Pharmacyte Biotech Inc (OTCMKTS:PMCB): Upside Potential On A Phase 2 Catalyst

Mid September, Pharmacyte Biotech Inc (OTCMKTS:PMCB) CEO Kenneth L. Waggoner put out a press release addressing to the company's pancreatic cancer investigation. Well, it was titled as such, but after touching on pancreatic cancer he went on to say he knows that the company's share price is frustrating for investors, and that even though it looks like there's very little going on behind the scenes, the company is working hard and fast to get its treatment back into the clinic.A phase 2 study should have been well under way now, and certain delays have meant this isn’t yet the case. The delays, Waggoner says, are primarily related the the fact that the drug is a biologic and not an NCE. There's some validity in what he is saying – biologics are more difficult to develop from a manufacturing and storage perspective – but it probably won't wash with those shareholders that have held stock for the last two or three years waiting for a catalyst.Anyway, we think that things are finally about to get moving again, and based on the company's rhetoric, that we could see the initiation of the long awaited phase 2b at some point early next year.We also really like the science. The company is using what it calls its Cell in a Box technology to go after a number of oncologic indications, of which pancreatic cancer is the primary target. The MOA is simple, but elegant. Currently, a combo treatment of Abraxane and gemcitabine (two SOC chemo agents) is the gold standard in pancreatic cancer. It works to some degree, but has a really severe toxicity profile, and patients are essentially undergoing treatment to get an extra eight weeks of life, each of which they spend in pain and vomiting. It's the gold standard, but in this space, that doesn’t mean much.Pharmacyte's technology is rooted in a type of encapsulated cell that produces a protein that is otherwise produced only in the liver. With traditional chemotherapy, the chemo is introduced systemically, it passes through the liver, and the cell in question activates it. It then carries on through the system to its target (in this instance, the pancreas). Of course, as well as the pancreas, it's also being washed around other parts of the body, killing healthy cells as it goes.With Cell in a Box, a physician injects the encapsulated cell into the patient, as close to the cancerous cells (tumor) as possible. They then introduce a chemo agent called ifosfamide systemically, but at one third the dose of a standard treatment. The ifosfamide would normally need to pass through the liver for activation, but instead it travels to the cell capsules, which absorb it, activate it, and pump it back out on location.So that's how it works, what do we know about efficacy so far?Well, from two trials that have been conducted, we know two important things.One, that it seems to work. In a phase I trial, as compared to gemcitabine (another SOC chemodrugm, with the data points deriving from an old trial), the Cell in a Box ifosfamide combination increased median survival from 28 to 44 weeks, and the percentage of one-year survivors increased from 18% to 36%.Two, that it isn’t improved with an increased dose. In a phase II trial, patients took a double dose, and efficacy results were weak. Also at the higher dose, the safety profile was poor.With proof of concept in place, an established maximum tolerable dose and some sound safety data in hand, it can only be the above mentioned manufacturing issues that are holding Pharmacyte back. And it's not the first company to require a biologic for an expanded trial, so we know the issue will resolve sooner or later.Which brings us to a final point, cash. The longer the company holds out on initiating the trial, the longer it is going to have to rely on shareholder cash injections to maintain operations. It's got about $2 million on hand right now, and burns about $1 million every quarter. Even without the added cost of a phase IIb initiation, therefore, cash wouldn’t last too far in to 2017. As such, we'll almost certainly see a dilutive raise between now and trial initiation.We think there's enough run room to outweigh the dilution, however, and when things get moving, there should be some degree of upside revaluation. We will be updating our subscribers on PMCB as soon as we know more. Subscribe below and we will bring you more of these types of opportunities 100% free!Disclosure: We have no position in PMCB and have not been compensated for this article.