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Executive Summary

Alpha 1 Biomedicals is hoping to start a confirmatory study of its immunostimulator thymosin compound Thymosin Alpha 1 as a palliative treatment in conjunction with radiation therapy for stage 3 lung tumors, but is in need of additional funds, the firm said in an April 25 prospectus filed with the Securities and Exchange Commission The Washington, D.C.-based start-up said that a Phase III Thymosin Alpha 1 trial funded by the National Cancer Institute on over 160 patients at 25 medical centers was completed in the summer of 1988. The study, conducted under the auspices of the Radiation Therapy Oncology Group, began in 1984. The RTOG's analysis of the data so far "show that overall survival was not increased by Thymosin Alpha 1," the prospectus notes. However, those patients with stage 3 tumors, the largest group of lung tumors treated by radiation therapy, "lived significantly longer than the controls." Alpha 1 Biomedical said it feels another Phase III trial on the stage 3 tumors is warranted. The future of the start-up may be in question. The company needs additional capital or faces a shutdown after June. Price Waterhouse's company report for fiscal year ended March 31 notes that the auditor "has substantial doubt about the entity's ability to continue as a going concern" without an infusion of new funds. Since its inception in mid-1982, Alpha 1 Biomedical has accumulated a deficit of nearly $5 mil. The company also faces NASDAQ delisting because it has failed to maintain the minimum capital and surplus required. Alpha 1 Biomedicals is looking to raise $1.6 mil. via an offering for 350,000 units (one common share and one Class A warrant each) for a proposed maximum price per unit of $4.56, or $1.6 mil. in total. Proceeds would be used for working capital. In addition to the stage 3 lung cancer tumor indication, the company's lead compounds, Thymosin Alpha 1 and Thymosin Fraction 5, have been tested in 14 clinicals, including an FDA-sponsored Phase II for the treatment of chronic active hepatitis B and a Phase II trial as an adjuvant to flu vaccinations in elderly patients. A multicenter Phase III trial in chronic hepatitis B patients is planned as soon as sufficient funding is available, the prospectus notes. A Phase II pilot trial, funded by FDA, was recently completed at Wayne State University (Detroit). The randomized, double-blind, placebo-controlled study of 20 patients with chronically active hepatitis B employed both Thymosin Alpha 1 and Thymosin Fraction 5. Of the 12 patients treated with either drug, the company said eight achieved complete remission five to eight months after treatment began. In a 32-month followup, none of the eight had suffered a relapse. Alpha 1 Biomedical's partner in a 50/50 joint venture to develop an AIDS drug, Alexandria, Virginia-based Cel-Sci, also has filed an offering with the SEC. The May 11 preliminary prospectus for the company, which is already publicly traded, offers 1.5 mil. units, consisting of one common share and one warrant each. The underwriter is Neidiger/Tucker/Bruner. Net proceeds from the offering are expected to total a maximum of $4.3 mil. Of that figure, $900,000 will fund general and administrative expenses for one year; $250,000 will pay for U.K. Phase II clinical trials of the company's lead compound, an IL-2 "cocktail," in a variety of solid tumor cancers. An IND is pending for the same types of trials. The AIDS drug HGP-30, being developed by the joint venture Viral Technologies, Inc., began human clinicals in vaccine form in the U.K. in April 1988. In March of this year, HGP-30 was approved for clinical testing in California. HGP-30's IND, filed in February 1987, is on clinical hold.

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