enrolling

Each DAC™ construct is a fully patentable new chemical entity (NCE) that is composed of three components:

A drug component: a peptide or small molecule that is responsible for the biological activity

A connector permanently attached to the drug component

A reactive chemistry group at the opposite end of the connector responsible for the permanent bonding of the construct to albumin

The DAC™ construct can be administered into the patient by intravenous or subcutaneous injection. The reactive chemistry portion of the DAC™ construct will then covalently (permanently and specifically) bond to a single known site on albumin

SAFETY DAC™ bioconjugates are not primarily metabolized in the liver and kidneys and therefore, cannot damage these organs. DAC™ bioconjugates do not readily cross the blood brain barrier, therefore they cannot access the central nervous system.

LONGEVITY DAC™ bioconjugates can extend the half-life of a peptide from minutes to days. This extended duration of activity results from bonding the peptide to the most abundant protein in serum, albumin, in a process we call in vivo bioconjugation.

Conjuchems patent portfolio 52 patents in several countries covering:

methods for producing drug conjugates

use of cellular and serum proteins as drug anchors and conjugates

affinity labelling libraries

novel conjugates of opioids

affinity markers for human serum albumin

long lasting insulinotropic peptides 

Long lasting synthetic glucagon like peptide 

Long lasting fusion peptide inhibitors of viral infection 

The oldest of these patents (expiring in the year 2014) includes broad method claims on the use of in vivo bioconjugation for all therapeutic applications. Subsequent patent applications relate to focused therapeutic indications and specific drug conjugates

Lead product: DAC:GLP-1: -Glucagon-Like peptide-1(GRP-1) induces pancreatic secretion of insulin for type II diabetic patients

-Type II diabetes market expect to reach US$20.5 billion by 2012

- 10/2002 resolved formulation problems due to degradation of product; slowed phase I/II trials; now last 3 months

-Phase I/II results 6/2003- 4 trials at different doses showed glucose control for up to 6 days post injection; n=140

-Side effect was nausea which was expected with GLP-; treatable with Reglan; no nausea seen with step up tx

-Final Phase I/II- glucose normalization with all patients for 7 days post injection; no immunogenicity

-Phase II results expected Q2-2004- Our Binary event- endpoint HbA1c levels

2nd product: DAC:GRF: -Growth releasing hormone (GRH) stimulates Growth Hormone (GH) which is deficient in many disease (congential deficiencies, AIDS-related lipodystrophy, COPD, and slow recovery from injury)

-Conjuchem currently has multiple constructs that stimulate IGF-1 secretion in animal models for up to 10 days post-single injection

-Phase I/II trials to commence Q2 2004

Products in research phase: DAC:NP: -Atrial Natriuretic Peptide( ANP) is a vasoactive peptide that regulates blood pressure-Lead construct, CJC-1382:HSA maintains bioactivity after conjugation and has serum half-life of 14.8 hours

Products in research phase:GLP-2(Crohn’s disease and other intestinal disorders),

InsulinPTH( Parathyroid Hormone) – hypocalecemia/osteoperosisKringle V (anti-angiogenic factor)- solid tumors

Two failed products: DAC:Opioid; DAC:TI ( thrombin inhibitor)

Collaborators

NONE- Conjuchem is perfect for acquisition

Competitors/Competitive Technology

Exenatide (Eli Lily/Amylin)Phase III trials showed decreased HgbA1c levels lowered, weight loss, Immunogenicity issues, cash burner, over priced?, multiple injections

Albugon (Human Genome Sciences): Albumin:GLP-1 fusion peptideNo clinical trials yet

Symlin (Amylin)- synthetic version of pancreatic hormone amylin; May dose titration trial showed 25% of patients couldn’t tolerate

high doses, recent withdrawal of Swiss drug application due to side effects, recent Morgan Stanley upgrade

ThGLP-1(Theratechnologies)Long acting platform that modifies enzymatic cleavage site; targeting, GLP-1, GRF, PTH; three phase II trials data

expected soon.

Litaglutide (NN2211; Novo Nordisk) Long acting GLP-1 analog with a amino acid modification that allows fatty acid attachment that facilitates albumin binding (protein lipidation). Not that long acting and may be marketed as twice-daily or once daily formulation. Currently in Phase II. Also using this technology for Insulin

ZP10 (Aventis/Zealand Pharma)Exendin-4 analog; phase I/II results show 2x daily administration lowers blood glucose levels. Longer acting version is in early stage development

DPP-IV (Di-peptyl peptidase) inhibitors (Probiodrug, Novartis)Long term effects still unclear; phase I trials have not begun

Summary

Conjuchem is currently trading at 12.40/share. The GLP-1 target is on track to achieve upcoming phase II trial milestone, potential partnership and the advancement of additional compounds into clinical trials.

Issues: -DAC:GLP-1 critical for company survival -multiple competitors; positive/negative data will affect stock price -company is not profitable and partnering is essential for survival Upcoming Binary events: -Phase II trial data- Q2/04 - Potential for partnership /acquisition before Phase II data (Large firms with diabetic therapy development but no current in-house

GLP-1 development- Pfizer, Glaxo, AstraZeneca) - Phase I GRH trials to begin Q2/04 - Nasdaq listing likely after phase II trial data

We recommend buying 100 shares of Conjuchem with the endpoint of Phase II trial data or acquisition.