Rodman Rambles: Promising Biotechs

NEW YORK (TheStreet) -- I saw some promising, small biotech companies at this week's Rodman & Renshaw Annual Global Investment Conferences. The confab wasn't all about the biotech dreck.

AVI Biopharma (AVII) has a long and checkered history of biotech drug development futility, but the company's early work on a novel drug to correct the genetic damage in boys with Duchenne muscular dystrophy (DMD) is very interesting. The AVI drug, AVI-4658 is designed to "skip over" the section of damaged gene in DMD patients and therefore restore the gene's ability to produce partially functioning dystrophin, a protein that plays a key role in muscle function and repair. [The genetic inability to make dystrophin is what causes muscular dystrophy.]

Studies in a very small number of patients done in the U.K. have shown AVI-4658 to be relatively safe and even better, some of the patients showed a restoration of dystrophin levels. AVI is in the process of getting FDA sign off to begin clinical trials in the U.S. next year.

DMD is a rare genetic disorder, so AVI is working from the playbook successfully used by Genzyme (GENZ), BioMarin Pharmaceuticals (BMRN) and Alexion Pharmaceuticals (ALXN) -- develop a drug for a rare, genetic disorder with a sky-high price tag that patients will need to take for the rest of their lives. That's an excellent way to make investors happy, if the drug works.

I may be a bit late to the AVI story, unfortunately. The stock has almost doubled since April, trading today at just under $2 a share. Owing to its checkered past, AVI is saddled with more than 100 million shares outstanding and the company probably needs to raise cash at some point soon, but if '4658 is successful, AVI's share price today will look very cheap.

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I was surprised to learn that BioDelivery Sciences (BDSI) has three drugs entering phase III clinical trial programs. All of the drugs are based on BioDelivery's buccal (inside of the mouth) delivery technology and will use the previously validated and relatively easy 505(b)2 route for FDA approval.

Bema Buprenorphine will soon start two, phase III studies in chronic back pain, with completion expected in the third quarter next year. BioDelivery CEO Mark Sirgo says "Bema Bup" should be superior to generic tramadol ($2 billion in 2009 sales), which doctors and patients often use as the preferred choice for chronic pain relief before graduating up to more potent but also riskier and addictive narcotics.

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