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SBOT: NCI Supply Contract: Highlights Growing Interest of KLH for Cancer Immunotherapies

By Brian Marckx, CFA



SBOT Scores National Institutes of Health / NCI Supply Agreement

Securing more KLH supply agreements has been one of Stellar Biotechnologies’ (NASDAQ:SBOT) strategic objectives and earlier this month the company made additional headway on that goal. In early September Stellar announced that they entered an agreement with the U.S. National Institutes of Health (NIH) to supply their proprietary KLH for government-sponsored studies.

While details regarding the potential breadth of the agreement with NIH or specifics about which particularly programs SBOT will support, were not disclosed, the press release does indicate that SBOT’s KLH will be used in cancer immunotherapy studies. That includes one or more dendritic cell-based cancer therapy programs sponsored by NIH’s National Cancer Institute which will use a vialed formulation of SBOT’s KLH.

Dendritic cell vaccines have shown potent cancer fighting ability and have quickly become one of the most promising areas of cancer research. Preparation of dendritic cell vaccines involves extracting (precursor) dendritic cells from the body and then loading them with tumor antigens. They are then put back in the body where they seek out and destroy cancer cells. Studies have indicated that KLH, when combined with the dendritic cells, can enhance immunotherapies’ cancer killing efficacy.

While we currently have little insight into the potential significance of this agreement in terms of revenue, we think it is meaningful as providing additional validation of SBOT’s manufacturing capabilities (in regards to both quality and capacity) and the importance of traceability of the source of KLH. It also adds additional credence to the potential utility of KLH in these new cancer immunotherapies – related research and development around which has massively accelerated over the last few years.

Our quick query of using search terms ‘dendritic, KLH’ under a generic ‘cancer’ indication returned 27 studies – while several are dated, this list likely represents only a fraction of related programs (and also does not include all of the preclinical programs). Our point being that, dendritic cell vaccines represent a potential near-term breakthrough in cancer therapy and Stellar likely represents the only source of reliable capacity and quality KLH

And while this is the latest government agreement that SBOT received, it is not the first. In fact, Stellar has previously received more than $4M of funding from SBIR programs, including at least $3M related to a previous NCI award. That funding was a significant catalyst to building out Stellar’s manufacturing and aquaculture capabilities.

We cover SBOT with a $7.50/share price target. See above for free access to our most recent report.

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