Cigarette makers must be worried. A tiny U.S. company has a drug
that could all but destroy nicotine addiction in America and
beyond, and its shares give investors a chance to profit from this
potentially world-changing drug.
About 46 million Americans smoke. But most of them don't want to.
According to the Centers for Disease Control and Prevention, about
70% say they want to quit. In fact, 40% of U.S. smokers try to quit
every year by abstaining for at least one day. Of course, most do
not succeed. And according to public health officials, half of
those who fail to quit will eventually die of smoking-related
Without treatment, the chances of someone quitting on any given
attempt are about 1.5%. Current remedies improve these results, but
the failure rate is still daunting. Use of a nicotine replacement
therapy -- such as nicotine patches or gum -- increases the success
rate to about 3%.
Prescription drugs have been more successful -- but even their
results leave a lot be desired. Quit rates for
Wellbutrin and Zyban, which reduce the severity of nicotine
cravings, stand at about 15%. And the quit rate for
Chantrix -- a drug that partially blocks nicotine from stimulating
the brain -- approaches 26%; however, this drug has received the
most severe warning the U.S. Food and Drug Administration gives to
medications for the serious psychological side effects it may
Here's the good news: A new drug currently in Phase III clinical
trials could dramatically improve the rates at which people
successfully quit smoking.
Nabi Biopharmaceuticals (
is a $250 million company that has a treatment that appears to beat
the success rates of what's currently on the market and which so
far has caused no serious side effects. Called NicVAX, the drug not
only helps people quit, it also helps prevents relapses.
NicVAX works by stimulating the immune system to produce antibodies
that bind to nicotine in the bloodstream, preventing it from
entering the brain. What's more, once NicVAX is administered, the
effects are irreversible for up to a year. This means that once the
patient has decided to receive the treatment, there's no going
back, as the nicotine can no longer get to the brain.
The 46 million American smokers present a huge market for NicVAX.
But consider this: There are more than 1 billion smokers
Nabi recently inked a deal with GlaxoSmithKline that gives GSK the
option to obtain the exclusive worldwide license to develop,
commercialize and manufacture NicVAX and related drugs. For that
option, GSK is paying $40 million, and could pay up to $500 million
if certain regulatory and sales milestones are reached. Nabi will
also collect royalties on both NicVax and second generation drugs
that GSK may develop.
The drug is currently being tested in several studies, including a
Phase III study on its effectiveness in helping people quit smoking
long term. The company has received a $10 million grant from the
U.S. National Institute on Drug Abuse -- part of the National
Institute of Health -- to help fund the first NicVAX Phase III
trial. Nabi has said that the drug will not be ready for FDA
approval before 2012.
Nabi's latest filing dated September 2009 reported $28 million in
cash in the company's coffers and just $5 million in debt. As a
small pharmaceutical company with no drugs on the market, Nabi has
no significant revenue stream, but the deal inked with GSK should
allow it to continue to operate through the Phase III trials.
For risk tolerant investors with the patience to wait until 2012
for Nabi's big potential payday, the shares still offer a lot of
upside as the company progresses through its Phase III clinical
trials toward FDA approval and world-wide commercialization.
Disclosure: Anthony Haddad does not own shares of any security
mentioned in this article.