Lipoxen is filled to the brim with blockbuster drug potential

11th Jun 2009, 11:50 am by Ian Mclelland Virtually every week investors are reminded of the high risks of investing in start up pharmaceutical and biotechnology companies who rely solely on the capital markets to fund their drug development programs. The sector has been decimated in the past twelve months by the rapid contraction in finance available which has resulted in a number of AIM companies either delisting to conserve cash, diluting existing shareholders into oblivion to stay afloat, or effectively putting the company up for sale.  It has not been pretty.

There are some positive outcomes from all this turmoil however - investors quickly learn which companies are build to last. There are a handful of characteristics that any junior pharmaceutical company requires, but there are three qualities that really deliver the litmus test. First, and most obvious, the company has to have a solid portfolio of intellectual property and drug candidates at various stages of development. Second, it requires a loyal shareholder base, willing to support the company irrespective of wider market turmoil. Third, and equally important, it requires sound management.  This combination of management, excellent prospects and strong shareholder support is actually quite a rare combination in the junior pharmaceutical sector, let alone across the entire market.

They do exist however, and one of those companies is Lipoxen (AIM: LPX), who successfully raised £2.9 million last week ensuring it is funded through to 2010.

Lipoxen has arguably the most impressive range of company making technologies of any pharmaceutical company on AIM under £50 million – perhaps £100 million.  It arrived on shareholder’s radar in January 2006, and since then has announced a dizzying array of research collaborations, pre-clinical and clinical trials and licensing agreements for some of its novel technology platforms.  If Lipoxen is accused of anything, it would be that it has so many applications in development that investors struggle to see the company’s potential.

Lipoxen in the simplest of terms, can be viewed as a company targeting three specific areas – biological, vaccines and oncology drugs.  It has three novel platforms to do this – PolyXen®, ImuXen® and VesicAll®. The key focus of the company is the first two platforms.

The PolyXen® platform is a versatile protein drug delivery technology. The technology is essentially based on a polymer of sialic acid which is naturally found in the body.  The polymer is attached to a drug, which generates several positive attributes. Firstly, as the polymer is a natural substance, it effectively hides the drug from the body’s immune system.  Second, the polymer acts like a tail on the drug, substantially increasing its life once administered. This means the drug dose frequency required is greatly reduced as the drug is released over a longer time frame. PolyXen® polymers also improve the stability and water solubility.

Rather than focus solely on effectively reengineering drugs on its own, Lipoxen has opted to partner with major pharmaceutical companies who already have blockbuster drugs in the market, but are nearing the end of their patent protection. Lipoxen offers them a novel solution. By taking an established drug and adding its polymer, the new drug gains all of the improved characteristics of the polymer, and as a reformulation, can reapply for a new patent. This is clearly an opportunity many pharmaceuticals would not like to miss, and Lipoxen has already signed a string of agreements with large players to develop reengineered version of their own products. 

One of those is SuliXen®, an improved formulation of insulin for diabetics. Another is ErepoXen®, which recently received positive Phase I clinical trial results for both efficacy and toxicity.  ErepoXen® is being developed as a long-acting form of EPO, a product with annual sales of US$9bn, for the treatment of anaemia in cancer and renal disease patients.

Lipoxen’s other major technology platform is ImuXen®, which is also a naturally derived application that is based around liposome. Liposome is widely accepted as an effective medium for delivering drugs for cancers and other diseases.  Lipoxen’s technology is designed to improve the deliverability of a wide range of potential products, but they key driver the company is focusing on is vaccines. 

ImuXen® uses a proprietary liposomal formulation method to deliver vaccine materials to the immune system, in a manner which is designed to emulate the response of a natural encounter with the infectious agent. “The key benefit of ImuXen® technology is that it gives rise to strong immunological responses, akin to that achieved by live attenuated vaccines, while avoiding completely the risk of infection as a result of vaccination which is a rare but
significant consequence of some live attenuated vaccines,” the company states – and clearly some people agree…

There is a plethora of agreements already in place testing the ImuXen platform on a wide variety of vaccines, including Hepatitis and pneumococcal vaccines plus a range of chemotherapy drugs including Paclitaxel. It is certainly worth noting that one of the largest vaccine manufacturers in the world, the Serum Institute of India Limited, is the second largest shareholder in Lipoxen, after subscribing in a placing in 2007 followed by several share purchases in the market. It is furthermore worth noting that Lipoxen has already signed a world-wide licence agreement with InterVet - one of the largest animal health company’s in the world, and a subsidiary of Schering-Plough Corporation (NYSE: SGP). Just one more point to take note of, Lipoxen has agreements in place already with some very big players including Baxter (NYSE: BAX), Amgen (NYSE: AMGN), Genzyme (NYSE: GENZ) and Genentech (NYSE: DNA)! Baxter in particular appears so impressed it subscribed to Lipoxen’s recent placing (Lipoxen has an exclusive worldwide development and licence agreement with a subsidiary of Baxter International to develop improved, longer-acting forms of blood-clotting factors.)


A recent pre-clinical study into Lipoxen’s vaccine candidate for the prevention of Hepatitis-E outlines the potential quite nicely. The trial combined Lipoxen’s ImuXen® formulation technology with the Serum Institute manufacturing capability to produce a liposomal vaccine. The vaccine, after administration, produced a “very strong antibody response” and after vaccination there was “complete” protection from liver disease. A similarly positive pre-clinical result was recently announced for a flu vaccine, which caught the attention of the UK press reporting on Swine Flu.

There are many other ongoing preclinical and research collaborations ongoing where Lipoxen’s technology is involved. Partners include Cambridge Biostability, University of Cambridge and the Health Protection Agency, University of Nottingham, and have received funding from a wide range of groups, including the PATH Malaria Vaccine Initiative.

It is amazing to think that all of this is occurring in just one small company listed on AIM with a market capitalisation of £15 million. One would be wrong to assume that cash burn rates are high – quite the opposite. Compared to many of its peers, Lipoxen is burning through a comparatively modest amount of money, thanks largely due to a frugal financial director, who shares a small office with the CEO, and the fact that many of the company’s product developments are being funded by its partners – Lipoxen only has 24 employees.

Lipoxen shares its non-executive chairman, Brian Richards, with Alizyme plc, while most of the non-executive directors are top heavy from the research and development field. Lipoxen’s board is balanced out with CEO Scott Maguire, a US investment banker with a few decades of experience in the life science and health care investment banking sector. 

This all blends into a rather potent cocktail at Lipoxen. The CEO brings in a wealth of experience in the healthcare investment banking industry, the company’s three platform technologies have a impressive array of possible applications and routes to commercialisation and the shareholder register looks as solid as rock.

This makes Lipoxen stand out from the crowd, and it certainly warrants considerable due diligence from serious investors with a long term view.