GROWING GLOBAL CONCERN about a possible pandemic stemming from avian flu have put the spotlight on several drug companies that may have treatments, notably Switzerland's Roche , maker of the highly sought-after anti-viral, Tamiflu.

AVI BioPharma (ticker: AVII), a little-known U.S. biotechnology firm, also could be a beneficiary of flu fears because its novel "antisense" drugs may be effective in combating the flu virus, as well as hepatitis C and a range of bio-terror threats, including the dreaded Ebola virus.

Antisense drugs potentially offer an elegant antidote to viral diseases because they're designed to enter cells and eliminate viruses by preventing their replication. The drugs, which act by blocking critical viral genetic sequences, may be more potent than anti-virals such as protease inhibitors, which seek to inhibit a protein needed for viral replication. AVI's specialty is single-strand RNA viruses, which include Ebola, hepatitis C and the flu.

Based in Portland, Ore., AVI has developed a drug, now in early clinical trials, to treat hepatitis C. Its drug to prevent restenosis, or the reclogging of arteries that can occur after angioplasty, is undergoing a clinical trial in Europe. The results from the hepatitis C trial are expected late this year or early in 2006, and the restenosis-trial data are likely next year.

AVI has no drugs on the market, and minimal sources of revenue, other than government grants. But its treatments for hepatitis C and dreaded viruses such as Ebola and Marburg have shown promise in pre-clinical testing.

The hepatitis trial, combining the first and second phases of the three trials typically required by the Food and Drug Administration, admittedly is small, involving about 40 sick patients. But, if that trial proves a success, AVI would stand a good chance of forming a potentially lucrative partnership with a major drug maker. Such a pact could help lift the company from obscurity and power its stock, which now languishes around $3 a share.

While AVI has little support on Wall Street, its fans believe it could be a big winner. "AVI has created and patented a core technology that has multiple applications that span everything from infectious disease to restenosis to muscular dystrophy and cancer," says Richard Macary, a managing partner at Corporate Insights, an independent research firm in New York. Macary owns AVI shares.

AVI clearly is a speculative stock. It has no drugs on the market, and minimal revenues other than government grants. As such, it has had to rely on dilutive equity financings, including a $24 million deal earlier this year, to fund itself. AVI has a modest market value of about $140 million, based on 44 million shares outstanding. It has $31 million of cash, enough to last more than a year, given its current annual cash-burn rate of about $22 million.

Unlike most other biotech companies with depressed shares, AVI hasn't had any failures in clinical trials. The company arguably has too much on its plate, and its management has been faulted for not telling its story well to investors and for not moving quickly enough with clinical trials in order to commercialize its products.

What attracts Macary is AVI's technology and the broad range of diseases its drugs presumably could treat, including avian flu. Once AVI's technology is "proven in one area," he says, Wall Street and the drug industry will take notice. That could come with the Phase I/II trial involving AVI's hepatitis C drug. AVI is taking on a difficult disease -- a leading cause of liver failure -- that may affect 200 million to 300 million people worldwide, including as many as four million in the U.S.

Hepatitis C represents a multibillion-dollar opportunity for any company that can come up with a better treatment than the current standard, a long, toxic and costly regimen involving Interferon and ribavirin that is ineffective in about half of patients. Many drug companies are working on hepatitis C drugs, including Vertex Pharmaceuticals (VRTX. For more on Vertex, see Q&A with Joseph McNay.)

AVI has developed treatments for a range of bio-terror threats, including the Ebola and Marburg viruses, anthrax and ricin, as well as West Nile virus and dengue fever. A U.S. Senate committee has approved an appropriation of $22 million to the company to pursue these drugs.

If the funds materialize in 2006, it will help AVI move forward with the testing necessary to seek FDA approval. The company has a strong relationship with the U.S. Defense Department and its top lab, the U.S. Army Medical Research Institute of Infectious Diseases (USAMRIID), at Fort Detrick, Md. AVI's Ebola and Marburg treatments have been effective in animals, including primates, but haven't yet been tested in humans.

AVI also has had success in preclinical experiments with a drug to combat the flu. The company now wants to expand its research to animals, and later to humans.

Wall Street analysts generally are cool to AVI, partly because the history of antisense drugs hasn't been a happy one for investors. The FDA failed to approve antisense cancer drugs from Genta (GNTA) and Isis Pharmaceuticals (ISIS) in the past two years, casting a pall over any biotech company pursuing such therapies.

One of AVI's biggest critics on the Street is Legg Mason biotech analyst Edward Nash, who has a Sell rating on the stock. "So we ask ourselves, why would investors invest in AVI with no near-term hope of profitability when they could invest in other biotech companies that have near-term, late-stage clinical, and/or commercialization milestones," Nash wrote in a recent note, titled "AVII: AVI (an) is for the birds."

AVI's situation could change dramatically if its hepatitis C drug trial meets the company's goal of substantially reducing the viral count in diseased patients. Major drug companies are desperate for products, and hepatitis C is considered one of the largest opportunities. Biotech firms with promising drugs, even those not yet in Phase III trials, are reaching lucrative deals with Big Pharma. AVI's chief executive, Denis Burger, says the company is likely to partner with one of several big drug makers if the hepatitis C trial goes well.

AVI was formed in 1980, and its drug platform is supported by more than 100 patents. The company's top executives and directors have significant experience in the drug and biotech industries. Burger, who has been AVI's CEO since the company went public in 1997, acknowledges it's a show-me story. "With the high-profile antisense failures, the Street is leery of the word antisense. Pharmaceutical companies and investors are leery," he says.

Burger says AVI's third-generation Neugene technology differs fundamentally from antisense drugs developed by rivals. AVI drugs use a patented, synthetic chemical backbone to deliver their gene-blocking payload. This structure is designed to prevent the human body's tendency to break them down before they reach target cells.

Antisense drugs also have to overcome other biochemical hurdles, including the ability to cross cellular barriers and then block specific genetic targets. The drugs need to work without causing severe side effects, as safety has been a problem with rivals' drugs. "We've completed 11 human clinical trials involving 250 patients, and we've not had a single drug-related adverse event," Burger says.

AVI can develop a drug quickly once it knows the genetic code of the target virus. With the flu, it strives to target a critical section of the virus that is common to multiple strains. Because the flu virus mutates, a new vaccine must be developed yearly.

If its technology works, AVI could develop drugs for a host of ailments that have a genetic cause. GlaxoSmithKline (GSK), for instance, is using AVI's technology to develop a treatment for muscular dystrophy. Other applications could include diabetes and multiple sclerosis.

In 2004, a worker at the USAMRIID lab was stuck by a needle while working with Ebola, prompting fears the worker might contract the deadly disease. AVI formulated a drug within days that got special FDA approval, though the worker proved to be unharmed. AVI was then able to test the drug in primates who were given a fatal dose of Ebola, and 75% survived.

The U.S. government is eager for drugs to combat a range of bio-terror threats because few treatments now exist. Ebola, which causes a hemorrhagic fever that is usually fatal, largely has been confined to central Africa. It is transmitted through direct contact with the blood or bodily secretions of those afflicted. The fear is that terrorists could produce an airborne form of Ebola and then seek to infect a city.

If AVI's Ebola and other bio-terror treatments are deemed sufficiently promising, the government could commission the company to produce a significant amount of the drugs for stockpiling. The government already has an $877 million contract with VaxGen (VXGN), a California biotech, to make 75 million doses of an anthrax vaccine. The advantage of AVI's treatment over a vaccine is that it can be used immediately when an outbreak of the disease occurs. Vaccines typically aren't effective for those who already have contracted a disease, and they can take weeks to provide immunity to healthy people. The chief of immunology at USAMRIID, [Sina A Bavari (born 1959)], said recently that favorable animal tests involving AVI drugs "represent important progress for the potential treatments of these deadly bio-threats," according to an AVI press release.

One of the knocks against AVI is that it lacks a major drug partner. In 2001, AVI traded up to $12 share after it partnered with Medtronic (MDT), which planned to use AVI's restenosis drug for a new stent. That partnership lapsed in 2004 without producing a drug-coated stent, and its failure has been interpreted as a sign that the AVI drug isn't effective. Drug-coated stents from Boston Scientific (BSX) and Johnson & Johnson(JNJ) now dominate the market. Stents are used as scaffolding to hold open arteries after they've been cleared of blockages. Drug-coated stents have reduced the incidence of restenosis, or the reclogging of arteries, compared with bare-metal stents.

In Europe, AVI is testing its drug in conjunction with bare-metal stents, commonly used on the continent, to see if the combination can achieve similar success at much lower cost. The AVI drug is injected.

A U.S. Phase II trial in 2003 found that AVI's Resten drug, when delivered via catheter, was effective in preventing restenosis. "It's a very good drug," says Dr. Nicholas Kipshidze, a physician and researcher at Lenox Hill Hospital in New York, which conducted the 2003 trial. "We got very good results with inferior delivery. It's less toxic than any other drug we are using. I still believe that Resten will play a role in the stent" market. Kipshidze consults for AVI, but doesn't own stock.

The Street has written off AVI's restenosis drug, just as it has downplayed the potential of its other products. The biotech industry is full of hype, hope and frequent disappointment. Like most biotechs, AVI amounts to a lottery ticket. But, in this case, the payoff just might be huge.

PORTLAND, Ore. [AVI BioPharma], Inc. (Nasdaq:AVII) announced today the presentation of data from two studies evaluating the company's NEUGENE(R) PLUS therapeutic antisense compounds in the treatment of nonhuman primates (NHP) exposed to the Ebola virus. Results of the studies were presented at the National Institutes of Health's Filovirus Animal Workshop by [Sina A Bavari (born 1959)], principal investigator, U.S. Army Medical Research Institute of Infectious Diseases (USAMRIID).

The studies were conducted in collaboration with USAMRIID and funded as part of AVI's two-year, $28 million research contract with the [Defense Threat Reduction Agency] (DTRA) of Fort Belvoir, Va., an agency of the Department of Defense.

The two Ebola studies involved 10 NHP subjects, including two controls. In the first study, three of four treated NHPs survived and the Ebola viral infection was completely eliminated. In the second study, all four treated NHPs survived substantially beyond untreated subjects and all completely eliminated the Ebola virus. Subjects were initially challenged with a 1000pfu of Ebola Zaire and then treated one hour following exposure with a 20 mg/kg dose of two NEUGENE PLUS antisense drugs via subcutaneous (SC) and intraperitoneal (IP) injection. Researchers continued treatment daily for 10 to 14 days via SC and IP injection at 20mg/kg.

[Sina A Bavari (born 1959)] also presented data for two studies evaluating NEUGENE PLUS therapeutics in the treatment of mice and guinea pigs exposed to different strains of the Marburg virus. One hundred percent survival was observed in mice challenged with Marburg, Ravn strain and 100 percent survival was observed in guinea pigs challenged with Marburg, Musoke strain. The NEUGENE PLUS therapeutic is expected to be effective against all known strains of Marburg. These studies were also supported by the $28 million DTRA contract.

"These studies clearly demonstrate the ability of a NEUGENE PLUS treatment to protect against viremia and death associated with Ebola or Marburg exposure," said K. Michael Forrest, AVI's interim CEO. "This research provides the basis for a viable therapeutic response as part of our nation's biodefense preparedness. It also establishes much-needed scientific evidence of therapeutic benefit against two currently untreatable hemorrhagic viruses that trigger devastating outbreaks."

Associated mouse studies demonstrated that AVI's Ebola NEUGENE PLUS therapies are safe and well-tolerated in mice at 50 times the dose used in the NHP studies.

The NEUGENE PLUS molecules used in the study represent a small but significant chemical modification to AVI's antisense "backbone." This change, which creates a positively charged therapeutic molecule that binds more readily with negatively charged RNA virus particles, is one result of an ongoing initiative at AVI to innovate the antisense platform for improved pharmacokinetics and bioavailability in certain therapeutic areas, including the treatment of infectious diseases.

AVI researchers are in the process of conducting additional GMP and GLP toxicology and safety studies using the NEUGENE PLUS compounds as part of the ongoing collaboration between USAMRIID and AVI. The next step in evaluating clinical efficacy of the NEUGENE PLUS drugs against Ebola exposure will measure the impact of delayed treatment of Ebola Zaire threats in a NHP population.

About Ebola Zaire and Marburg Viruses

• Ebola hemorrhagic fever is a severe, often-fatal disease in humans and nonhuman primates (monkeys, gorillas and chimpanzees) that has appeared sporadically since its initial recognition in 1976. The disease is caused by infection with Ebola virus, named after a river in the Democratic Republic of Congo (formerly Zaire) in Africa, where it was first recognized. Ebola virus and Marburg virus are the only two members of a family of RNA viruses called the Filoviridae.
• Researchers have hypothesized that the first patient becomes infected through contact with an infected animal. After the first patient in an outbreak setting is infected, the virus can be transmitted in several ways. People can be exposed to Ebola virus from direct contact with the blood and/or secretions of an infected person.
• The disease is a National Institute of Allergy and Infectious Disease (NIAID) priority A pathogen and a bioterrorism suspect agent of interest to the Department of Defense and Project BioShield. There are currently no approved treatments for Ebola.
• Marburg virus was first recognized in 1967, when outbreaks of hemorrhagic fever occurred simultaneously in laboratories in Marburg and Frankfurt, Germany, and in what is now Serbia.
• Marburg hemorrhagic fever is a rare, severe type of hemorrhagic fever that affects both humans and nonhuman primates. It is caused by a genetically unique animal-borne RNA virus, whose recognition led to the creation of this virus family.

About AVI BioPharma

• AVI BioPharma develops therapeutic products for the treatment of life-threatening diseases using third-generation NEUGENE antisense drugs and ESPRIT exon skipping technology. AVI's lead NEUGENE antisense compound is designed to target cell proliferation disorders, including cardiovascular restenosis. In addition to targeting specific genes in the body, AVI's antiviral program uses NEUGENE antisense compounds to combat disease by targeting single-stranded RNA viruses, including dengue virus, Ebola virus and H5N1 avian influenza virus. AVI's NEUGENE-based ESPRIT technology is initially being applied to potential treatments for Duchenne muscular dystrophy. More information about AVI is available on the company's Web site at http://www.avibio.com.

[...]

• CONTACT: AVI Contact:
• AVI BioPharma, Inc.   /   Michael Hubbars  [...]
•   or  AVI Investor Contacts:
•              Lippert/Heilshorn & Associates Inc.   /    Jody Cain or Brandi Floberg [...]
•  or   AVI Press Contact:
•              Waggener Edstrom Worldwide Healthcare   /    Jenny Moede   [...]

New studies show that treatments targeting specific viral genes protected monkeys infected with deadly Ebola or Marburg viruses. Furthermore, the animals were protected even when therapeutics were administered one hour after exposure—suggesting the approach holds promise for treating accidental infections in laboratory or hospital settings.

The research, which appears in today's online edition of the journal Nature Medicine, was conducted by the U.S. Army Medical Research Institute of Infectious Diseases in collaboration with [AVI BioPharma], a Washington-based biotechnology firm.

Working with a class of compounds known as antisense phosphorodiamidate morpholino oligomers, or PMOs, scientists first performed a series of studies with mouse and guinea pig models of Ebola to screen various chemical variations. They arrived at a therapy known as AVI-6002, which demonstrated a survival rate of better than 90 percent in animals treated either pre- or post-exposure.

Encouraged by these results, the team conducted "proof of concept" studies in which 9 rhesus monkeys were challenged with lethal Ebola virus. Treatment was initiated 30-60 minutes after exposure to the virus. In these studies, 5 of 8 monkeys survived, while the remaining animal was untreated. Further experiments, including a multiple-dose evaluation, also yielded promising results, with 3 of 5 monkeys surviving in each of the AVI-6002 treatment groups when they received a dose of 40 mg per kg of body weight.

According to first author Travis K. Warren of USAMRIID, antisense drugs are useful against viral diseases because they are designed to enter cells and eliminate viruses by preventing their replication. The drugs act by blocking critical viral genetic sequences, essentially giving the infected host time to mount an immune response and clear the virus.

Ebola and Marburg cause hemorrhagic fever with case fatality rates as high as 90 percent in humans. The viruses, which are infectious by aerosol (although more commonly spread through blood and bodily fluids of infected patients), are of concern both as global health threats and as potential agents of biological warfare or terrorism. Currently there are no available vaccines or therapies. Research on both viruses is conducted in Biosafety Level 4, or maximum containment, laboratories, where investigators wear positive-pressure "space suits" and breathe filtered air as they work.

The USAMRIID team next turned its attention to Marburg virus, again screening various compounds in mice and guinea pigs to select a candidate for further testing. They settled upon AVI-6003, a drug that consistently conferred a high degree of efficacy (better than 90 percent survival) in both models.

Investigators conducted two pilot studies in cynomolgus monkeys to assess the efficacy of AVI-6003 against lethal challenge with Marburg virus. As with the Ebola studies, treatments were initiated 30-60 minutes after infection. All 13 animals receiving AVI-6003 survived. Additional research provided important information about the optimal therapeutic dose range of the compound, with a 40 mg per kg body weight dose protecting 100 percent of the monkeys following challenge.

"This report of successful early post-exposure treatment of filovirus hemorrhagic fever is significant on its own," said Colonel John P. Skvorak, USAMRIID commander, "but the drug characteristics of these PMOs also support investigation of potentially broader therapeutic applications."

Senior author [ Sina A Bavari (born 1959)] said USAMRIID has been collaborating with AVI BioPharma since 2004. In February of that year, an Institute scientist working in a Biosafety Level 4 laboratory stuck her thumb with a needle while treating Ebola-infected mice with antibodies. As a precaution, USAMRIID medical experts recommended the investigator be isolated for 21 days to ensure that she had not been infected.

Coincidentally, earlier that very day, [Dr. Patrick Lynn Iversen (born 1955)] from AVI BioPharma had presented a seminar at USAMRIID concerning the efficacy of novel antisense drugs against a range of viruses. When he found out that a USAMRIID scientist had potentially been exposed to Ebola virus, the company volunteered to design and synthesize compounds against the virus to treat her if the need arose.

The team at AVI worked for four straight days to generate human-grade anti-Ebola compounds. In the meantime, their regulatory staff worked with USAMRIID physicians to gain emergency approval from the U.S. Food and Drug Administration to use the compounds if necessary. Five days after the exposure, AVI delivered the compounds to USAMRIID's medical team. 

Fortunately, the scientist had escaped infection with Ebola virus, so the compounds were never used. However, USAMRIID went on to test them in animal models, and has been collaborating with AVI ever since. 

According to the authors, the investigational new drug applications (IND) for AVI-6002 and AVI-6003 have been submitted to the U.S. Food and Drug Administration, and they are now open to proceed with clinical trials.

NOTES: 

• Collaborating on the study were Travis K. Warren, Jay Wells, Kelly S. Donner, Sean A. Van Tongeren, Nicole L. Garza, Donald K. Nichols, Lian Dong, and Sina Bavari of USAMRIID; Kelly L. Warfield and Dana L. Swenson, formerly of USAMRIID; and Dan V. Mourich, Stacy Crumley, and Patrick L. Iversen of AVI BioPharma.
• USAMRIID, located at Fort Detrick, Maryland, is the lead medical research laboratory for the U.S. Department of Defense Biological Defense Research Program, and plays a key role in national defense and in infectious disease research. The Institute's mission is to conduct basic and applied research on biological threats resulting in medical solutions (such as vaccines, drugs and diagnostics) to protect the warfighter. USAMRIID is a subordinate laboratory of the U.S. Army Medical Research and Materiel Command. 
• Reference:    Travis K. Warren, Kelly L. Warfield, Jay Wells, Dana L. Swenson, Kelly S. Donner, Sean A. Van Tongeren, Nicole L. Garza, Lian Dong, Dan V. Mourich, Stacy Crumley, Donald K. Nichols, Patrick L. Iversen and Sina Bavari; "Advanced antisense therapies for postexposure protection against lethal filovirus infections," Nature Medicine (22 August 2010).