Sirona Biochem is a biotechnology company developing diabetes therapeutics, cancer vaccine antigens, skin depigmenting and anti-aging cosmeceuticals and biological ingredients. The Company is applying a proprietary chemistry technique to improve the pharmaceutical properties of their carbohydrate-based molecules.

Investment Highlights

Profile

Analyzing a biotechnology company, even a big board play, is a challenge for most investors as many biotechs do not have any revenue stream and the future of the company can hinge on a pipeline of promising products. Most of the true blue chippers are somewhat easier to analyze because their drugs have made it to commercialization and by comparing what other companies have in their pipelines as potential competition can be evaluated to determine what may happen to future revenue. Many other companies that are in advanced stages of clinical trials and looking to garner Food and Drug Administration drug approval have already seen a big swing in share price as the investment community “baked-in” price increases throughout the different phases of research and development.

The fact is that while there are many big pharmas in the multi-multi-billion dollar biotechnology industry, the vast majority of biotechs are still developmental in nature. Sifting through the hundreds of investment possibilities can be intimidating, but extremely rewarding if an investor can identify truly undervalued companies with a large upside.

Diversification is the key to small biotechs. Companies need to have multiple applications for their technologies or drugs that can be used for several indications to hedge against one product not making it to commercialization. Additionally, the target population (i.e. size of potential market) is also crucial in evaluation of a small biotech. A junior biotech with a promising cancer drug carries far greater potential to hit a jackpot for its investors than one focused on an orphan drug with a miniscule number of patients with an obscure disease that could benefit.

By breaking things down into these types of basic guidelines, it makes it easier to identify biotechnology firms that could provide a larger return on investment. Drilling down on the more than 1,000 biotechnology companies operating in North America quickly brings to light the potential of Sirona Biochem Corp. (TSX-Venture:SBM) (Pink Sheets:SRBCF), a Vancouver, British Columbia-based biotechnology company specializing in carbohydrate chemistry technology.

Sirona Biochem is focused on the development of carbohydrate-based molecules, a technology that has a robust number of uses, but has been a challenge in development because of a major limitation in the lack of stability of carbohydrate molecules. Sirona Biochem’s French subsidiary, TFChem, has developed a proprietary chemistry technique that maintains the integrity of carbohydrate-based molecules even after enzyme exposure. In effect, Sirona is clearing the hurdles that have caused other biotechs to stumble related to the instability and has turned its attention primarily to advancing three programs – therapeutics, cosmetic agents and biological ingredients – with its proprietary chemistry. The company aims to maximize the commercial value of carbohydrate-based drugs by improving their pharmaceutical properties and target some of the most lucrative markets in biotechnology.

Sirona’s most advanced program, a sodium glucose co-transporter (SGLT) for diabetes, has already achieved positive preclinical results. In a comparative study, Sirona Biochem’s SGLT inhibitor performed better than the leading drug candidate, Dapagliflozin (Bristol Myers Squibb & AstraZeneca) in this drug class. Additional research is being conducted to further test Sirona’s SGLT inhibitor for safety and toxicology as the company maneuvers towards clinical trials.

The diabetes industry is one of the single, largest disease markets in North America (and the world, for that matter). In the United States alone, nearly 26 million people are diagnosed with diabetes, with millions more being qualified as “pre-diabetes”. The prevalence of the disease is reaching epidemic proportions with The International Diabetes Federation (IDF), the umbrella organization of over 200 national diabetes associations in over 160 countries, indicating that the number of people globally living with diabetes is expected to rise from 366 million in 2011 to 552 million by 2030. That’s more than 10% of the world’s population. IDF also estimates that as many as 183 million people are unaware that they have diabetes.

Recognizing that financing clinical trials is often a major setback, Sirona Biochem intends to complete its IND (Investigational New Drug)-enabling studies, then seek a pharmaceutical partner to handle the downstream clinical and commercial needs of the program. This will be happening at a very opportunistic time as bigger pharmas are acquisition/merger and partnering-hungry because many big drug makers will be losing key patent protection on blockbuster drugs within the next two years. For example, Pfizer, Inc. lost patent protection on Lipitor and Protonix in 2011 and will be losing its patent on Geodon in 2012. Merck’s blockbuster asthma drug Singulair is coming off patent this year. Sanofi and Eli Lilly will be seeing 40% and 66%, respectively, of their 2010 pharmaceutical sales exposed to risks from patent expiration by 2013. Patent expiration leads to huge losses in revenue as generic drugs move-in to compete with the popular name-brand drugs; leaving the big biotechs thirsty for novel drugs to rebuild their pipelines. Notoriously weak in developing drugs on their own, big pharma generally looks to absorb or collaborate with smaller biotechs that have drugs with strong potential. Being that money is typically not an issue for majors, developmental biotechs and shareholders can yield strong rewards from new deals.

While targeting the massive diabetes industry as one pipeline component, Sirona Biochem is also building its technologies aimed at cosmetic agents and biological ingredients. Unlike its SGLT inhibitor, these products are not subject to the extensive clinical trials and regulatory pathways, which allows them to be advanced to market much more quickly.

The company is developing anti-aging cosmetic agents that can be used to maintain and improve skin vitality. The global anti-aging cosmetic market was estimated at $64.4 billion in 2009 and is expected to grow to $105.4 billion in 2013, a combined annual growth rate of a stellar 10.4 percent. According to the National Consumers League, 90 million Americans use anti-aging products.

Sirona is also developing a depigmenting agent that has the potential to lighten and evenly tone skin. Sales of skin lightening products are estimated to reach $10 billion globally by 2015. In Asia-Pacific alone, it’s estimated that the skin lightener market will exceed $2 billion by 2012.

Regarding its biological ingredients, the company’s chemistry technology platform can be used for the development of enhanced inducers for recombinant protein production and adjuvants for the preservation of stem/islet cells. More specifically, inducers could be valuable in the production of insulin, human growth hormone, vaccines, interferon (anti-viral/bacterial/parasitic/tumor) and interleukin-2 (immune), and other recombinant protein produced by E. Coli. The market for recombinant proteins is expected to significantly rise with sales forecasted to reach $75.8 billion in 2012, a 50% increase from 2007.

The management and advisory board for Sirona Biochem rivals that of its big board competitors. Further bolstering its already highly-experienced team, just last week the company appointed organic chemistry expert Professor Pierre Vogel, fluorine chemistry expert Dr. Bernard Langlois and carbohydrate chemistry expert Dr. Eric Leclerc to the Scientific Advisory Board of its subsidiary, TFChem.

Technically speaking, the SBM chart is what many would consider a perfect bottom play stock. The price per share dipped to a 52-week low of 7.5 cents last week and promptly produced a 50 percent bounce back to 11 cents. Since that point, the value of a share has slipped back and is holding a firm support level at 8 cents. Today’s closing candlestick is a dragonfly doji, which is a sign of indecision leaning towards bullishness as the price opened at 8.5 cents and a dip to 8 cents was following by buying taking the stock right back to where it opened. Resistance won’t enter the picture again until a 30 percent climb takes the stock back to 11 cents.

While many of the indicators are in bearish positions – as is common with most bottom plays – the Moving Average Convergence/Divergence has been trending back towards zero and making higher lows since October 2011. This is known as a “positive divergence” as the price drops lower, the MACD is climbing higher, many times signaling that a shift in trend is about to happen.

On a different note, the Average Directional Index (ADX), a measure of the strength of direction in a chart, is registering a 13.37. Technical traders will use a 10 handle on the ADX as an exaggerated reading and a sign of weak directional strength, adding credence to a shift in direction. The last time the ADX was this low for SBM, the share price doubled in a matter of days.

As we just mentioned above, with support hovering around $0.075 currently, stop losses just below that level would make a lot of sense in case of wild swings in the wrong direction. As we always mention at this point, these are merely the interpretations of AllPennyStocks.com. We encourage all investors to do their own due diligence and consult with a financial advisor prior to making any investment decisions.

To further add fuel to the fire, the Company just announced some major news after the bell today that should excite investors on its own but could also significantly affect the Company's stock price tomorrow and for the next few trading days. The Company announced after the bell today that its lead compound for the treatment of Type 2 diabetes was effective in lowering blood glucose levels in a well-established preclinical diabetic model.

Sirona Biochem's compound, SBM-TFC-039, significantly and rapidly reduced the blood glucose level in obese diabetic rats (Zucker). In an acute dosing study, six hours after treatment, the blood glucose level of obese diabetic rats was reduced to the level of control lean rats. There was a strong correlation between the decrease in blood glucose level (0 to 6 hours post treatment) and the excretion of urinary glucose.

A study in normal rats also confirmed that SBM-TFC-039 triggered elimination of glucose through the urine (glycosuria) in a dose dependent manner. SBM-TFC-039 also reduced blood glucose excursions following a glucose challenge by 34 percent compared to an untreated group. A separate safety study of SBM-TFC-039 showed the compound was well-tolerated. These preclinical results show the potential that this Company trading under $0.10 a share can have going forward. The diabetes industry is one of the single, largest disease markets in North America (and the world, for that matter). In the United States alone, nearly 26 million people are diagnosed with diabetes, with millions more being qualified as “pre-diabetes”. Any compound that is effective in the treatment of this disease, whether its from a biotechnology powerhouse or a junior biotech Company should be closely examined from both a health and financial standpoint.

All the components of finding a value proposition in the biotechnology space are glaringly intact for Sirona Biochem. The company’s proprietary fluorine-based chemistry platform not only gives the company the chance to develop new robust compounds, but also allows them to improve previously-developed compounds by other companies that may have been put on hold because of the inherent challenges of these carbohydrate compounds. The company was named as one of the TSX Venture’s Top 50 in 2011 and ranked second in the Technology and Life Sciences category. All of this wrapped-up in a company only commanding less than a dime a share and a market cap of about $5 million. It is because of these reasons, as well as the one’s mentioned above that we have decided to turn our latest corporate spotlight on Sirona Biochem Corp. (TSX-Venture:SBM) (Pink Sheets:SRBCF) and encourage our members to promptly begin their due diligence and add it to their watchlists.

Sirona Biochem Announces Preclinical Results of Diabetes Compound
Marketwire (Thu, Feb 23)

Sirona Biochem Appoints Three Chemistry Experts to Subsidiary Scientific Advisory Board
Marketwire (Tue, Feb 14)

Sirona Biochem Announces Results in Key Study for Biological Inducer
Marketwire (Tue, Feb 14)

Sirona Biochem Appoints Sean Cunliffe to Chief Business Officer and Board of Directors
Marketwire (Tue, Jan 24)

Sirona Biochem President Mark Senner Stepping Down
Marketwire (Fri, Dec 16)

Sirona Biochem's French Subsidiary Receives CDN $1.9-Million Grant for Cosmeceutical Project
Marketwire (Tue, Nov 22)

Sirona Biochem Announces New Grant of Stock Options
Marketwire (Thu, Nov 3)

Management

Howard J. Verrico, MD - President & Chief Executive Officer

Dr. Verrico obtained his medical degree from the University of Toronto in 1985 and has been a member of the College of Physicians and Surgeons of British Columbia since July 1986. Dr Verrico is currently a practicing emergency room physician. In addition, Dr. Verrico has extensive experience as a venture capitalist in the junior capital markets.

Géraldine Deliencourt-Godefroy, PhD - Chief Scientific Officer

Dr. Géraldine Deliencourt-Godefroy is an award-winning synthetic chemist and the founder of France-based biotechnology company TFChem. Since the acquisition of TFChem by Sirona Biochem in March 2011, Dr. Deliencourt-Godefroy has assumed the role of Chief Scientific Officer. Her scientific research in carbohydrate chemistry has led to the discovery of new drug families and the development of drug candidates for diabetes and obesity, cosmetic ingredients and biological adjuvants. Previous to founding TFChem, Dr. Deliencourt-Godefroy was a scientific leader at INSA (National Institute of Applied Sciences) in Rouen, France, where she developed a new technology on stabilized carbohydrates. Previous roles also include a post-doctoral position at the University College London and doctoral research at the Research Institute of Fine Organic Chemistry in Rouen, France. Dr. Deliencourt-Godefroy received a PhD and Masters in Organic Chemistry as well as her business degree from the University of France. She is the author of several publications and patents and is also the recipient of the acclaimed Francinov Research and Innovation Medal, French Ministry of Research Award and the French Senate Award.

Sean Cunliffe - Chief Business Officer

Mr. Sean Cunliffe has more than 25 years of pharmaceutical marketing and sales experience in a wide variety of therapeutic areas. Most recently, he was Senior Vice President of Sales and Marketing at Angiotech Pharmaceuticals. Prior to Angiotech, Mr. Cunliffe served as Chief Commercial Officer of Neuromed Pharmaceuticals, now Zalicus Inc. At Neuromed, Mr. Cunliffe negotiated, from ALZA Corporation the in-licensing of a once-daily hydromorphone, now marketed as Exalgo®. He also negotiated a partnership and research collaboration with Merck, in what was noted at the time as the largest pharmaceutical deal in Canadian history. Mr. Cunliffe has held several leadership roles at Wyeth Pharmaceuticals in Collegeville, PA, including, Vice President of New Product Marketing where he co-chaired, along with Discovery, both the Neuroscience and Cardiovascular leadership teams, Vice President Marketing and Global Business Manager of Neuroscience and Vice President of Cardiovascular and Gastrointestinal Marketing. Prior to Wyeth, he was the Group Director U.S. Marketing, Gastrointestinal and Anti-Viral Products at Glaxo Wellcome in Research Triangle Park, NC. Mr. Cunliffe also served for Glaxo and Astra Pharmaceuticals in a variety of sales and marketing roles in Canada before moving to the US to work in both global and US domestic commercial functions. Mr. Cunliffe received an MBA in Finance from McMaster University in Hamilton, Ontario and an Honours B.Sc. in Biology from Queen’s University in Kingston, Ontario.

Christopher Hopton, CGA - Chief Financial Officer

Mr. Christopher Hopton is Sirona Biochem’s Chief Financial Officer. He brings 15 years of expertise in financial management and operations. His extensive experience covers areas of financial planning, accounting policy and business process improvement. As a business investment and finance consultant, Mr. Hopton has worked with several public and privately-held companies. Most recently, Mr. Hopton was the Chief Financial Officer of Central Resources Corp., a junior mineral exploration company. Formerly, he held the position of Division Controller at Canadian Airlines where he was responsible for an annual operating budget of $200M. Mr. Hopton was also involved in the restructuring of 360 Networks, a network communications company, which led to a buyout by Bell Canada. Mr. Hopton earned his Bachelor of Business Administration from Simon Fraser University in British Columbia, Canada and received his professional designation as a Certified General Accountant.

Bertrand Plouvier, PhD, PMP - VP, Product Development

Dr. Bertrand Plouvier is Vice President of Product Development at Sirona Biochem. Since 2007, Dr. Plouvier has been a consultant for several start-up pharmaceutical companies, including Verona Pharma plc in the UK. From 1995 to 2007, Dr. Plouvier worked at Cardiome Pharma, where he established the company’s chemistry department. As Associate Director of synthetic chemistry at Cardiome, he contributed to the discovery and clinical development of Vernakalant, a new antiarrhythmic agent for the treatment of recent onset of atrial fibrillation, currently pending approval by the FDA. Previous to this role, Dr. Plouvier worked as a post-doctoral fellow in the chemistry department at the University of Alberta. Dr. Plouvier is a medicinal chemist who has discovered several pre-clinical and clinical candidates for the treatment of cardiac arrhythmias and cough over the course of his career. He obtained his PhD at the University of Lille, France in 1991 and a master in drug design from the Institut de Chimie Pharmaceutique de Lille, France. Dr. Plouvier is co-author of 12 publications and 6 patents. Dr. Plouvier also obtained his certification as Project Manager Professional in March 2008.