Cleveland BioLabs stock lost nearly a quarter of its value Wednesday after a key federal agency declined to back the Buffalo biotechnology company's bid for further funding for the development of its anti-radiation sickness drug.
Cleveland BioLabs shares plunged by 23.85 percent, or 57 cents, to $1.82 per share Wednesday after a Department of Health and Human Services agency said it would not invite the company to submit a full proposal for continued development funding of its Protectan anti-radiation sickness drug.
The Biomedical Advanced Research and Development Authority has been an important source of development funding for Cleveland BioLabs. But its financial support has been in question for almost a year because of questions over the path the company is following to obtain approval for its Protectan 502 drug from the Food and Drug Administration.
Company executives said they would pursue other funding options to continue the drug's development, while they also plan to resubmit a proposal to the research agency in the coming months.
"The development of 502 as a radiation countermeasure will continue without interruption," said Yakov Kogan, Cleveland BioLabs' interim president, during a conference call. "While we're disappointed, we continue to believe that 502 is the most effective and the most advanced drug candidate for treatment of acute radiation syndrome."
During previous clinical trials, Protectan 502 showed promise in limiting the damage caused by radiation exposure. Those clinical trials so far have shown the drug can be effective if administered as long as 48 hours after initial exposure, which could make the drug a valuable medication for soldiers exposed to radiation on the battlefield or in the aftermath of a terrorist attack.
Cleveland BioLabs executives said they received a letter from the Biomedical Advanced Research and Development Authority on Monday saying it would not support the company's latest bid for funding to develop Protectan as a way to protect victims from the harmful effects of radiation exposure.
Company executives said they believe the agency's objection stems from questions about the type of studies the FDA will require before approving the drug.
Cleveland BioLabs had submitted its request for more development funding to the research agency in hopes that its existing plan for human and animal studies would satisfy the FDA. But questions about whether those studies would be sufficient lingered as the agency faced a March 1 deadline to rule on Cleveland BioLabs' latest request, and the agency rejected it.
"We anticipated that the studies that we proposed would be acceptable," said Dr. Edward D. Martin, a senior business adviser for Cleveland BioLabs. "Simply put, they did not agree that our proposed studies were the proper studies to move ahead toward FDA approval."
Cleveland BioLabs executives are scheduled to meet with FDA officials later this month in a two-day session that they hope will clarify the path the company must follow to obtain FDA approval. No drug touted as a radiation countermeasure has received FDA approval.
Once they receive clarification from the FDA on the scope and type of studies the company must undertake, Cleveland BioLabs plans to submit a technical proposal to the research agency in search of further funding.
The company, which had $28 million in cash and investments on its books at the end of December, is burning through $1.2 million to $1.4 million in cash each month, said Neil Lyons, Cleveland BioLabs' chief financial officer.
That cash should last into next year, though the company could slow its investments in the development in Protectan 502 and a sister drug as cancer treatments to conserve cash, Lyons said.