Letter to Shareholders from 2006 Annual Report
Letter to Shareholders
To Our Shareholders and Friends:
I am pleased to be appointed chairman of AVI BioPharma and look forward to working with interim chief executive officer and board member K. Michael Forrest and the entire AVI team. As a board member for the past three years, I am aware that our technologies have potential applications in many unmet medical needs, some of which represent large market opportunities. Further, our technologies provide us with options to partner certain programs or to focus internal resources on the development of others.
Currently, we have a major ongoing clinical program underway with our NeuGene® antisense technology to prevent graft failure in coronary artery bypass grafting procedures. We also expect to begin clinical evaluation of our ESPRIT therapeutics among boys with Duchenne muscular dystrophy early in the second quarter of this year, pending regulatory approval in the United Kingdom.
Cardiovascular Disease
Coronary Artery Bypass Graft Surgery (CABG)
Patients are now being exposed to study drug AVI–5126, or Resten–CP™, in a randomized, double–blinded, placebo–controlled study. Resten–CP incorporates our proprietary drug delivery peptide CytoPorter® conjugated to our antisense AVI–4126, which silences the human c–myc gene. This trial represents our first use of Resten–CP and of the CytoPorter delivery peptide in humans. Currently, we expect to recruit up to a total of 600 patients. We have active clinical sites for this study in the Ukraine and expect that additional sites will be opened later this year in Poland, pending regulatory approval.
Coronary arteries are the small blood vessels that supply the heart with oxygen and nutrients. CABG surgery entails the surgical placement of a vein or artery to create new routes around coronary arteries that have become narrowed or blocked by plaque. The saphenous vein, which runs from the toes along the leg to the groin, is often used as a grafting source in CABG. Although CABG is effective in restoring blood flow in the short–term, 30 percent to 50 percent of venous grafts eventually become blocked or otherwise fail after one to three years.
In this clinical trial, the saphenous vein is soaked briefly ex vivo (outside the body), either in physiological buffer or in a Resten–CP solution, prior to its connecting, or grafting, into the coronary artery to bypass localized narrowing or obstruction. Over the course of the year following the procedure, study patients will be continuously evaluated to determine Resten–CP’s safety. At the end of the year, graft failure will be assessed by quantitative coronary angiography. CABG is a common and often life–saving surgery performed around the world for patients with coronary artery disease. If successful in reducing the venous graft failure rate, an unmet medical need, Resten–CP could become the standard of care in processing saphenous veins in CABG.
Cardiovascular Restenosis
Last year we took the strategically important step of out–licensing our program for delivery of NeuGene drugs for the treatment of vascular diseases to Cook Group Incorporated. Our agreement covers AVI–4126, including Resten–NG® and Resten–MP™, which combines AVI–4126 with a proprietary microparticle delivery system.
Cook Group assumed the responsibility for completing a Phase II clinical trial with Resten–MP, called APPRAISAL. Resten–MP was delivered intravenously in conjunction with the placement of one or more bare–metal stents to inhibit elevated expression of c–myc, which can result in cardiovascular restenosis. Rates of restenosis following bare–metal stent procedures can range between 10 percent and 40 percent. While conventional pharmaceutical compounds work by retarding certain aspects of the restenosis response, AVI–4126 works by down–regulating the c–myc gene.
The primary therapeutic endpoint of the APPRAISAL study is the reduction in luminal diameter, known as late loss, from the time of stent placement to follow–up at six months. Reduction in late loss is the standard indicator cardiologists use to gauge long–term stent efficacy. The fully enrolled APPRAISAL study is being conducted in collaboration with the Harvard Clinical Research Institute, an internationally recognized specialist in the management of coronary artery disease and stent clinical trials. Results from the study will be compared with historic data from the Harvard Research Institutes’ database, which includes information for more than 20,000 patients.
Infectious Disease
Our infectious disease program encompasses research on more than 50 different viruses representing most viral families, and involves collaborations with investigators worldwide. Data from these studies potentially provide us with the ability to design effective agents for emerging as well as for engineered pathogens. Through our antiviral research program we have produced antisense drugs shown to be active in preclinical studies against a wide range of RNA viruses, including hepatitis C virus, influenza A virus, West Nile virus, dengue virus, SARS coronavirus, Ebola virus and Marburg virus.
Hepatitis C Virus
In late 2005 we began evaluating the safety and tolerability of AVI–4065 in healthy adult volunteers. AVI–4065 is a NeuGene compound designed to treat patients with chronic active hepatitis C virus (HCV). HCV is particularly difficult to treat or cure due to its high mutation rate and the lack of accuracy and predictability of preclinical models. HCV represents a formidable medical concern with approximately 2.7 million Americans chronically infected. HCV patients are typically co–treated with alpha–interferon and ribavirin therapy, which is expensive, has numerous side effects, and is successful in fewer than half of the patients infected with the most common form of HCV in the U.S.
In January 2006 we reported favorable safety, tolerability and pharmacokinetic results among healthy volunteers receiving 14 days of AVI–4065. Based on these data, we began to enroll patients with chronic active HCV to evaluate AVI–4065’s effect on HCV viral load. Preliminary results among these patients treated for 14 days, presented in May 2006, were unanticipated as the pharmacokinetics of AVI–4065 in HCV patients were significantly different from that in healthy volunteers. The blood concentration of the drug in HCV patients was less than expected and only one–third of that predicted to be required to elicit a clinically significant reduction in HCV viral load. We conducted a trial extending treatment to 28 days, which also failed to indicate therapeutic benefit.
We are currently exploring the option of conducting a dose–escalating protocol at four- to nine–fold higher dosage levels than previously administered to HCV patients. The proposed high–dose clinical study is designed to meet or exceed the predicted biologically active drug concentration in blood.
Influenza Program
We have published confirmation through independent laboratories of NeuGene antisense efficacy in preclinical experiments against multiple strains of influenza, including avian influenza strain H5N1, a potential worldwide public health threat. We are continuing to work with collaborators to complete preclinical animal efficacy data to support our plan to file an IND. Our NeuGene technology allows for the targeting of regions of the viral genetic code that are common to all influenza A subtypes. This suggests that a single NeuGene drug could provide effectiveness against most influenza strains, including avian influenza, as well as the more common seasonal influenza that is attributed to more than 35,000 deaths in the U.S. each year.
Bio-defense Program
We are actively collaborating with the U.S. Department of Defense on programs in the area of bio–threats and emerging diseases. We are pleased with the 2006 defense appropriation allocation of $11 million for our work with Ebola, Marburg, and dengue viruses, and countermeasures for ricin and anthrax toxins. Net of government administrative costs, it is anticipated that we will receive up to $9.8 million under this allocation.
We announced last December a two–year $28 million research contract with the Defense Threat Reduction Agency, or DTRA, which is a Department of Defense agency. These funds are dedicated to the development of NeuGene therapeutics to treat Ebola, Marburg and Junin hemorrhagic viruses. We expect to receive funds from our research throughout this year and 2008.
Exon Skipping Pre RNA Interference Technology (ESPRIT)
In late 2005 we announced plans to pursue opportunities with our NeuGene–based Exon Skipping Pre–RNA Interference Technology, or ESPRIT therapeutics. ESPRIT is designed to have the ability to delete disease–causing genetic sequences or skip functional sequences to redesign proteins that are over–expressed or harmful in certain diseases. Unlike antisense technology that can disrupt the genetic information in a cell to eliminate pathological causes, ESPRIT therapeutics may have the ability to restore the normal activity of a protein, which means it could represent a highly potent tool for altering many disease mechanisms.
Duchenne Muscular Dystrophy (DMD)
We selected Duchenne muscular dystrophy (DMD) as the first clinical target for ESPRIT technology based on extensive and favorable preclinical results published by leaders in the field. DMD, a rare, lethal genetic disease of boys, is caused by mutations in the dystrophin gene such that no dystrophin is produced. Dystrophin is required for muscle function. A defect in exon 51 is the most common genetic abnormality in DMD, accounting for approximately 17 percent of all cases. Our current objective is to use an ESPRIT–based therapeutic, AVI–4658, to skip exon 51 so that a functional version of dystrophin might be produced. In a large number of preclinical studies, mice with a Duchenne–type muscular dystrophy produced a functional version of dystrophin for at least 16 weeks following a single dose or multiple systemic doses with our ESPRIT compounds.
According to the Muscular Dystrophy Association, the onset of DMD typically occurs between two and six years of age, with death occurring usually before 20 years of age. Our clinical objective of skipping exon 51 is to reduce or mitigate the decline of DMD patients by the production of a functional version of dystrophin as has been proposed by leaders in the field.
We are awaiting regulatory approval to begin a proof–of–principle clinical trial in the United Kingdom. In brief, this study will recruit up to nine boys with DMD. Each boy will receive a single, intramuscular administration of AVI–4658 at a pre–determined dosage level. Approximately two to four weeks following dosing, the injected muscle will be biopsied and examined for molecular evidence of dystrophin production. The identification of dystrophin within the biopsied muscle will represent a positive endpoint.
We are simultaneously working to expand AVI–4658 clinical development to systemic administration for treating DMD, as well as potentially evaluating other dystrophin exons that account for DMD. We are exploring domestic and international clinical sites to evaluate the safety and efficacy of ESPRIT compounds in DMD patients and will file the appropriate regulatory documents to proceed with clinical trials once they are identified.
We are pursuing additional opportunities with our ESPRIT program. As announced in December we entered a collaborative and cross–licensing agreement with Ercole Biotech, a recognized leader in alternative gene splicing, to identify and develop ESPRIT drugs. AVI and Ercole have each selected a set of specific gene targets and will take the respective lead in investigating the potential therapeutic effects of alternative splicing of those genes. We see this agreement as a means to strengthen the intellectual property position for ESPRIT technology and to benefit from the scientific cooperation of both AVI and Ercole.
We believe our ESPRIT therapeutics could revolutionize the treatment of genetic and other disorders, and represents a platform for developing novel therapeutics in the years to come. We are positioning AVI to be the leader in exon skipping in the gene silencing field.
Looking Forward
At AVI BioPharma, we are working diligently to create shareholder value through the development and commercialization of drugs that that can improve human health. This year we anticipate reporting important clinical progress in our ongoing CABG trial. Based on our ability to secure regulatory approval to proceed with clinical protocols, we look forward to reporting clinical progress with our HCV and DMD programs, as well as updating activities based on both our NeuGene and ESPRIT therapeutics technologies.
I would like to take this opportunity to thank Dr. Denis Burger for his many years of service and tremendous contribution to the growth and development of AVI. His dedication and enthusiasm have been instrumental in advancing AVI to where we are today.
In the coming period, we will be seeking a highly qualified individual to fill the position of chief executive officer. Simultaneously, we will be working to accelerate selection and development of clinical candidates, and improving our market opportunities. On behalf of our board of directors and my colleagues, I thank you for your support of AVI BioPharma and for your confidence in our future.
Sincerely,
Jack L. Bowman
Chairman