Immune Response Sounds an Alarm
Immune Response Corp., a Carlsbad-based biotechnology company that has for 10 years struggled to create an HIV/AIDS vaccine, said Monday that its outside auditor had questioned its ability to continue operations because of cash flow problems.
Co-founded by the late polio vaccine discoverer Jonas Salk in 1986, Immune Response primarily has focused on the development of Remune, a vaccine that aims to slow the progress of human immunodeficiency virus, which leads to AIDS.
Remune is currently in Phase II of clinical testing, but the company noted in its annual report, which was filed last week with the Securities and Exchange Commission, that it might run out of funds to perform Phase III testing. The vaccine is expected to need the next level of testing before it can receive Food and Drug Administration approval.
In the annual report, Immune Response’s independent auditor BDO Seidman raised doubts about the company’s ability to continue as a going concern. The company has $12.8 million cash on hand as of Dec. 31, and $6.5 million in working capital.
That’s enough, said Chief Financial Officer Michael Green, to keep the company functioning until October.
Immune Response shares fell 9 cents to $1.50 on Nasdaq. The company had a net loss of $28.8 million in 2003.
It’s not the first time Immune Response has had money problems. The company, which has never generated revenue from its products, faced bankruptcy in November 2002. It raised $8.2 million in financing to avert that crunch and in January 2003 named a new chief executive to help with fundraising. In October, Immune Response raised $10.7 million in private sales of stock to keep it operational through the third quarter of 2004.
Immune Response does not expect to generate sales on its products, which also includes a second HIV-related drug in development and a potential multiple sclerosis vaccine, until the third quarter of 2008, if then, the company said in its annual report. “It’s not unusual to go through these cycles,” said Green. “We are in the research phase.”
Unlike other HIV/AIDS drugs that typically go after particular strains of the virus, Remune is trying to target the proteins found in numerous strains.
In the commercial race to develop new blockbuster drugs, low cash reserves are “part of the normal life of a biotech company,” said Navdeep Jaikaria, senior biotechnology analyst with New York-based Rodman & Renshaw Inc., a investment bank that helped Immune Response raise money last year.
“There will be investors willing to invest in that technology so we don’t see any problem for Immune Response going forward as a business entity,” Jaikaria said.
