Bionovo Inc. (BNVI)

Research Published on Bionovo’s Cancer Drug Candidate Bezielle^®
Bionovo’s Botanical Menerba^® Begins U.S. Phase IIIa Clinical Trial
Menerba^® Could Be First Botanical Blockbuster Drug

Download Full 9-Page Note with Important Disclosures: Morning Note 02-07-12 BNVI

Investors should note that Bionovo has been delisted from NASDAQ as of today but the company expects to trade on the OTC Bulletin Board promptly following the delisting. (see Nasdaq Delisting Strategy)

Bionovo announced the publication of two studies that characterize the anticancer properties of their drug candidate Bezielle^®. Bezielle^® (formerly BZL101) is derived from botanical extracts, specifically an aqueous extract of Scutellaria barbata, also known as Barbat skullcap, Ban Zhi Lian, and Banjiryun, similar to Menerba^®. Scutellaria barbata is a perennial herb found in Korea and southern China. The herb has been used in traditional Chinese medicine to treat ailments ranging from anxiety and depression to bacterial infections, hepatitis and cancer. Flavanoid components found within the herb including, Scutellarin are thought to be responsible for the reported antineoplastic properties of the plant. Bezielle is currently being developed to treat advanced Breast Cancer.

The two research papers were published in the Journal of the Public Library of Science One as shown below:

Bezielle Selectively Targets Mitochondria of Cancer Cells to Inhibit Glycolysis and OXPHOS
Source: http://www.plosone.org/article/info%3Adoi%2F10.1371%2Fjournal.pone.0030300

Abstract
Bezielle (BZL101) is a candidate oral drug that has shown promising efficacy and excellent safety in the early phase clinical trials for advanced breast cancer. Bezielle is an aqueous extract from the herb Scutellaria barbata. We have reported previously that Bezielle was selectively cytotoxic to cancer cells while sparing non-transformed cells. In tumor, but not in non-transformed cells, Bezielle induced generation of ROS and severe DNA damage followed by hyperactivation of PARP, depletion of the cellular ATP and NAD, and inhibition of glycolysis. We show here that tumor cells’ mitochondria are the primary source of reactive oxygen species induced by Bezielle. Treatment with Bezielle induces progressively higher levels of mitochondrial superoxide as well as peroxide-type ROS. Inhibition of mitochondrial respiration prevents generation of both types of ROS and protects cells from Bezielle-induced death. In addition to glycolysis, Bezielle inhibits oxidative phosphorylation in tumor cells and depletes mitochondrial reserve capacity depriving cells of the ability to produce ATP. Tumor cells lacking functional mitochondria maintain glycolytic activity in presence of Bezielle thus supporting the hypothesis that mitochondria are the primary target of Bezielle. The metabolic effects of Bezielle towards normal cells are not significant, in agreement with the low levels of oxidative damage that Bezielle inflicts on them. Bezielle is therefore a drug that selectively targets cancer cell mitochondria, and is distinguished from other such drugs by its ability to induce not only inhibition of OXPHOS but also of glycolysis. This study provides a better understanding of the mechanism of Bezielle’s cytotoxicity, and the basis of its selectivity towards cancer cells.

Identification and Analysis of the Active Phytochemicals from the Anti-Cancer Botanical Extract Bezielle
Source: http://www.plosone.org/article/info%3Adoi%2F10.1371%2Fjournal.pone.0030107

Abstract
Bezielle is a botanical extract that has selective anti-tumor activity, and has shown a promising efficacy in the early phases of clinical testing. Bezielle inhibits mitochondrial respiration and induces reactive oxygen species (ROS) in mitochondria of tumor cells but not in non-transformed cells. The generation of high ROS in tumor cells leads to heavy DNA damage and hyper-activation of PARP, followed by the inhibition of glycolysis. Bezielle therefore belongs to a group of drugs that target tumor cell mitochondria, but its cytotoxicity involves inhibition of both cellular energy producing pathways. We found that the cytotoxic activity of the Bezielle extract in vitro co-purified with a defined fraction containing multiple flavonoids. We have isolated several of these Bezielle flavonoids, and examined their possible roles in the selective anti-tumor cytotoxicity of Bezielle. Our results support the hypothesis that a major Scutellaria flavonoid, scutellarein, possesses many if not all of the biologically relevant properties of the total extract. Like Bezielle, scutellarein induced increasing levels of ROS of mitochondrial origin, progressive DNA damage, protein oxidation, depletion of reduced glutathione and ATP, and suppression of both OXPHOS and glycolysis. Like Bezielle, scutellarein was selectively cytotoxic towards cancer cells. Carthamidin, a flavonone found in Bezielle, also induced DNA damage and oxidative cell death. Two well known plant flavonoids, apigenin and luteolin, had limited and not selective cytotoxicity that did not depend on their pro-oxidant activities. We also provide evidence that the cytotoxicity of scutellarein was increased when other Bezielle flavonoids, not necessarily highly cytotoxic or selective on their own, were present. This indicates that the activity of total Bezielle extract might depend on a combination of several different compounds present within it.

Download Full 9-Page Note with Important Disclosures: Morning Note 02-07-12 BNVI

Bionovo Moving to OTC Bulletin Board Avoiding Reverse-Split
Bionovo’s Botanical Menerba® Begins U.S. Phase IIIa Clinical Trial
Menerba® Could Be First Botanical Blockbuster Drug

Download Full 8-Page Report with Important Disclosures: Morning Note 01-30-12 BNVI

On Friday, Bionovo announced that their Board of Directors decided to seek a voluntary delisting from the NASDAQ Capital Market. Form 25 will be filed with the SEC on February 7, 2012 to commence the NASDAQ delisting process and is expected that the delisting will take effect as of the close of trading on February 17, 2012. Investors should note that, at that time, Bionovo will no longer trade on NASDAQ under the symbol “BNVI” but expects to trade on the OTC Bulletin Board promptly following the delisting.

We believe this allows Bionovo to more easily raise funds in this challenging environment for their Phase IIIa clinical trial for Menerba^® and the supporting expenses which are expected to be approximately $50M, which we have included in our model. Specific benefits of the OTCBB are:

• A reverse split is not required as there is no minimum bid requirement
• No financial restrictions on capital raising
• There are no listing requirements that need to be met
• Lower continued compliance costs

We continue to believe that the top-line efficacy and safety results of the Phase IIIa trial, if favorable, would unlock additional shareholder value and attract significant financial support from a partner for the Phase IIIb trial.

Other Recent News

New Board Member: On January 5, 2012, Robert E. Farrell, J.D. was named to Bionovo’s Board of Directors. Mr. Farrell will also serve as an independent director and member of the Audit and Compensation committees. From 1996-2009, Mr. Farrell held the positions of EVP and CFO of Titan Pharmaceuticals and was appointed President and CEO of Titan in December 2008 , a position that he held through 2009. From 1991-1996, Mr. Farrell served as Corporate Group VP and CFO of Fresenius USA. Mr. Farrell holds an undergraduate degree from the University of Notre Dame and received his J.D. degree from the University of California.

New Chief Financial Officer: On January 4, 2012, David Boyle was named SVP and Chief Financial Officer. He was previously SVP and Chief Financial Officer of AVI BioPharma. Prior to AVI, he was VP, Finance and Chief Financial Officer of XOMA. In addition to his past positions as VP of Finance at Polycom and Director of Business Development at Intel, Mr. Boyle has held senior positions in biotechnology and specialty pharmaceutical companies. He was previously at Salix Pharmaceuticals, Ltd. in the U.S. and at Ares Serono Group both in the U.S. and Switzerland.

$5M Preferred Stock Agreement: On January 3, 2012, Bionovo announced that it entered into a $5M securities purchase agreement with an institutional investor where Bionovo has the right over 2 years to sell up to $5M redeemable Series A 10% Preferred Stock. In addition, Bionovo will issue warrants to purchase shares of common stock valued at 35% of the Preferred Stock amount. The exercise price of the warrants will equal the closing bid price of Bionovo’s common stock on the preceding day.

When Preferred Stock is sold, the investor is also obligated to exercise an additional investment right to purchase a number of shares of common stock valued at 100% of the amount of Preferred Stock purchased at a per share price equal to the exercise price of the warrants received in the sale of Preferred Stock. Both the warrants and additional investment right are exercised when Bionovo elects to sell a tranche of Preferred Stock to the investor.

Upon exercise, the investor must pay for the shares underlying the additional investment right and the warrants, at its option, either in cash or by delivering a full-recourse secured promissory note. Any such promissory note will bear interest at 2.0% per year calculated on a simple interest basis and be secured by certain securities owned by the investor with a fair market value equal to the principal amount of the promissory note. Bionovo may redeem the Preferred Stock at any time and, at the option of either Bionovo or investor, all outstanding promissory notes may be offset, exchanged and cancelled for all outstanding shares of Preferred Stock then held by the investor.

Download Full 8-Page Report with Important Disclosures: Morning Note 01-30-12 BNVI

Bionovo’s Botanical SERM Could Address Postmenopausal Obesity
Bionovo’s Botanical Menerba® Begins U.S. Phase IIIa Clinical Trial
Menerba® Could Be First Botanical Blockbuster Drug

Download the Full 7-Page Note with Important Disclosures: Morning Note 12-08-11 BNVI

Bionovo announced the publication of a study on the effects of two botanically-derived, tissue selective estrogen receptor modulators (SERM) for the treatment of postmenopausal obesity. The paper titled “Estrogenic Plant Extracts Reverse Weight Gain and Fat Accumulation without Causing Mammary Gland or Uterine Proliferation” was published in the Journal of the Public Library of Science One and can be accessed free of charge at: http://www.plosone.org/article/info%3Adoi%2F10.1371%2Fjournal.pone.0028333

The study describes a new class of botanically-derived, tissue selective estrogen receptor modulators in adipose tissue, which cause weight loss in mice without the unwanted proliferative effects in breast and uterine tissue that are associated with cancer. Currently, estrogen used for menopausal hormone therapy can result in weight-loss and improvement for Type 2 diabetes, but at the cost of increased risk of breast and uterine cancer. This study shows preclinical evidence that Bionovo’s unique botanical drug approach might reduce obesity and diabetes without increasing cancer risk.

Abstract: “Long-term estrogen deficiency increases the risk of obesity, diabetes and metabolic syndrome in postmenopausal women. Menopausal hormone therapy containing estrogens might prevent these conditions, but its prolonged use increases the risk of breast cancer, as wells as endometrial cancer if used without progestins. Animal studies indicate that beneficial effects of estrogens in adipose tissue and adverse effects on mammary gland and uterus are mediated by estrogen receptor alpha (ERα). One strategy to improve the safety of estrogens to prevent/treat obesity, diabetes and metabolic syndrome is to develop estrogens that act as agonists in adipose tissue, but not in mammary gland and uterus. We considered plant extracts, which have been the source of many pharmaceuticals, as a source of tissue selective estrogens. Extracts from two plants, Glycyrrhiza uralensis (RG) and Pueraria montana var. lobata (RP) bound to ERα, activated ERα responsive reporters, and reversed weight gain and fat accumulation comparable to estradiol in ovariectomized obese mice maintained on a high fat diet. Unlike estradiol, RG and RP did not induce proliferative effects on mammary gland and uterus. Gene expression profiling demonstrated that RG and RP induced estradiol-like regulation of genes in abdominal fat, but not in mammary gland and uterus. The compounds in extracts from RG and RP might constitute a new class of tissue selective estrogens to reverse weight gain, fat accumulation and metabolic syndrome in postmenopausal women.”

Download the Full 7-Page Note with Important Disclosures: Morning Note 12-08-11 BNVI

Menerba^® Phase IIIa Commences – Data Q1’13
Phase IIIa Trial Capital Raise Expected
Menerba^® Could Be First Botanical Blockbuster Drug

Download Full 26-Page Report with Important Disclosures: BNVI Update 11-16-11

1.) Phase IIIa Trial in U.S. to Commence Dosing in a Few Days: On October 26, 2011, Bionovo enrollment of the U.S. Phase IIIa human clinical trial of Menerba® (MF101) in postmenopausal women for the treatment of menopausal hot flashes in 50 clinical sites. Since then, entry criteria diaries, randomization and baseline diaries for the first patients are nearing completion. There will be 5 safety reviews by the Data Safety Monitoring Board during the Phase IIIa trial with top-line efficacy and safety data expected in Q1 2013.

2.) Capital Raise Expected: As stated on management’s conference call, they anticipate the cost of the Phase IIIa and supporting expenses to be approximately $50M and we have included this in our model. While the company expects the confirmatory Phase IIIb trial to require another $30M-$50M, we believe that the top-line efficacy and safety results of the Phase IIIa trial (expected Q1’13), if favorable, would unlock additional shareholder value and attract significant financial support from a partner for the Phase IIIb trial.

3.) Menopause Market – Large and Underserved: With approximately 80 million women in the U.S. and Europe transitioning through menopause and at least 70% experiencing hot flashes, night sweats and associated insomnia, we estimate the worldwide market at approximately $10 billion. Current hormone replacement therapy (HRT) carries warnings for increased risk of breast cancer, strokes, heart attacks, and blood clots while alternatives to HRT, such as antidepressant drugs, are not FDA approved and can cause significant side-effects as well. Menerba^® could become the first botanical blockbuster drug which we believe represents an intriguing opportunity for patient investors.

4.) Maintaining Strong Speculative Buy with $5.00 Target: Menerba^® could become the first botanical blockbuster drug with significant upside should the Phase III trials be successful. Investors should note that while the expected capital raise will dilute existing shareholders, the efficacy and safety results of the Phase IIIa trial, expected in Q1 2013, falls within our 12-18 month forecast horizon. Therefore, we are maintaining Bionovo, Inc. with a Strong Speculative Buy rating and 12-18 month Price Target of $5.00 based on a 35x multiple on projected fiscal year 2015 EPS and discounted 45% for cumulative risk.

Download Full 26-Page Report with Important Disclosures: BNVI Update 11-16-11