[edit] Financial Summary

[edit] Recent Updates

[edit] Highlights

On September 3, 2010, the company revised 1H and full year FY03/11 forecasts. Details were as follows:

1H FY03/11 forecast:

Sales: 20 million yen

Operating Profit: -312 million yen

Recurring Profit: -312 million yen

Net Income: -313 million yen

Full year FY03/11 forecast

Sales: 475 million yen

Operating Profit: -226 million yen

Recurring Profit: -227 million yen

Net Income: -229 million yen

The company released Q1 FY03/11 results on July 30, 2010.

The company announced on June 28, 2010 that the Paclitaxel Micelle (NK105) patent was registered in Europe.

On June 21, 2010, the company announced that it developed a cosmetics product called ‘éclafutur-W’ that uses its nanotechnology. The serum will be sold from October 1, 2010.

The company announced on May 19, 2010 that its Board of Directors made a decision (on the same day) to issue new shares to Medinet through a 3rd party offering. 4,819 new shares will be issued at 20,750 yen for the total amount of 99,994,250 yen (or 98,194,250 yen of available capital after 1,800,000 yen in fees). The payment procedures were completed on June 7th, 2010. The number of shares outstanding following the issue was 133,398 shares.　The new capital will be used to pursue cancer-related therapy R&D under a comprehensive joint research agreement with Medinet. Specifically, R&D will focus on (1) development of new cancer therapy technologies combining cytokine micelle preparations and effector cells with antigen-presenting cell therapy and (2) research and development of cancer-related therapy technologies utilizing micelle antibody conjugates. The dilution from the issue is expected to be 3.74%, minor in SR Inc.’s view. While strengthening the relationship with Medinet amid challenging market conditions deserves certain praise, it will probably take some time before material results are produced.

The company released Full Year results on May 14, 2010.

Back to Top

[edit] Trends & Outlook

Quarterly Trends

Q1 FY 03/11 Results

The company released Q1 FY03/11 results on July 30, 2010 (see the table above). Q1 results vs. 1H estimates were as follows:

• Sales : 2.0% (vs. 1H estimate of 516 million yen)
• Operating profit : -145 million yen (vs. 1H estimate of 119 million yen)
• Recurring profit : -145 million yen (vs. 1H estimate of 118 million yen)
• Net income : -146 million yen (vs. 1H estimate of 117 million yen)

Sales were from providing micelles for feasibility studies to licensing partners. The company minimized R&D spending, resulting in an operating loss of 145 million yen.

In Q1, the company also started test-selling the beauty serum ‘éclafutur-W’ which uses the company’s nanotechnology. Polymeric micelles are loaded with vitamin E and vitamin C derivatives that penetrate skin cells and help keep skin moist and clear. Although a full-scale sales campaign will start in October 2010, the main goal behind the product development is demonstrating the company’s technology.

There was no change to 1H and full year forecasts. The company expects that its 1H sales target is likely to be achieved with help from new contract revenues.

Pipeline Update

Paclitaxel Micelle (NK105)

Phase II clinical trial completed, entering data analysis. According to the company, progress is more or less as expected. Analysis could take 4-6 months to complete, after which Phase III clinical trial will start.

Nanoplatin® (NC-6004)

The Phase I/II clinical trial in Taiwan is progressing. Phase II is expected to start in 2011, which will take approximately one year.

DachPlatin (NC-4016)

Phase I clinical trial is continuing. The company had indicated that results and underlying data from the trial would be available in Fall 2010, but this was pushed back to the end of 2010. Normally, the dosage amount is determined and drug safety is verified in Phase I. Adverse effects were less than anticipated by NanoCarrier and Debiopharm, and the dosage amount was increased - which required more trials. Although the completion of Phase I has been delayed, the company commented that Debiopharm is satisfied that safety of the drug has been verified and therefore the delay is not a negative development.

Full Year FY03/10 Results

The company announced FY03/10 Q4 and full year results on May 14, 2010.

Sales were 118 million yen (-66.7% YoY), operating loss of 493 million yen (vs. a loss of 532 million yen in FY03/09), recurring loss of 492 million yen (vs. a loss of 524 million yen in FY03/09), net loss 495 million yen (vs. a loss of 524 million yen in FY03/09).

FY03/10 Results Report Card

Revenues

Target: 505 million yen

Result: 118 million yen

Operating Profit

Target: -253 million yen

Result: -493 million yen

Net Income

Target: -257 million yen

Result: -495 million yen

Full-year FY03/10 results were in line with the revision made in March. Some negotiations that were expected to lead to licensing agreements in Q4 were extended to FY03/11, causing a miss relative to initial forecasts. Specifically, negotiations for Nanoplatin® (NC-6004) and DACH-Platin Micelle (NC-4016) were delayed. While the company does not disclose specifics, SR Inc. suspects that slower than expected progress of NC-6004 clincal trial might have been the main factor behind the delay. However, the delay might bring about additional tactical opportunities as discussed below.

R&D spending in FY03/10 was 219.2 million yen (-25.8% YoY). This was driven by budgetary constraints but also impacted by the absence of a specific research grant that the company used in FY03/09. Overall, NanoCarrier seems to have controlled costs well and maintained its cash burn at a sustainable level.

Pipeline Update

For Paclitaxel Micelle (NK105), Phase II clinical trial is underway and is progressing more or less as expected according to the company. The trial is performed by Nippon Kayaku; NanoCarrier cannot comment on details until they are announced by Nippon Kayaku. SR Inc. understands that progress might be somewhat slower than initially expected. Nippon Kayaku appears to be taking a slow and measured approach, probably reflecting a conservative nature of Nippon Kayaku, who has a solid track record of bringing small niche drugs to market and keeping sales stable even after patent expiration thanks to careful positioning. SR Inc. notes that Nippon Kayaku chose to focus on stomach cancer in Phase II. The logic behind such a narrow choice is unclear, but is probably related not only to medical, but also strategic reasons. Stomach cancer is one of the major cancers in Japan, and bold steps by Nippon Kayaku could dissuade potential competitors. SR Inc. guesses that the drug could be approved in 2014 or early 2015.

Nanoplatin® (NC-6004) – The Phase I/II clinical trials in Taiwan were taking a bit more time than initially expected due to what the company described as commonly occurring delays with patient recruiting. Despite delays, the preliminary results are expected in summer 2010. SR Inc. estimates that at that stage, negotiations with potential licensing partners should resume. Multiple licenses will be available for NC-6004: Orient Europharma Co. Ltd. has exclusive rights for only Oceania and Asia (but excluding Japan and mainland China), thus leaving rights for Japan, mainland China, the US and EU available.

One interesting point about negotiations that failed to produce licensing agreements in FY03/10 is that both NC-6004 and NC-4016 were discussed, according to company statements. While NanoCarrier would not provide detail, SR Inc. wonders if negotiations were with the same party for both drugs. Indeed, if NC-4016 negotiations failed to produce results but NanoCarrier only vaguely blamed the delay on Taiwanese trial of NC-6004, it seems likely that the company was negotiating with one partner for the Japan distribution rights for both drugs. The negotiation partner for US/EU rights for NC-6004 might have been the same or different company, but the delay with the trial results produced a delay here as well.

While it is disappointing that negotiations did not produce results the company committed itself to in its FY03/10 forecast, it might also have won some time and “moral rights” to negotiate with multiple partners. Armed with more concrete trial results for both drugs, the company could be in an improved negotiation position than it was in FY03/10. If true, such licensing agreements could produce more substantial revenues than would have been available if they were concluded in FY03/10 (royalties percentages typically increase as drugs progress through trial phases).

DachPlatin (NC-4016) – Progressing through Phase I. The company hopes that results and underlying data from the trial will be available in Fall 2010 at the latest. Normally, Phase II trials commence 6-9 months after the completion of Phase I. That would mean that Phase II could start as early as Q4; NanoCarrier will receive a milestone payment at that time. However, the possibility that the company would acquire the clinical data from Debiopharm is equally important. NanoCarrier could pursue licensing opportunities in Japan, the only market where the company kept the rights for NC-4016.

NanoCarrier indicated that as of FY03/10 end, the pipeline included 20 different projects with 12 different partner companies. The company particularly emphasized five items that hold commercial promise: Docetaxel Micelle, Epirubicin Micelle, Protein Micelle, siRNA Micelle, and Sensor-Incorporated Micelles. There was little information on specific targets related to the new pipeline as of May 2010, however the company indicated that it had completed feasibility studies of Docetaxel Micelle and Epirubicin Micelle, leading SR Inc. to think that these two are likely next candidates for commercialization.

In terms of the overall progress for the pipeline, the company commented to SR Inc. that it was “good”.

Company Estimates (FY03/11)

SG&A assumptions for the year are approximately 600 million yen, however depending upon sales progress, the company said spending may increase. The R&D budget for the year is expected to increase by approximately 80 million yen YoY to approximately 300 million yen. R&D expenses are expected to be roughly equal in 1H and 2H, however this should probably be viewed through the same prism discussion above.

NanoCarrier has ample cash on hand for FY03/11 and beyond, assuming revenues are flat and R&D spending is stable. The company has 28,500 Warrant-6 series warrants outstanding (as of Q1 FY03/11), which if exercised at the minimum strike price, would generate just under 900 million yen.

Longer Term Outlook

NanoCarrier’s longer term progress is largely on-track according to the company. Potential developments in FY03/11 should lay the foundation for increasing revenues, although the uncertain nature of payment timing (milestones) suggests that sales are likely to remain lumpy.

Back to Top

[edit] Business

[edit] Core Technologies

Micellar nanoparticle (nanomicelle particle) technology

The core skills of NanoCarrier are a combination of polymerization and nanotechnological skills.

One of the more important aspects of the company's technology is the fact that micelles can be “engineered” to have various sizes and contain different components. That opens venues of growth and development and represents a potential competitive advantage. The company commented that many other existing technologies were fixed, i.e. they represented one manufacturing approach that companies try to apply to various compounds and diseases. NanoCarrier's technology is more of a flexible platform allowing the company to explore new areas of growth.

The company maintains that its systems may be used not only with conventional monomer drugs but also polymers, including nucleic acid polymers, as well as bioactive peptides and proteins. (“Bioactive” means that it can have an effect on living organisms). Please note that protein targeting micelles are not the same technology that are used for passive targeting compounds (that comprise the existing pipeline) but rather an extension of the same principles.

Current technology focus:

• NanoCarrier produces nanoscale micelles (20-100 nanometers) that incorporate drugs at their core and are stable for a long time in the bloodstream.
  

(Source: Company Data)

• Polyethylene glycol (hydrophilic substance) and amino acids (hydrophobic substances) are synthesized into a copolymer. When mixed with water, aggregates of several dozen to several hundred molecules of this copolymer form individual stable spheres with polyethylene glycol forming the shell and amino acids forming the core. A drug is packed inside the amino acid structure and sealed.
• Anticancer drugs that the company is targeting are often non soluble in water. In order to seal them inside the amino acid core, such drugs are dissolved in alcohol or a similar organic solution. This drug-alcohol solution is then thoroughly mixed with the copolymer-water solution.
• When it happens, (1) water soluble hydrophilic part forms an outer shell while (2) insoluble drug compound and amino-acid form an inner core. The drug meanwhile gets sealed inside the amino acid “container”. The alcohol is then separated from the solution to arrive at a safe intravenous drug delivery system.
• The drug containing micelles are invisible and the drug appears to be dissolved in water.

The nanomicelle particle technology offers the following attractive features:

• Less accumulation in most of major organs and therefore lower toxicity. The small size of the particles, similar to the size of viruses, substantially reduces the amount of drug containing particles that are trapped in the organs of the body such as liver. This effect becomes particularly pronounced at sizes under 100 nanometers.
• Prolonged circulation. Polyethylene glycol that forms an outer shell has properties that prevent it from being recognized as a foreign body by the immune system. That makes it possible for a drug-incorporated micelle to travel in the bloodstream for a long time, increasing drug efficacy.
• Enabling passive cancer cell targeting. Because cancer cells multiply very rapidly, the walls of blood vessels forming inside cancerous tissue tend to be more permeable than normal blood vessels. Indeed, particles smaller than 100 nanometers can permeate the walls of cancer tissue blood vessels but they bounce off the walls of the normal blood vessels. It means that drug containing micelles gradually leave the blood stream and accumulate inside the cancer tissue where the drug release takes place. The accumulation is assisted by the tendency of tumor cells to have reduced lymphatic drainage, i.e. particles do not leave the tumor tissue as easily as they arrive. Together, those phenomena are known as EPR effect (Enhanced Permeation and Retention). A successful nanomicelle drug could substantially reduce adverse effects of chemotherapy, allowing for higher doses (more power to fight cancer) and fewer injections (home treatment as opposed to expensive and exhausting hospital based treatment programs).

(Source: Company Data)

• The technology is using safe non-toxic materials, such as water and polyethylene glycol. In addition, it allows choosing the size of particles (by changing the number of molecules forming them) and the amino acid materials that form the core. That gives a great flexibility in terms of absorption, distribution and elimination of the therapeutic material by the body.

Main systems developed using the existing technology are:

NanoCap® System for locking-in drugs using polyamino acids. Polyamino acids have oil-like properties that they do not dissolve well in water. When introduced to a solution that contains block copolymers, water insoluble drugs get effectively dissolved in oil (polyamino acid) and then become trapped inside the micelle core. NanoCap® effect: Allows improving solubility of insoluble drugs.

Medicelle® System that allows to encapsulate drugs by magnetic binding or chemical binding. Some medications have defined positive or negative electric charges. It is possible to bind them inside a micelle by using a polymer with the opposite electric charge. Chemical binding is performed by chemically attaching the drug to a polyamino acid. Medicelle® effect: Improves retention in the blood.

NanoCoat® System of attaching sensors (ligands) to the micelle surface for selective targeting of cancer cells. It is possible to use antibodies as such signaling sensor devices. NanoCoat® effect: Enhances site specific targeting ability.

(Source: Company Data)

[edit] Core Patents

[edit] Product Pipeline

[edit] Main Pipeline

• NK105 (Paclitaxel Micelle)　

Paclitaxel (often referred to by its commercial name Taxol) is a drug used to treat ovarian, lung, breast, stomach and other cancers. It is hard to dissolve in water and to address this problem Cremophor EL (polyoxyethylated castor oil) and alcohol are used as solvents. Those solvents cause serious adverse effects. Steroids and anti-histaminics (anti-inflammatory drugs) are given as prophylactic medications to lessen suffering, but they may in turn cause their own adverse effects. NanoCarrier developed paclitaxel-loaded micellar nanoparticles using its NanoCap® technology to improve drug delivery and relieve toxic solvents related adverse effects. This is the NK 105 (Paclitaxel Micelle).

Several years ago, the company performed successful joint studies with Nippon Kayaku (4272) to improve paclitaxel using micellar technology. Nippon Kayaku then made a decision to develop NK105, based on results of those studies and inlicensed the technology from NanoCarrier in June 2002. The license gave Nippon Kayaku exclusive distribution rights for Japan and Asia, as well as non-exclusive rights for the rest of the world.

Phase I clinical trial was performed from May 2004 to April 2006 at the National Cancer Center Hospital and showed positive results. According to Drug Delivery System newsletter (24-1, 2009), NK105's AUC (Area Under Curve, the area under the blood-concentration-versus-time curve) was 15 times higher than that of the conventional paclitaxel (recommended dosage of NK105 of 150mg/sq.m vs. usual dosage of paclitaxel of 210mg/sq.m). Several patients showed stable disease for more than 4 weeks and one patient with metastatic pancreatic cancer showed clear shrinkage of liver metastasis.

Based on the licensing agreement Nippon Kayaku successfully conducted Phase I clinical trials in Japan and started Phase II trials in November 2007.The main objective of Phase II clinical trial in Japan is to prove efficacy and safety as well as to establish whether the drug prolongs patient survival. It is hoped that NK105 will show lower toxicity relative to paclitaxel, especially when administered for long periods of time. Combined with better AUC relative to paclitaxel, that could open the doors for NK105 to become a replacement for paclitaxel. The primary endpoint (the main result that is measured at the end of a study) was expected to be available in the 2nd half of 2009. The first cancer addressed is stomach cancer. If the results of Phase II are positive, they can then be applied to other cancers currently treated with paclitaxel, such as breast cancer, non-small cell lung cancer, ovarian cancer etc.

NanoCarrier received the initial upfront and milestone payments upon beginning of each phase from Nippon Kayaku. It stands to receive a further milestone payment (total milestones: 350 million yen up to drug approval) and royalties (2% of net sales; gross royalties are 4.5% but 2.5% flows through to JST) when the drug is commercialized. SR Inc. estimates that if trials go smoothly the drug could probably get approved in Japan in 2014.

While just a speculation at this point, SR Inc. thinks that if NK105 proved to be a successful replacement for paclitaxel, it could also probably compete with the current blockbuster market leader Taxotere. A 30% global market share within the taxanes group could mean sales of roughly $1.4 billion. That could produce up to 4 billion yen in annual revenues for the company, based on the assumption of 2-2.5% royalty level (the assumptions are made by SR Inc. for reference purposes only; the company does not comment on potential sales or royalties).

• NC-6004 (Nanoplatin®)

Nanoplatin is a drug that NanoCarrier developed applying its micellar nanoparticle technology to cisplatin. While a good drug, cisplatin causes severe vomiting and renal toxicity and requires intensive hydration (through IV infusion) during its administration. That results in dramatic reduction of quality of life (QOL) of patients. The company believes that its cisplatin-incorporated polymeric micelle compound, NC-6004, could solve these problems thanks to improvements similar to those described in NK105 discussion.

NanoCarrier attempted to develop the drug in-house and started Phase I clinical trial in the UK. However, insufficient capital, primarily due to poor equity market during and after the IPO, caused NanoCarrier to suspend further European trials and look for a lower cost opportunities in Asia. Eventually, NanoCarrier out-licensed NC-6004 to Orient Europharma Co. Ltd., a Taiwan based pharmaceuticals and cosmetics manufacturer and importer, granting it exclusive Oceania and Asia (ex-Japan, ex-mainland China) rights. Orient Europharma is currently performing a Phase I/II clinical trial in Taiwan.

According to company materials, the revenues under the agreement are the upfront payment and milestone payments. No direct royalties are mentioned. Instead, Orient Europharma will bear 1/2 of the clinical trial costs and at the same time buy the drug from NanoCarrier at a certain fixed percentage of the drug's selling price. This is effectively a scheme similar to royalties but allowing the company to lower its direct manufacturing cost burden and seems to be designed with the worst case scenario in mind, i.e. that the company would continue to have difficulties raising capital.

• NC-4016 (DACH-Platin Micelle)

NC-4016 is a new drug formulation consisting of DACH-platinum, a metabolite (product of metabolism) of oxaliplatin. Oxaliplatin is an effective and widely used drug but it causes severe adverse effects such as vomiting and neuropathy, a condition characterized by numbness of hands and feet that sometimes develops into a chronic form. Those adverse effects often mean that treatment with oxaliplatin has to be stopped even if its effects on a cancer are positive.

Oxaliplatin, once it is in the body, is metabolized into DACH-platinum, a platinum compound that was shown to prevent cancer cells from multiplying. NanoCarrier believes that when DACH-platinum is enclosed inside NanoCarrier nanomicelles, it will produce strong anticancer effects with milder adverse effects. NanoCarrier licensed the NC-4016 to Debiopharm S.A., the original developer of oxaliplatin, in October 2007. This agreement granted Debiopharm S.A. exclusive rights for the development and sales of the drug worldwide except Japan. Manufacturing rights rest with NanoCarrier. NanoCarrier received an upfront payment and R&D assistance payments.

Debiopharm started Phase I clinical trial in Europe in March 2009. From discussions with the company, SR Inc understands that the Phase I clinical trial is proceeding smoothly. SR Inc. estimates that if all clinical trials proceed without problems or delays, the drug could be released in 2016, initially in Europe and later in the US.

The company IPO prospectus states that the total milestone payment under License and Supply Agreement is $14.6 million. NanoCarrier also exclusively supplies preparations to Debiopharm S.A. The level of royalties is set at a maximum of 5% of the net sales (for the later of 10 years or patent expiry) or 15% of total royalties if Debiopharm S.A. were to out-license the drug further. The company would have to pay Debiopharm S.A. an undisclosed amount if the company were to purchase the data of non-clinical and clinical studies to perform its own trials in Japan.

Oxaliplatin (Eloxatin) had sold EUR1.4 billion worldwide in 2008 (SEC Form 20-F).

[edit] New Development Pipeline and Compounds under Research

SR Inc. estimates that the majority of new research by NanoCarrier is focused on learning how to produce carrier structures to deliver short-lived biomolecules to targeted areas of the body. This is a very new area and also an extremely promising one. Success here could mean breakthrough therapeutic compounds that could revolutionize modern pharmacology. Most of the new projects are in a feasibility study stage.

Protein Micelles

Therapeutic protein targeting is an emerging area of biotechnological research. Protein targeting occurs naturally in the body, this is how various proteins get transported to their appropriate destinations in cells. Proteins are produced on ribosomes and their transport is directed by signaling peptides. When something goes wrong, some proteins get overproduced (overexpressed) causing cancer and other diseases. Switching off “bad” proteins and switching on the “good” ones could be the Holy Grail of pharmaceuticals. However, proteins and peptides have short half lives and can cause damage (adverse effects) when they get to the wrong places. Making them “live longer” and work selectively are therefore important tasks.

According to company materials, other firms' solutions, such as PEGylation (polyethylene glycol linking) of proteins, lead to lower biological activities of proteins in question. Techniques employed by the company do not change biological activities of proteins and make possible targeting to tissues affected by the disease.

NanoCarrier is focusing on G-CSF (granulocyte colony-stimulating factor). It is a growth factor (cytokine), i.e. substance that stimulates the bone marrow to produce stem cells and types of white blood cells. In rats NanoCarrier’s G-CSF micelle showed 9 times higher AUC than that of conventional G-CSF solution and resulted in 4 times higher neutrophil (type of white blood cell) count in the blood. This means that G-CSF micelle can be effectively used in cancer therapeutics, helping patients to recover from neutropenia (lower white blood cell count due to impaired formation of new neutrophils) and lowered immune response associated with cancer therapies.

According to company materials, protein micelles use the same core copolymers as in other technologies, a combination of PEG and polyamino acid derivatives. However researchers modified the hydrophobic core part by introducing different hydrophobic groups. That allowed encapsulation of proteins without using organic solvents, while preventing the so called burst effect. Burst effect means a large drug volume being quickly released (carrier “bursts”).

The market for protein therapeutics was expected to grow to $95 billion in 2008 and to $160 billion in 2013, according to BCC Research.

siRNA Micelles

siRNA (small interfering RNA), a biological molecule which is applied to the treatment of various diseases, is drawing attention of researchers. It is a small RNA fragment (hence “small”) that interferes (hence “interfering”) with “hostile” RNAs and, through a complex mechanism, eliminates them. Such hostile RNAs could be those of viruses or tumor cells. One of frequently highlighted siRNA applications apart from cancer is AMD (age-related macular degeneration), a leading cause of blindness of elderly people in the developed world.

A problem with siRNA as well as peptides and other biological molecular structures is that they are rapidly eliminated from the body due to normal metabolism (or using a proper description, their half-life is very short). That made them an elusive target as blood-infused drugs. The company estimates that it may be possible to lock siRNAs inside micellar nanoparticles. If that was indeed possible it could lead to a dramatic increase of stability of such compounds in the bloodstream and therefore boost therapeutic possibilities of siRNA based drugs. The company received a development grant from the New Energy and Industrial Technology Development Organization (NEDO) and performs joint research on the theme with Todai TLO.

The company recently highlighted recently (see Company News and Topics) a new exclusive agreement with Todai TLO regarding of forming of large molecule ionic complexes using new entities such as cationic polyamino acids and small molecular nucleic acids such as siRNA. In the press release, the company says that technology is effective in delivering nucleic acids through endosomes (cellular membranes) and deep inside the target afflicted cells. Relevant applications mentioned are cancer, inflammatory diseases, and liver diseases.

Cationic Polyamino Acids (this discussion is linked to siRNA discussion above)

The company is researching the possibility of manufacturing therapeutic compounds, cationic polyamino acids. “Cationic” means very simplistically “with a positive electric charge”. Physics 101 tells us that positively charged and negatively charged particles attract each other.

It is known that malignant tumor cells have a greater negative electric charge than non-tumor cells. It is therefore theoretically possible to engineer positively charged compounds that would be attracted selectively to tumors and deliver drugs there. Furthermore, it appears that cationic polymers also have an ability to condense and protect negatively charged strands of nucleic acids (such as siRNA that has a strong negative charge). These features could help to create nucleic acid carrying drugs that could be delivered directly to and deep within the cancer tissue. It therefore seems to SR Inc. that this area of the research has high potential for the company although at this point it is impossible to estimate its chances of success.

Sensor-Incorporated Micelles

The company is performing a feasibility study regarding the possibility of attaching biosensors to its polymeric nanomicelles for better tumor targeting. One of such sensors is an antibody. The company had a partnership with Kirin Pharma from 2006 to explore possible use of antibodies developed by Kirin but it appears that those particular antibodies were not suitable for this system and the relationship was terminated in June 2008. The company is not providing details of the current feasibility study.

pH-Sensitive Micelles

The company reported that it had completed feasibility studies of pH-sensitive micelles and was in talks with one or more undisclosed potential partners. It has been known for some time that cancerous cells tend to have higher acidity compared to normal cells. Once absorbed into a cancerous cell through a process known as endocytosis, NanoCarrier’s pH-sensitive micelle responds to the higher acidity level and releases the drug. Based on discussions with the company, SR Inc wonders if pH-Sensitive Micelles could be an increasingly relevant technology for joining NanoCarrier’s product pipeline.

Docetaxel Micelle

NanoCarrier reported that it had developed a new nanomicelle to enable the effective delivery of docetaxel while reducing the possibility of adverse effects associated with Docetaxel. The Docetaxel Micelle utilizes the company’s Medicelle® technology to control the release speed of docetaxel entrapped in micelles, and thus reduces toxicities commonly observed with docetaxel treatment, while preserving the drug’s efficacy.

Docetaxel Micelle was announced in November 2009, and the company expects it to be a succeeding candidate of NK-105 (Paclitaxel Micelle). The company expects an approximate 6-year development gap between the Docetaxel Micelle and NK-105.

Skin Care

Another emerging application for the company’s nanomicelle technology is in skin care. The nanomicelles can penetrate through the outer layer of human skin (stratum corneum) and into epidermis delivering pharmacological or cosmetic compounds. The transdermal absorption happens when nanomicelles penetrate the first layer of the epidermis, the outermost skin layer, due to their small size. They then get “stuck” in the next layer called “stratum granulosum” because that layer is full of hydrophobic lipids. The company provided its technology to Ichimaru Pharcos, a Gifu based company. Ichimaru recently started marketing its ADS-Nanomicelle for cosmetic applications. This warrants attention – if micelle production costs were to come down as NanoCarrier partners start selling nanomicelle drugs and therefore require a larger scale production, then cosmetic applications would immediately come into a limelight. SR Inc. wonders if in addition to “dream drugs”, NanoCarrier's technology could also produce a “dream cream”.

Business Model
The company develops new drug compounds using its nanomicelle manufacturing technology. In principle, it employs three approaches: in-house development, joint development, out-licensing. According to company materials, the main targets for development are well known drug compounds, new compounds that were discontinued and new applications of existing compounds. The company looks for situations when any of such compounds can be substantially enhanced by its micellar nanoparticle technology.

Currently NanoCarrier relies mostly on out-licensing, partly because to capital constraints arising from the tough financial market conditions. Ideally, management wants to focus more on in-house development and out-license only on later clinical trial stages. In any case, its involvement in manufacturing would be limited to a pilot scale production.

NanoCarrier has been focusing on cancer applications as the market for anti-cancer drug is large and dynamic and many of the existing compounds have severe adverse effects providing a fertile ground to use NanoCarrier technology.

The main components of the business model are:
R&D assistance payments and grants. Payments made under contracts with partner companies and government organizations.
Upfront payments. Payments received at the beginning of each licensing contract, upon its conclusion.
Milestones. Payments received at certain points of the development stages.
License fees. Fixed sum or net-sales-linked variable royalties that are paid once a drug is released in the market.

Estimates of typical royalty percentages that licensor (e.g. a biotech company like NanoCarrier) receives vary widely. According to one often mentioned study (Medius Associates 2001), royalties were in 0-5% range for nonclinical stage drugs, 5-10% for Phase I, 8-15% for Phase II, 10-20% for Phase III, and >20% for approved drugs. Based on this, the actual numbers released by the company in the IPO prospectus suggest that royalty levels for its existing deals (NK105 and NC-4016) are typical for early stage licensing agreements. Nippon Kayaku will pay 2.0% of the net sales as royalty to the company (paying another 2.5% to JST). It seems likely that the royalties from the Debiopharm deal will be closer to 10% of net sales as NanoCarrier will manufacture and provide the finished product.

It would be a very important development for the company to move up from just a developer of a carrier technology to a drug developer as this would lead to a manifold increase in revenues per compound. If NanoCarrier started to demonstrate that it can achieve such a shift, SR Inc. believes that it would also substantially improve NanoCarrier's ability to raise capital, possibly creating a virtuous cycle.

Cost Structure

It is impossible to discuss a specific cost structure of the company due to its nature of business, i.e. the business is new and still unstable. Its spending is determined to a larger degree by its allowable cash burn rate (estimated by management at about 700 million yen) and its existing cash position than by revenues (as of FY03/10, revenues were mostly milestones vs. product sales). The company aims ideally to maintain its cash position of approximately 1.0 billion yen (FY03/10), spending approximately 460 million yen in FY03/11 on R&D related costs (this number includes the material costs, information from the company mid-term plan presented in FY03/09 results meeting).

SR Inc. estimates that high manufacturing cost is a constraint. The company appears to be working on lowering these costs but it is hard to bring down material costs due to smaller purchases in absence of industrial production. The gross profit margin in FY03/10 was 39.8%, a YoY improvement of nearly 10% (FY03/09 GPM stemmed from the fact that the main source of revenues was the supply of NC-4016 preparation for a clinical trial, a low margin business due to high material costs). SR Inc. estimates that milestone payments from FY03/11 onwards could improve gross margins; operating margins could be affected by discretionary R&D spending.

SWOT Analysis
Strengths

• Experience with polymeric nanomicelles. The company maintains that its main strength is in technological experience of modifying various block copolymer structures to construct micellar nanoparticles and incorporate organic and inorganic materials inside such particles.
• Patents. NanoCarrier's technologies are protected by more than 30 patent applications.
• Further access to primary technology. NanoCarrier has a strong primary technology source, Prof. Kataoka and his team. Kataoka was one of the company's founders and will probably remain supportive. Management stated that it has first refusal rights regarding technologies that are produced at Kataoka's lab at Tokyo University.

Weaknesses

• Limited financial resources. NanoCarrier listed in early 2008, amid deep bear market for Japanese small cap and specifically biotechnology stocks. As such, the company was not able to raise the money the management thought it necessary to implement its strategy. The situation of unfavorable markets continued through FY03/10, restricting the company's ability to finance its growth.
• No successful approved drugs. Annual royalty payments would have positively impacted the cash flow and make strategic planning much easier. As NanoCarrier is still an early stage developer, it has no recurring source of revenue.
• Market perception. While the company is trying to position itself as a new drug development company, the fact that so far it mostly out-licenses early technology might create a temptation to regard it as a transport-only manufacturer. That could affect its market valuation restricting growth potential and access to funds. Management is focusing on delivering the message that NanoCarrier is indeed a drug development firm.

Main Facilities
NanoCarrier has an R&D center in Kashiwa, Chiba prefecture, the location of its headquarters. It also has an administrative office in Tokyo.

Geography of Operations
The company operates in Japan. However, it is seeking global alliances and is targeting global markets.

Back to Top

[edit] Market & Value Chain

Market Overview
Cancer related drugs are the largest area of the pharmaceutical market. According to IMS Health MIDAS, they were at the top of the sales league tables worldwide in 2007, being the highest selling group in Europe and in Japan, the second highest in the U.S. after lipid regulators (e.g. cholesterol lowering drugs), and also second highest in the ”pharmerging” markets (BRICs, Korea, Turkey, and Mexico) after cephalosporins (antibiotics).
According to Total Planning Center Osaka, in 2008 the US cancer drug market was 2.15 trillion yen, Europe – 1.73 trillion yen and Japan – 527 billion yen.

Worldwide sales of taxane (alkaloid) group drugs:

• 2005 : 300 billion yen
• 2006 : 327 billion yen
• 2007 : 375 billion yen
• 2008 : 390 billion yen (estimated)

Worldwide sales of platinum group drugs:

• 2005 : 240 billion yen
• 2006 : 270 billion yen
• 2007 : 267 billion yen
• 2008 : 232 billion yen (estimated)

(Source: Total Planning Center Osaka)

Taxol worldwide sales peaked at $1.6 billion in 2000 and it was subsequently overtaken by another taxane, Taxotere. Taxotere is marketed by Sanofi-Aventis. It is a highly regarded drug and its sales continue to grow reaching EUR 2 billion in 2008 (SEC Form 20-F). Its patent will expire in 2010. Taxol went off patent in 2003 and its sales declined to $422 million in 2007.

For a discussion of oxaliplatin, the main platinum group drug, please see discussion in the Existing Pipeline section.

DDS is a new area of research that emerged in the late 1990s fueled by advances in biochemistry and nanotechnology. DDS makes possible both passive and active targeting to tumors and other disease afflicted cells, as well as release control. The technologies under DDS umbrella offer a promise of such improvements over conventional medications as:

Better drug efficacy

Less adverse effects

Easier use (better quality of life)

Various DDS technologies, apart from polymeric micelle developed by NanoCarrier and discussed in this report, include polymeric microspheres, hydrogels, biodegradable polymers, dendrimers, electroactive polymers, and modified C-60 fullerenes (“buckyballs”).

Some of the DDS and molecular target drugs currently available in the market are:

Doxil (ovarian cancer, AIDS-related Kaposi's sarcoma; Johnson & Johnson). Doxil is used primarily for treatment of ovarian cancer when platinum-based chemotherapy was not effective. (see also Competitors section)

Abraxane (metastatic breast cancer). Abraxis BioScience (Nasdaq: ABII) launched Abraxane, the world’s first drug delivery system (DDS) version of paclitaxel in 2005. It uses albumin as a carrier. Abraxane is co-marketed with AstraZeneca. It reached $336 million in 2008 (up from $325 million in 2007). Nomura Securities' analyst speculated in his report in early 2008 that NK105 would be compared to Abraxane and if it proves to be more effective, it could lead to worldwide licensing deals for NanoCarrier. SR Inc. notes that there are some concerns raised regarding Abraxane's ability to prolong life and it is an open question whether or not it is a valid comparator for NK105. While both are DDS drugs, they are using completely different transport systems and will probably have different efficacy and toxicity profiles.

Iressa (generic name Gefinitib) is a drug marketed by AstraZeneca and Teva. Iressa acts to inhibit EGFR (epidermal growth factor receptor; a protein in which mutation can cause cancer). Tarceva (Erlonitib by Chugai/Roche) is another EGFR inhibitor.
Herceptin (Trastuzumab) is an antibody drug that was developed by Genentech (acquired by Roche). It acts by binding to a so-called HER2/neu receptor that has been identified as one of direct trigger mechanisms for breast cancer.
Avastin (Bevacizumab) is another monoclonal (made by cloning of one cell) antibody drug developed by Genentech/Roche that acts by blocking formation of blood vessels in tumors (such formation is called angiogenesis and drugs stopping them are therefore angiogenesis inhibitors).
The problem highlighted in regards of those drugs has been that they delay growth of tumors but their effectiveness in killing cancer cells is low. At the same time they work well in combination with other drugs, oxaliplatin being one frequently mentioned.
NanoCarrier mentions in its IPO prospectus that it believes new drugs created by nanomicellar technology can be used in combination with above-mentioned drugs, so called molecular target drugs for cancer medications. Further it may be possible to incorporate these molecular target drugs inside nanomicelles for improved targeting.

Suppliers & Sources of Technology

NanoCarrier purchases materials from a number of suppliers (FY03/10 percent of total shown in parentheses).

• Kawahara Oil & Chemical – 21.6 million yen (40.4%)
• Ieda Chemical – 18.3 million yen (34.2%)
• Core Trading – 3.4 million yen (6.3%)
• Tokai Chemi – 1.7 million yen (3.3%)
• OZ international – 0.4 million yen (0.7%)

NanoCarrier buys polymers and reagents necessary for production of nanomicelles. The level of dependence on these particular suppliers appears to be high. Kawahara Oil & Chemical acts as a reselling agent for NOF Corp. All relevant materials are manufactured by NOF Corp. NOF Corp. has exclusive rights to supply NanoCarrier with polymers necessary for production of polymeric micelles. The current exclusive contract is valid till December 2013.

NanoCarrier has been and is likely to continue to obtain the basic technologies to develop into practical manufacturing application from Todai TLO, a company formed by Tokyo University to commercialize discoveries of its researchers. In some cases in the past, such technologies were transferred to JST and NanoCarrier would source it from JST. In most cases, the base technologies were developed by Prof. Kataoka and his colleagues.

TSE rules do not require NanoCarrier to disclose the details of new in-licensing deals post listing. However, the IPO prospectus provides details of several existing arrangements that can be used as a reference (pp. 44-53). Simplistically, it appears that in Todai TLO deals 1% of net sales and a small upfront payment is a typical arrangement.

Barriers to Entry

Barriers to entry would be very high for successfully approved drugs due to patent protection. At the same time, it is hard to judge how high the barriers are at R&D stage. Indeed, while the company's access to what seems to be a world class basic research of Prof. Kataoka and others is probably a barrier, there are a large number of competing technologies and superiority claims. Winners will be determined as technologies approach the commercial stage.

In terms of the particular technology that NanoCarrier is pursuing, if this technology proves to be commercially successful then the barriers to entry into this area should be very high due to the company's learning curve (experience) advantage. The development of manufacturing technology is a long trial-and-error process with few obvious shortcuts.

Competition
It is difficult to identify relevant potential competitors among new compounds. NanoCarrier is developing substantially novel technologies. There are several companies in Japan and worldwide that are developing new drugs using similar compounds or technologies based on similar principles.

NanoCarrier mentions in its IPO prospectus and elsewhere that liposome carriers applied to cancer drugs, particularly paclitaxel and cisplatin, are possible competitors. Liposomes are microscopic particles that are protected by a membrane and are used to store substances and deliver them to target cells. Doxil (PEGylated Liposome Encapsulated Doxorubicin) is an example of such drug. (Doxorubicin is an effective but highly cardiotoxic anticancer drug). Liposome carriers, while looking conceptually very similar to nanomicelles, are different in how they store, deliver and release drugs. Such differences result, according to the company, in poorer drug loading, release control and drug selectivity of liposome carriers.

There are several biotech companies that seem to be pursuing similar goals, trying to address issues of release control, targeting and reducing toxicity of anticancer and other drugs, as well as performing targeted therapy of cancers in general:

Novosom is a German biopharmaceutical company that uses so called “fully charge-reversible liposomal technology” for delivery of nucleic acid drugs. It uses liposomes that change their charge from negative to positive depending on pH of the environment. It has a compound called CD40 antagonist in a nonclinical stage.

Calando Pharma is a US biotech company developing a drug delivery technology. Its drug, IT-101, is Campothecin (another common anticancer drug) made soluble using Calando's Cyclocert(TM) technology in a nonclinical stage. The company’s strength seems to be in know-how related to manufacturing of polymer nanoparticles containing cyclodextrin and PEG. Calando is trying to apply this know-how to siRNA drugs.

Access Pharmaceuticals Inc., a US based company, has developed Prolindac (Phase II stage in the US as of early 2010) which active metabolite is DACH-platinum, same as in NanoCarrier's NC-4016. The active agent in Prolindac is attached to an HPMA (hydroxy-propyl methacrylamide) copolymer backbone.

Supratek Pharma is a Montreal, Canada based company. It developed a technology called “pluronic block copolymers” and developed SP1049C, Doxorubicin based DDS drug. Phase II clinical trial appears to be underway in the UK from 2005.

Substitutes

Any existing or new drug for the same application is a substitute. Many years after the drug is released and goes off-patent, the generic versions become powerful substitutes. Arguably, generics also raise the hurdle in terms of efficacy of new drugs. Unless a new drug is much more effective than available generics, it is less likely to achieve high level of sales due to its high comparative cost.
Alternative technologies for fighting cancer, if successful, could be a substitute although such technologies would be used most likely in combination with, not instead of, existing drugs. An example of such technology is provided by NanoBiotix, a French company developing nanoparticles that can accumulate inside cancer cells. These particles are inert, i.e. they are not drugs and do not have particular activity by themselves. However, when exposed to X-ray irradiation, they release free radicals and heat that can potentially shut down the cancer cells. NanoBiotix products are in the experimental nonclinical stage.

Back to Top

[edit] Strategy

Management Strategy
The company is pursuing a narrowly-focused strategy determined by such constraints as high manufacturing cost and limited available capital. It is targeting those applications where its technological experiences and particular areas of research and licensing expertise are likely to produce high payout outcomes at a relatively low cash burn rate.

NanoCarrier will likely continue to seek existing therapeutic compounds that are potent but constrained by the lack of effective carriers and targeting devices. Specifically, new strategic areas of research are:

• Molecular targeting by single drugs using proteins, enzymes etc. (See also Market Overview)
• Drug cocktails. Anticancer drugs often work better in combination than in single drug use. However, it is sometimes very difficult to apply cancer drug cocktail therapy in practice, due to severe adverse effects caused by existing anticancer drugs.
• Non-cancer applications.

The company maintains that its goal is to pursue an independent drug development strategy. However, as of early FY03/11 it is more likely to out-license early stage compounds for lower upfront cost and quicker cash flow turnaround. SR Inc. that when the company is able to raise additional equity capital in the public market or through 3rd party offerings, it would substantially increase its strategic options and therefore the value of the business.

Back to Top

[edit] Historical Financial Statements

[edit] Summary

Earnings Results Discussion for the Year Preceding Current Fiscal Year (For Reference Purposes)

Q3 Results Announcement

NanoCarrier announced Q3 results on February 1, 2010. Sales were 59 million yen (-56.0% YoY), operating profit was -87 million yen (-40.0% YoY), recurring profit was -88 million yen (-39.3% YoY), and net profit was -88 million yen (-39.7% YoY).

The company did not change full-year estimates. Given the progress achieved through Q3 (cumulative sales of 98 million yen, net loss of88 million yen), full-year earnings are dependent on Q4 results.

NanoCarrier indicated that some cost control measures are being considered with reference to minimizing cash use. The business is still a stage where the needs for research funding must be practically balanced with available funding sources. Reducing current research expenses to reduce cash consumption has implications for the future: a less robust product pipeline (if early stage technologies are out-licensed, the company will be unable to collect the higher revenues associated with more developed technologies).

Financing needs during the quarter have been partially met through the warrants issued during the 1H (6th Series New Share Adjustable Strike Dilution Protected Warrants). The company’s quarterly report indicated that approximately 44 million yen had been raised through exercising of the warrants, partially offsetting the 125 million yen of cash used to fund operations.

Q2 (1H) Results Announcement

The company announced Q2 (1H) results on October 30th, 2009. Sales for the 1H were 39 million yen, an approximately 73.8% decline YoY. Operating and recurring profit were -282 million yen. Specific developments during Q2 mentioned in the release included: expected patent approval for NC-4016 in Europe; a comprehensive joint research agreement with Medinet (2370) in the area of cancer treatment; combining NanoCarrier’s micellar nanopartical technology with Medinet’s immuno-cell therapy expertise; the previously announced capital raising; and the selection of the company’s proposal submitted to the Cabinet’s Council for Science and Technology Policy for the Advanced Research and Development Assistance Program.

The change in cash balance over the period was in-line with reported losses, and there were no other notable changes to company financials.

Q1 Results Announcement

NanoCarrier announced Q1 results on July 30th, 2009. The total sales were low at 7.29 million yen. 77.7% of that amount was sales to Europe and the rest domestic. During the quarter the company concluded a new exclusive license agreement with University of Tokyo and Todai TLO. The details of the agreement are discussed in Company News and Topics.

In terms of the pipeline progress, there were no notable changes during Q1.

Back to Top

[edit] Income Statement

Historical Earnings Trends

The company publishes audited accounts from FY03/06. NanoCarrier does not report fully diluted EPS due to ongoing losses.Sales have been lumpy from FY03/03-FY03/10; not surprising due to uncertainty regarding R&D outcomes and clinical testing milestones.

In FY03/03 Revenue was a milestone payment from Nippon Kayaku of about 96 million yen; high R&D expenses led to a recurring loss of 141 million yen.
In FY03/04 Revenue of approximately 123 million yen was mainly from Kirin Beer.
In FY03/05 The company received an upfront payment from Debiopharm S.A. and that accounted for most of about 113 million yen in revenues.
In FY03/06 The company received an R&D assistance payment from Debiopharm S.A. as well as R&D assistance and milestone payments from Eisai Co. Ltd., for total revenues of approximately 108 million yen. It also started Phase I clinical trials of NC-6004 Nanoplatin in the U.K.
In FY03/07 Revenues received from Debiopharm were 26.6 million yen (25.7%), from Kirin Pharma – 29.2 million yen (28.2%), and from Eisai – 27.3 million yen (26.4%)

In FY03/08 Revenues received from Debiopharm were 148.0 million yen in FY03/08 (56.3% of total revenues). Revenues received from Nippon Kayaku were 101.0 million yen in FY03/08 (38.3%) as NanoCarrier received milestones for NK105.
In FY03/09 Revenues received from Debiopharm were 228.5 million yen in FY03/09 (64.6% of total revenues). Revenues received from Orient Pharma were 119.0 million yen (33.6% of total revenues). In FY03/10 The company announced a downward revision to its forecast for FY03/10 earnings on March 26, 2010 due to delays in contract negotiations with existing and new partners. The company said in the release that it was continuing the negotiations. FY03/10 results were in-line with the revised forecast.Revenues from Debiopharm were 55.0 million yen (46.6% of total revenues). Revenues from Ichimaru Pharcos were 13.5 million yen (11.4%). Approximately 27.5 million yen was from two other firms (names not disclosed).

Historical Performance vs. Estimates

Comparing NanoCarrier’s forecast accuracy is not entirely meaningful. The company’s product pipeline is still in development, and the speed of progress is to a large degree out of the company’s control (the license partners conduct clinical trials). SR Inc. therefore believes that it is more helpful to look more generally at the overall progress of the pipeline, both core and new, and compare it with the long term targets set by the company. According to the company, pipeline progress as of FY03/10 end was firmly on track.

Back to Top

[edit] Balance Sheet

Assets

As of the end of FY03/10 the company had cash and equivalents in the amount of 1.0 billion yen down from 1.4 billion yen a year earlier. Until the company’s product pipeline matures and additional revenue streams develop, operations will largely be funded from cash on the balance sheet.

Fixed assets on the balance sheet are mostly intangibles (34.7 of 69.6 million yen total fixed assets in FY03/10). Historically the most important of those have been licensing rights (30.7 million yen as of FY03/10).

Liabilities

Liabilities on the balance sheet have been negligible (debt free from FY03/07-FY03/10).

Shareholders’ Equity

NanoCarrier has used multiple sources of equity financing, including 3rd party offerings in FY03/07 and FY03/09 (generating 1.4 billion yen, and 75 million yen respectively), IPO in FY03/08 (raising 643 million yen), and issued warrants. The third party offering in FY03/09 was to Cyntec Co. Ltd. (a subsidiary of Orient Europharma Co. Ltd.). As of FY03/10, total equity stood at 1.0 billion yen.

Potential Dilution

NanoCarrier announced a warrants offering in September 2009 (Warrants-6). The strike price is adjustable to prevent excessive dilution to equity holders. Assuming the warrants are exercised for the minimum price (31,500 yen), the maximum dilution potential as of FY03/10 was 22.2% (based on 28,500 warrants outstanding and 128,579 total shares outstanding at year end).

Assuming the warrants were exercised at the minimum strike price (31,500 yen), NanoCarrier would raise approximately 897.8 million yen (approximately 2 years of cash used by operations in FY03/10).

Per Share Data

Note: The company performed a pre-IPO stock split of 10:1

There were 128,579 shares outstanding as of March 31, 2010. At of the same date, there were stock options outstanding for 16,340 potential shares. If all converted, they would cause a 12.71% dilution. The exercise price for the options ranges from 43,316 yen to 67,337 yen.

Combining outstanding options and Warrants-6 results in 44,840 new shares, or 34.9% potential dilution, as of FY03/10. Stock options issued prior to Warrants-6 are significantly “under water” (trading price is well below the option exercise price) suggesting that dilution potential is unlikely until the share price exceeds the strike price.

NanoCarrier listed on TSE Mothers exchange on March 5, 2008. It initially aimed to raise 873.8 million yen gross (before fees), 34,950 shares (including 4, 950 shares as a “green shoe” option from Nomura Securities) at 25,000 yen. The IPO price was set at a lower level of 20,000 and the total amount of funds raised was 699 million yen.

The company planned to spend a significant amount of the funds raised to finance clinical trials of NC-6004 but had later changed the plan and out-licensed the compound to Orient Europharma.

Back to Top

[edit] Cash Flow Statement

In FY03/10 the company had negative operating cash flow of 452 million yen, mainly due to lower net income that the company expected related to delays in contract negotiations. The negative operating cash flows from FY03/06-FY03/10 reflect the early stage of the company and its technology (the company has yet to create a mass-market product as of FY03/10, and R&D costs are fixed).

Investment cash flows have been negligible from FY03/06-FY03/10.

Financial cash flow in FY03/06 was the combination of bank debt (300 million yen) and share issuance (499 million yen). FY03/07 and FY03/08 financial cash flows were the result of share issuance (3rd party issue and IPO, respectively). Financing cash flow in FY03/09 was the result of an equity investment from an Orient Europharma Co. Ltd. Subsidiary).

NanoCarrier’s simple free cash flow from FY03/07-FY03/10 illustrates the company’s early stage of growth. Net income has yet to turn positive, because products are still in the investment and development stage. One important characteristic of the simple free cash flow pattern is that the amounts consumed have been decreasing during FY03/07-FY03/10. The company’s initial FY03/11 forecast (presented in May 2010) included positive net income, suggesting that the business could be progressing to the point where it generates cash.

Back to Top

[edit] Other Information

[edit] History

The story of NanoCarrier starts with academic research of polymeric micelles. Professors Kataoka of Tokyo University (see Top Management) and Okano of Tokyo Women's Medical University (see Top Management) were researching possibilities of medical application of polymeric nanomicelles (see detailed explanation of terminology in the Glossary). They found that if polymeric nanomicelles are injected intravenously they circulate in the bloodstream for a long time and can therefore be used as effective carriers of drugs. Current CEO Ichiro Nakatomi who had management experience in biotech companies started, together with above-mentioned researchers, a company called NanoCarrier, to commercialize their discovery.

Head Office and Lab　(Source: Company Data)

Corporate Timeline

June 1996 NanoCarrier Co. Ltd. established to develop and commercialize pharmaceutical applications of micellar nanoparticle technology.

August 1997 Signed an agreement with Nippon Oil & Fats, presently [NOF Corp. (4403)], to jointly develop new block copolymers.

January 2001 Signed an agreement with CASTI (Todai TLO) on sub-licensing (in-licensing) of cisplatin-incorporated polymeric micelle.

June 2002 Out-licensed paclitaxel micelle to Nippon Kayaku (4272).

November 2002 Signed an agreement with Kirin Brewery (now Kyowa Hakko Kirin Co., Ltd.) to jointly develop anticancer drug in the form of antibody conjugate micelle (NC-4010), combining NanoCarriers's nano-micelle technology and Kirin's human antibody technology.

May 2004 Nippon Kayaku started a Phase I clinical trial of Paclitaxel Micelle (NK105) in Japan.

May 2004 In-licensed DACHPt (DACH-Platin) block-polymer based anticancer agent from Tokyo University and Todai TLO.

March 2005 Signed Research Collaboration and Option Agreement with Debiopharm S.A. (Switzerland) regarding NC-4016 (DACH-Platin Polymeric Micelle).

May 2006 Started a Phase I clinical trial of cisplatin derivative micelle, Nanoplatin (NC-6004), in the United Kingdom.

June 2006 Entered into a new agreement with Kirin Brewery to co-develop NC-4010.

July 2006 Obtained exclusive license for electrostatic bonding type macromolecular micelle drug carrier and resulting drugs from Japan Science and Technology Agency (JST).

February 2007 In-licensed a new bock copolymer for preparation of pH-sensitive polymeric micelle and its production process from Todai TLO.

October 2007 Signed License and Supply Agreement with Debiopharm S.A. regarding NC-4016 (DACH-Platin Polymeric Micelle).

November 2007 Nippon Kayaku started a Phase II clinical trial of NK105 (Paclitaxel Micelle).

March 2008 Listed on Tokyo Stock Exchange MOTHERS market.

April 2008 Signed exclusive agreement with Todai TLO regarding processes of incorporating nucleic acids into micelles.

September 2008 Signed Licensing and Co-Development Agreement regarding NC-6004 (Nanoplatin®) with Orient Europharma Co. Ltd. December 2008 Received approval to start a Phase I/II clinical trial of Nanoplatin® (NC-6004) in Taiwan.

December 2008 Received approval to start a Phase I clinical trial of NC-4016 (DACH-Platin Polymeric Micelle) in EU.

May 2009 Signed exclusive agreement with University of Tokyo and Todai TLO regarding cationic polyamino acids.

November 2009 Issued a news release disclosing the successful development of the Docetaxel Micelle - a sustained release micelle for the anti-cancer drug docetaxel.

December 2009 Announced a licensing agreement with the University of Tokyo and Todai TLO regarding Gene Therapy technology.

March 2010 Received final decision for registration of the US patent regarding the production process of the NC-4016 DACH-Platin Micelle.

Back to Top

[edit] News & Topics

Company News and Topics

March 2010

The company announced on March 4, 2010 that it received the final decision for registration of the US patent regarding the production process of the NC-4016 DACH-Platin Micelle. This means that the patent will certainly be obtained. This patent differs from the one registered in Europe in that it is a production method patent. The method described in the patent application allows the efficient production of high quality DACH-Platin Micelles. NanoCarrier granted Debiopharm S.A. an exclusive worldwide license (excluding Japan) with sublicensing rights. NanoCarrier commented that the patent in question will allow the further strengthening of the relationship between the two companies. SR Inc. wonders whether the statement implies that Debiopharm S.A. may want to use the patented technology, potentially trading the right to use it in exchange for the clinical data from its European trials. Such data could be used by NanoCarrier to jumpstart its own clinical trials of the DACH-Platin Micelle in Japan, providing a major boost to the company’s fortunes over the long term.

Summary of the Patent Application:

Name – Method for Producing Polymerized Coordination Compounds of Platinum Complex

Application Number – 11/921784

Applicants: NanoCarrier, Tokyo University

December 2009

NanoCarrier announced a licensing agreement with the University of Tokyo and Todai TLO on December 21, 2009 regarding Gene Therapy technology. In the same release the company indicated that it would sub-license the Gene Therapy and polymeric micelle carrier technology to NOF Corporation (TSE 4403) for distribution. According to a related release on December 21, 2009 (released in English on January 7th 2010) by NOF Corporation, utilizing polymeric micelle carriers to deliver Gene Therapy treatment improves the transduction of genes while reducing toxicity (compared to existing methods).

On December 1, 2009, NanoCarrier issued a release regarding the third party warrants issue. The release indicated that during November, 600 additional warrants were exercised at the minimum strike price of 31,500 yen, for a total of 18.9 million yen.

The release indicated that there were 28,500 warrants outstanding.

November 2009

On November 19, 2009, NanoCarrier issued a news release disclosing the successful development of the Docetaxel Micelle - a sustained release micelle for the anti-cancer drug docetaxel. Tests on laboratory mice indicated that the Docetaxel Micelle was effective in regulating release control of the drug while reducing adverse effects such as swelling and gastrointestinal toxicity – improving patient quality of life during treatment. The Docetaxel Micelle belongs to the taxane group but has a structure different from the Paclitaxel Micelle (NK105) currently in the product pipeline. Company stated in the release that the Docetaxel Micelle is being developed as a successor to NK105 and is likely to be out-licensed in due course. Docetaxel is being sold as an anti-cancer drug from 1994 and is widely used for treatment of number of cancers.

Update regarding third party warrants issue (discussed below) - News released on November 2, 2009 indicated that 900 units were exercised for a total of 29.21 million yen (the price was 32,460 yen per share).

September 2009

On September 29, 2009 NanoCarrier announced a third party warrants issue (6th Series New Share Adjustable Strike Dilution Protected Warrants; hereafter referred to as Warrants-6) to Japan Equity Value LTD, an entity 100% owned by Noga Capital Group.

Timing and Background

According to the company, Japan Equity Value LTD is a Japan investment specialist fund advised by OPUS Capital Group, a European firm (the introducing party in the transaction was Allied Co., Ltd., who has an existing relationship with NanoCarrier). The company felt that this way of financing was the best available choice and that it needed to secure funds to accelerate development of the following three projects:

1. The company has started Phase I/II clinical trial of Nanoplatin® (NC-6004) in cooperation with Orient Europharm Co., Ltd., with which NanoCarrier has a License and Supply Agreement for 16 Asian countries excluding Japan and China. In parallel with that effort, the company is planning to speed up the project and start similar clinical trials separately in any two of Singapore, Hong Kong, and Korea. The relevant costs are approximately 400 million yen and are expected to be incurred after March 2010.
2. DACH-Platin leading micelle is undergoing Phase I clinical trial in Europe under the direction of Debiopharm S.A. Nanocarrier is planning to run a Phase I clinical trial in Japan in order to increase the value of the license it holds for this country. The relevant costs are approximately 220 million yen that are planned to be incurred beyond August 2010.
3. 303 million yen is slated to be spent beyond March 2010 on the facilitation of non-clinical trials of the pipeline development candidates, most notably pH-sensitive micelle.

Terms and Conditions

When the Warrants-6 are exercised, new shares are issued. The target number of shares is 30,000 shares (1 share for each of the 30,000 Warrants-6 units).
Capital to be raised: 947.91 million yen
Issuance pay-in amount: 2.91 million yen (97 yen per warrant)
Exercise pay-in amount: 945 million yen
Fees: 24.45 million yen
Total capital amount to be received: 923.46 million yen
Initial Strike Price: 31,500 yen
Maximum Strike Price: 47,250 yen
Minimum Strike Price 31,500 yen (90% of the closing price of 35,000 yen on September 28, 2009)

Strike Price Adjustment

The strike price of Warrants-6 is adjustable, to prevent excessive dilution to current equity holder. This adjustment is determined as follows: 90% of NanoCarrier’s closing share price on the Tokyo Stock Exchange on the day before the Board of Directors makes the final decision regarding warrant issuance. However, at each exercise day the strike price will be adjusted to 92% of the Value Weighted Average Price (VWAP) of the normal share trading of the day immediately preceding each exercise day.

The strike price of Warrants-6 after the day of issuance will be adjusted to 92% of VWAP of the normal day of trading at Tokyo Stock Exchange prior to the exercise day. However, if the post-adjustment price is below the Initial Strike Price then the post-adjustment price will be set at the Strike Price, and if the post-adjustment price is 150% or more of the Strike Price then the post-adjustment price will be set at 150% of the Strike Price.

The determination of the Adjusted Strike Price can be represented as follows:
X = max [31,500 , min ( 47,250 , .92 * Previous Day’s VWAP) ].
The allotment and the pay-in were completed on October 15, 2009.
The Exercise Period is October 15, 2009 – October 14, 2011.
The maximum dilution is 23.6%.

The company made a revision to its 1H cumulative forecast on September 24, 2009. The reason provided by the company was a delay in the signing of a specific contract with a client, delaying revenue recognition. The contract in question is expected to be agreed upon during 2H, hence the lack of adjustment of full year estimates. The revised 1H estimates are: sales of 42 million yen, an operating loss of 286 million yen, a recurring loss of 285 million yen, and a net loss of 286 million yen.

According to the release on September 7, 2009, “Nanobiotechnology Led Innovation in Diagnostics and Therapy”, a proposal submitted by the company’s scientific advisor Prof. Kataoka and co-authored by the company, was selected on September 4, 2009 as one of the thirty proposals for the Advanced Research and Development Assistance Program sponsored by the Cabinet’s Council for Science and Technology Policy. (Click here for the release in Japanese.)

July 2009

"Development of Micellar Nanoparticle preparation for Delivery of siRNA", the theme submitted by a research group that incuded Company (Chiba Industry Advancement Center, NanoCarrier Co., Ltd., The University of Tokyo), was selected in the public solicitation for Regional Innovation Research and Development Businesses 2009 organized by METI. This program was organized in cooperation of public, private, and academic organizations with the goal of reviving regional economies through creation of new businesses by promoting commercially viable technological development initiatives. (Source: Company Press Release of July 14, 2009)

May 2009

On May 25, 2009, the company announced that it concluded an exclusive license agreement with Tokyo University and Today TLO regarding “cationic polyamino acids”. (See New Development Pipeline and Compounds under Research for further discussion)

Industry News and Topics

On June 15, 2009 Nikkan Yakugyou, a pharmaceutical industry newspaper, published an article about the recent decision of the High Court of Intellectual Property to prolong the patent of an existing drug after it was improved using DDS. That, according to the paper, could open further possibility of allowing existing compounds patent protection if they are equipped with a novel DDS.

Back to Top

[edit] Top Management

Representative Director:
Ichiro Nakatomi, Ph.D. is President & CEO since June 1996. After a career at Hisamitsu Pharmaceutical Co., Ltd., he worked as Vice President, Business Development at TheraTech, Inc. in the US. He later became the President of TheraTech Japan. He is also Director at iPS Academia Japan Inc.

Directors:
Yasuki Kato, Ph.D. CSO (Chief Scientific Officer) since July 2005. Prior to NanoCarrier, he worked for 22 years at Kyowa Hakko Kogyo Co., Ltd., most recently as the Director of its Formulation Research Center.
Tatsuo Nishiyama, CFO (Chief Financial Officer)and head of General Administration, appointed in Oct 2005. His career started at The Sumitomo Bank(present Sumitomo Mitsui Banking Corp.) in 1974. He then worked at M&A Intelligence Center Inc. (Oct. 1990) as Executive Vice President, Mees Pierson (Japan) Ltd.(Nov. 1998), and SMT Co., Ltd. (Nov. 2001) before joining NanoCarrier in 2005.
Hiroyuki Hanada, CBO (Chief Business Development Officer), appointed in June 2008. He became an advisor to NanoCarrier in December 2007 and the Director of Business Development in May 2008. Prior to that he was an advisor at AnGes MG, Inc. Before AnGes MG, he was a director in charge of R&D at Sosei Co. Ltd. and held executive positions at Seikagaku Corporation. He started his career at Hisamitsu Pharmaceutical Co. Ltd. in 1980.
Teruo Okano, Ph.D. (Non Executive Director) is one of the core inventors of NanoCarrier technologies and plays an important role in advising the direction of research and development and making important strategic decisions. He is a Professor at Tokyo Women's Medical University, Professor at University of Utah, and Director of Institute of Advanced Biomedical Engineering and Science. His research specializes in biomaterials, artificial organs, DDS, tissue regeneration and other areas.
Akira Ohashi, M.D., Ph.D. (Non Executive Director) is a key member providing advice and input on clinical/non-clinical program strategies and execution of the company projects based on his rich experience and knowledge related to clinical development.

Scientific advisors:
Company has advisory contracts with professors Kazunori Kataoka of Tokyo University and Yukio Nagasaki of Tsukuba University (Tsukuba Research Center for Interdisciplinary Materials Science). Prof. Kataoka is advising the company on new technologies, while Prof. Nagasaki's advice is centered on siRNA applications.

Back to Top

[edit] Employees

As of the end of FY03/09 the company employed 28 full time staff. Their average age was 41 years.

Back to Top

[edit] Major Shareholders

As of March 31, 2009 NanoCarrier had 4,955 shareholders.

Back to Top

[edit] Dividends and Shareholder Benefits

As of FY03/10, the company does not pay dividends or have a shareholder benefit program.

Back to Top

[edit] Investor Relations

Contact: 03-3548-0217 (President Office)
Address: 3-2-2 Nihonbashi Chuo-ku Tokyo 103-0027 (Tokyo Office)

Back to Top

[edit] By the Way

[edit] Glossary

[edit] Basic NanoCarrier Relevant Biochemistry Terms:

Amino acids

Building blocks of proteins. There are about 300 known amino acids and roughly 20 of them participate in protein synthesis.

Antibodies(Immunoglobulins, lg)

Unique proteins produced by the immune system as a response to presence of foreign substances, such as bacteria and viruses. They kill or help to kill invader cells. There are 5 types of antibodies with different protective functions.

Bond (chemical)

A process when atoms or molecules stick to each other.

Cell

A smallest unit of living organisms. Essentially, cell is a somewhat self-sustaining group of organic molecules and contains the information necessary for functioning and procreation of organisms they belong to.

Covalent bond

A process when atoms stick to each other (bond) by sharing pairs of electrons (subatomic particles with a negative electric charge).

Cytokine

A category of molecules with short lives, often proteins, that are produced by some cells to impact functioning of themselves or other cells. They are basically signaling (messenger) agents that cause cells to react in a certain way, e.g. produce certain chemicals. Cytokines are important in functioning of the immune system.

Diaminocyclohexaneplatinum(DACHPt; DACH-platinum)

A platinum organometallic compound and the basic building block of Oxaliplatin.

DNA (deoxyribonucleic acid)

A nucleic acid that contains the entire genetic information of a given organism. Its functions as a repository of information, or instruction code template, for vital processes such as protein synthesis. The segments of a DNA molecule that actually carry that information are called genes.

Endocytosis

A process by which cells absorb substances from outside the cells by engulfing through cell membranes.

Hydrophilic molecules

Molecules that form short-term temporary bonds with water. In other words, they “like water”.

Hydrophobic molecules

Molecules that are repelled from water. In other words, they “hate water”.

Ligand

A signal triggering molecule that binds particularly to a protein or a nucleic acid. It serves as navigation buoy or a sensor allowing, for instance, to attach medical substances to targeted cancer cells.

Macromolecule

A large molecule.

Micelle

A bunch (aggregate) of substances called surfactants that are dispersed in a water based colloid. Colloid is a mixture when two substances are dispersed evenly through each other. Different from a solution, these substances are only suspended but not dissolved, normally because their particles are too big to be dissolved. An example of a colloid is milk. Surfactants (“surface acting agents”) are a type of molecules that contain both hydrophobic “tails” and hydrophilic “heads”. This feature allows surfactants to dissolve in anything. When they reach a certain concentration in water they form tiny ball-like structures with hydrophobic tails of each surfactant molecule hiding inside forming a core and hydrophilic heads sticking outside forming an outer shell. Micelles can act in a fashion similar to soap or detergents where insoluble particles are picked up and packed inside the micelle core (which is insoluble itself and is basically oil), a “cleaning” effect. This is precisely the effect of NanoCarrier's technology, where small micelles pack insoluble and often toxic drugs and carry them around in bloodstream.

Micelle, Polymeric

A macromollecular assembly formed from block polymers and has a spherical inner core and an outer shell.

Molecule

A stable group of atoms with a definite structure held in place by strong chemical bonds. They can be organic (of biological origin) or inorganic (of mineral origin). Organic molecules always contain carbon but not all carbon containing molecules are organic.

Nanosize

A size that is measured on a nanoscale, i.e. in nanometers. Nanometer is one billionth (1/1,000,000,000) of a meter. Typically, term “nanoscale” is used when talking about sizes of 1-100 nanometers.

Nucleic Acid

A macromolecule that carries genetic information or form structures within cells. The most common ones are DNA and RNA. They are found in all cells and viruses.

Organometallic compound

A chemical compound containing bonds between carbon and a metal. Organoplatinum compound is an example where metal is platinum. DACH-Platin is an example of organoplatinum compound.

Peptide

Small polymer formed when certain amino acids, called alpha amino acids, bond together. These amino acids are the building blocks of all proteins.

pH

A measure of acidity according to an internationally agreed relative scale. Pure water is pH neutral at pH of close to 7. Environments with pH of less than 7 are called “acidic” and those with pH of more than 7 are called “alkaline” or “basic”. Blood plasma is slightly alkaline at pH of about 7.35. This value is referred to as physiological pH, the optimum level for the body to function without stress.

Plasma

A water like solution (mostly water) that is the main blood component making more than half of its volume. It is the natural environment of blood cells.

Platinum (Pt)

A chemical element and a precious metal. It is also known to have high cytotoxity (meaning it is toxic for living cells). In effect, it inhibits (blocks or reduces) DNA synthesis and prevents cells from dividing.

Polyethylene glycol (PEG)

A widespread type of polyether, a class of organic compounds. It is interesting for us because it is soluble in water and, when combined with some hydrophobic molecules, can form surfactants (building blocks of micelles).

Polymer

Macromolecule made of repeating structures connected by chemical bonds (covalent bonds).

• Monomer is a small molecule (usually organic) that can bond with other monomers to form polymers. The most famous monomers are glucose and amino acids. Amino acids are natural monomers that form polymers called proteins.
• Copolymer is a polymer made from more than one kind of monomer. If only one monomer was used, it would be a homopolymer.
• Homopolymer is a polymer made of a single monomer chain.
• Block Copolymer is a copolymer with two or more homopolymer units linked by (covalent bonds).

Protein

An organic compound made of amino acids. Proteins are the major structural part of a human organism. They can act as building blocks for our tissues or as “enzymes” (bio-catalysts) when they help to control various biochemical reactions.

RNA (ribonucleic acid)

A nucleic acid that is somewhat similar to DNA. One part where it is different is that it usually has only one strand compared to two of a DNA. This feature allows RNA to play a vital role, for instance a carrier of information necessary for protein synthesis.

• Antisense RNA is a single-stand RNA that is complementary to a mRNA meaning that it connects neatly to mRNA . It may be used to prevent cells from functioning by attaching it to a complementary mRNA and physically obstructing translation mechanism. Medical applications proved elusive so far. Antisense RNA is not the same as RNA interference (RNAi).
• mRNA (messenger RNA) carries information from DNA to ribosomes (combination of RNA and protein) which in turn produce proteins.
• RNA interference (RNAi) is a process when genes are silenced (prevented from duplicating). This is a part of body's natural defense against viruses. When scientists realized that it could also be used to silence certain harmful internal processes in the body, it became a hot medical and biotechnology venture topic. In RNAi fragments of siRNA couple themselves with “hostile” RNAs and prevent them from carrying information, effectively killing hostile cells. RNAi is also sometimes called posttranscriptional gene silencing (PTGS).
• siRNA (small interfering RNA, sometimes called also “short interfering RNA” or “silencing RNA”) is a class of RNA involved in RNA interference. Discovery of siRNA was first published in Science Magazine in 1999.
• Other RNA types. There are more than 20 types of RNA. Important ones seem to be tRNA (transfer RNA vital for protein production) and rRNA (ribosomal RNA, a catalyst).

Self-assembly (molecular)

Also called self-association, is a process in which a disorderly system forms an orderly structure by itself due to interaction of its components among themselves.

Virus

An infectious agent, usually 10-300 nanometers in size, which can be reproduced only inside host cells. Viruses hijack cells using cell structures to replicate viruses' own DNA or RNA. That usually results in host cells death while viruses rapidly propagate. Viruses are some of the most important sources of external diseases in humans.

[edit] Basic Relevant Pharmaceutical Knowledge:

Abraxane

An anti-cancer drug developed and marketed by Abraxis Bioscience Inc. It is one of the first commercially available DDS anti-cancer drugs. It is based on paclitaxel and uses albumin (water soluble protein) as a delivery system.

Active targeting

A non-invasive therapeutic approach that consists in transporting drugs to target organs using site-specific ligands, or signaling molecules. Those molecules act as sensors and, if attached to a drug carrying micelles, they improve drug delivery efficiency.

Cisplatin

A platinum-based anti-cancer (chemotherapy) drug. It was approved by FDA in 1978 and was the first in the group of drugs including carboplatin and oxaliplatin. It acts by forming in the body of platinum compounds that penetrate DNA and interfere with the cell division ultimately causing cell death. It is administered intravenously. While it is one of the most widely used and very effective anticancer drugs, it causes severe adverse effects which limit its use.

Cisplatin-Incorporated Polymeric Micelle

Also can be called Cisplatin-loaded Polymeric Micelle. Polymeric micelle with cisplatin incorporated inside the core of the micelle.

Clinical Trial

A biomedical or health-related research study in human beings that follow a pre-defined protocol and is conducted to confirm safety and efficacy of a new drug, treatment, or device. Clinical trials consist of several typical stages such as phase I, II, III and IV.

• Phase I is a test of a new drug on a small group of people, mostly healthy individuals. The objective is to evaluate safety, determine safe dosage range, and learn about adverse effects.
• Phase II is an exploratory test on a medium group of individuals to establish efficacy, safety and dose response of the drug. Phases I and II are sometimes done in one set.
• Phase III is usually a randomized test on large groups of patients to confirm efficacy and safety compared with a conventional treatment for similar conditions. If successful, the test results are submitted for a regulatory approval.
• Phase IV (Post-Marketing Surveillance) is a study of efficacy and safety of an approved drug in various population groups and sometimes its long term safety.
• Phase 0 is recently FDA designated human trial phase where very small amounts of drugs, below therapeutic level, are tested under FDA 2006 Guidance on Exploratory Investigational New Drug Studies. Phase 0 studies provide no data on safety or efficacy of compounds, only on whether they seem to be functioning the same way as during in-vitro and animal testing.

DACH-Platin micelles

A new diaminocyclohexaneplatinum (DACH-platinum) loaded nanomicelle developed by NanoCarrier.

DDS (Drug Delivery System)

A technology that improves drug profiles by modifying the way a drug is released, absorbed, distributed or eliminated from the body. The objective is to deploy drugs to targeted parts of the body. Simply, DDS is a system for drug targeting.

Docetaxel

An anticancer drug in the taxane group. Docetaxel is used for the treatment of a variety of cancers, such as breast, non-small cell lung, uterus, ovarian, and prostatic cancer.

Drug Carrier

A substance that works to improve the delivery of a drug to the target area.

GMP

An abbreviation for Good Manufacturing Practice which in the context of NanoCarrier's business is a part of the set of development and manufacturing guidelines approved by the International Conference on Harmonization.

In Vitro

A process that is performed in a controlled environment outside a living organism.

In Vivo

A process that is performed using living organisms, such as animals.

Metabolite

The intermediates and products of metabolism (chemical reactions necessary to maintain life).

Micelle Antibody Conjugate

A compound type developed by Company. Conjugate is a product of coupling bio molecules together via (covalent bonds). It can be used to attach sensors, for instance antibodies, to a drug-loaded micelle and improve drug delivery efficiency.

Milestone

A cash payment tied to achieving R&D or clinical trials phase milestones.

Nanoplatin

A trademarked experimental drug developed by NanoCarrier (see Existing Pipeline) utilizing its nanomicellar technology to create a cisplatin-incorporated polymeric micelle.

Oxaliplatin

A platinum based anti-cancer drug that belongs to the same family as cisplatin. It was discovered in Japan in 1976 and licensed out to Debiopharm S.A. Debiopharm developed it as a colorectal cancer drug and licensed it to Sanofi-Aventis in 1994. Sanofi-Aventis is selling the drug under the trade name of Eloxatin. It was approved for sale in Europe in 1999 and in the US in 2004. Its patent as NCE (New Chemical Entity) expired in 2007 but the drug will remain protected by patents for applications in colon cancer treatment till 2013-2016.

Paclitaxel

A generic name for an anticancer drug. It was discovered in the US in 1967 when it was isolated from the bark of a rare Pacific yew tree. It was developed commercially by Bristol-Myers Squibb and marketed as Taxol. Together with another drugs, docetaxel (marketed as Taxotere) and Abraxan, it forms a group of anti-cancer drugs called taxanes.

Royalty

A percentage of sales or a fixed amounted that is paid in relation to revenues of an out-licensed product.

Taxol

A paclitaxel marketed by Bristol-Myers Squibb. It is paclitaxel dissolved in a castor oil formulation (Cremophor EL) and ethanol.

Upfront payment

A cash or equity payment that normally takes place at the beginning of a licensing agreement.

Back to Top

[edit] Latest Q&A

Back to Top