1. Why is non-lethal extraction important re: KLH?
2. There must be other supplies of KLH? Where are they?
3. Vaccines are all well and good ... but . . . ? This is a risk.
4. Small biotech companies and many very large ones have no current revenues - How about Stellar?
5. Total number of patents and patents pending?
6. Total market size for KLH?
7. What is the possibility some smart scientist will develop a “synthetic KLH”?
8. Projected revenue -- where will it come from?
9. Can you explain more about the Primary (and secondary) Immune Response Diagnostic?
1. Why is non-lethal extraction important re: KLH?
The importance is primarily economic: Non-lethal extractions allow customers to reserve specific limpets for multiple KLH lots which provides traceability back to individual source animals, a factor of considerable importance to the customer and FDA during drug development.
It also allows Stellar to contract with customers to provide long-term supplies from dedicated colonies, thereby reducing the customer’s supply risk and generating revenues for Stellar during the customer’s drug development phase.
Non-lethal extraction also greatly extends the supply potential from the natural resource (while Stellar is increasing its aquaculture capacity) by allowing captured animals to be held in captivity for years while KLH is periodically extracted;
There may be as few as 20,000 to 120,000 Keyhole commercially available from the wild. It is a non-renewable, rapidly depleting natural resource that demand could overrun in as little as 4-8 years, without a means to extend the supply and eventually replace through aquaculture every single animal that can be caught and bled. But
Stellar is changing this dramatically with its spawning and growing technologies
As of May 2010, 60,000 juvenile Keyhole Limpets are on a desktop in Port Hueneme. Stellar has a patent and trade secrets on the way to bleed the animals 3 times/year, extracting about 1 g/animal/yr. without killing the animals. In fact, they quickly recover their blood and go on to live full lives... 25+ years plus in this way.
2. There must be other supplies of KLH? Where are they?
Fortune 1000 Company Sigma Aldrich (SIAL) is a supplier of various formulations but their raw material comes from Stellar. Small German biotech/pharma company Biosyn has an office in Carlsbad, CA, but exports the blood from California limpets to Germany for purification. It seems they contract with local divers to catch limpets when they need them. Stellar has about 3000 mature (bleed-able) animals they have placed at their site or nearby.
Pierce Chemical supplies a form of KLH to the research market. They do not currently have a GMP-grade product approved by FDA or USDA. (Good Manufacturing Practice)
3. Vaccines are all well and good ... but . . . ? This is a risk.
Stellar recognizes the risk that any new therapeutic platform may not mature into a commercial market opportunity or may be replaced by an alternate technology. That is why we are pursuing the vaccine market through vaccine development partners including international pharmaceutical and biotechnology companies. Further, we are developing our own KLH-based diagnostics for testing primary immune response (while demanded by immunologists, oncologists and transplant surgeons, and having potential drug development applications, no such test exists.)
Stellar itself is not focused on vaccines. That is, however, where the current market is.
4. Small biotech companies and many very large ones have no current revenues - How about Stellar?
In FY 2009 Stellar had about $1M in revenues . . . 3 years of increasing revenues since beginning sales in 2007. Stellar has products, makes sales and has revenues currently.
5. Total number of patents and patents pending?
1 patent . . .1 patent pending .. . Our aquaculture and manufacturing methods are primarily trade secret to prevent disclosure an discourage reverse engineering. Stellar has all-important trade secret intellectual property (IP).
The most important KLH IP is related to sustainability and growth of the megathura crenulata resource itself through spawning, larvae control, breeding and husbandry technologies developed over 30 plus years of mollusk research of Daniel Morse, Ph.D. at UCSB (and Director and Exec VP of Stellar), a world-renowned expert in the space (Link) and Frank Oakes, over the same time-frame and in conduction with Dr. Morse, husbanding many millions of abalone and multiple times more megathura than any other person, having founded The Abalone Farm in the late 1970s (see pic at bottom of page - 6M abalone - Link) - Oakes is the patent-holder of non-lethal extraction of the hemolymph ("blood") from megathura. This patent combined with the trade secret IP developed over 30 years with mollusks and 9 years and $6M of NIH and NSF funding specifically on megathura crenulata, further combined with trade secret efficiencies on formulating KLH from the hemolymph (as recognized by one of the largest pharmaceutical companies in the world) give Stellar effective control of the space without having to reveal its methods to competitors. If appropriate and necessary, Stellar will of course be willing and able out-license or in-license IP as needed to achieve its corporate goals. That said, Stellar has many patentable technologies and methods that it and its patent attorneys may choose to patent in the future if it is purposeful or cost-effective for overall IP strategy.
Currently about $2-$3M/year. Based on cancer vaccine approvals expected it could leap to $50M+ within 5 years. In 4-8 years, if only 3 - 5 of 30+ KLH-based cancer vaccines currently in clinical trials are approved, demand could grow to 10s of KGs/year (more than 15X current worldwide supply (assuming 10s of thousands of keyhole limpets could even be found, fished and bled).
7. What is the possibility some smart scientist will develop a “synthetic KLH”?
First, once an important ingredient is in an approved drug or vaccine or even has been approved for an early clinical study, that ingredient cannot be replaced without completely re-starting the study from scratch. (toxicity studies, safety studies, tolerance studies, manufacturing QT studies, contamination studies . . . . etc.)
Second, because the injection of any new (especially medically-active) molecule into a human being requires years of study (typically 10 - 17 years) - first in mice for example, then a larger mammal like a pig, etc. and safety and effectiveness proven there before it can be even injected into humans - few would rationally start this very expensive and long process before there was confidence in a quite large market. Even then it would have to be proven in the specific use to which it was put (like conjugation to a particular cancer tumor target molecule) to it's fair to say that this idea is 12 - 20 years away, at least. (It would be natural for Stellar and its partners to be first-movers in this area, if it were to become a potential business opportunity for any participant.)
Third, looking out a couple of decades, if a synthetic were conceived and engineered (years and several million dollars in our scientists' opinion) and the company felt it could compete with KLH . . . only then could the above 12-20 year timeline even begin.
Fourth, should a "replacement" molecule for KLH appear, it is unlikely to either be a synthetically derived KLH-like molecule or a very different ingredient with similar properties. It is most likely to be another mollusk-derived hemocyanin from another limpet other than megathura crenulata (giant keyhole limpet). Because of our CEO and VP Science & Technology's deep 30 year experience with most all other mollusks, Stellar is confident they would have a lead in this area. Again, even this material would require 12-20 years - from a dead start today - before regulators could approve it for use in human beings for any specific use for which KLH is approved today. (We are very confident Stellar and its partners would be first movers in this area, if it were to become a potential business opportunity for any participant.)
8. Projected revenue -- where will it come from?
As we know, early stage biotech companies, often with market capitalizations of 100s of millions of dollars and facing 100s of millions in expenses before having any revenues, often have no revenues, Stellar, with an opening market cap of less than $10M has had revenues from sales of product for several years. Early revenue projections are based on orders we've been told to expect from current customers. Beyond that, Stellar’s revenue model does assume that KLH demand is driven by the advancement of 3-4 cancer vaccines through clinical trials over the next three years (out of 30 + in process), with the approval of one or more of these candidate products within the next five years. However, because of the attrition rate of vaccine candidates experienced in the past, Stellar is focusing product development on a KLH strategy that is not dependent on the cancer vaccine segment, and can be advanced by Stellar without dependence on the success of customer’s clinical programs. This is related to producing and gaining regulatory approval for a highly immunogenic KLH formulation that can be marketed in the immunological setting as an immune stimulant (neoantigen) that can be packaged with a diagnostic assay and marketed as an immune response test kit to meet the need for a standardized quantifiable human immune response test. The need for these products is demonstrated by the numerous requests from current and prospective customers seeking a screening tool to assay immune competence of patients being recruited into clinical trials. Ultimately the demand for these products will be driven by physicians seeking to enhance therapeutic decision making and reduce patient care costs by measuring immune competence prior to prescribing immune-based therapies.
As example for cancer vaccines going into trials, Bayer has selected KLH as the preferred carrier for its conjugate vaccines platform. Bayer’s first KLH conjugate for Non-Hodgkin Lymphoma is just entering Phase I human trials in early 2010. Vaccines for other indications will probably follow using the same PMP technology.
9. Can you explain more about the Primary (and secondary) Immune Response Diagnostic?
On neoantigen vaccine development: The neoantigen vaccine component of the test will utilize a KLH formulation optimized by Stellar specifically to induce primary and secondary immune response in humans without the use of an adjuvant. Stellar has evaluated the full molecular weight range of the KLH molecule, and developed methods to efficiently purify the molecular weight range from the hemolymph of the keyhole limpet that produces the optimum immune response (IMG KLH) Stellar has filed a provisional patent on a highly efficient method for purification of the KLH form, and plans to leverage its investment in IMG KLH production to manufacture not only the neoantigen vaccine, but also research-grade and GMP-grade IMG KLH products for use in antibody production, therapeutic vaccine manufacturing, and immunotoxicology studies in animals. These additional IMG KLH products do not require FDA approval for Stellar's ingredient, but GMP-grade products will be supported for clinical use by Drug Master File submissions. For the neoantigen vaccine, IMG KLH will be formulated as a liquid-stable product. Formulation studies, including accelerated stability studies, will be sub-contracted to an experienced protein formulation laboratory. Manufacturing of KLH neoantigen and fill/finish of the vaccine for clinical studies will be conducted at one of Stellar’s established GMP Contract Manufacturing sites.
