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The potential of Prolor Biotech's (PBTH) pipeline is quickly coming to fruition.

Prolor possesses world wide rights to the naturally-occurring Carboxyl Terminal Peptide (CTP), which can be attached to already-existing therapeutic proteins in order to slow the process by which the protein is removed from the human body, thereby creating an extended life span for an already-existing treatment and significantly reducing the amount of injections or applications a patient would need to endure during the course of treatment.

For instance, Prolor's hGH-CTP is An already-completed Phase II trial in adults demonstrated that one weekly injection of hGH-CTP, being developed as a long-lasting substitute for the once-daily injection of hGH that is currently prescribed for patients with hormone deficiencies, could replace seven daily injections - a huge reduction in the necessity of needle injections, a huge bonus on the effectiveness of the treatment, and a huge burden off the shoulders of patients who would no longer need the needle on a daily basis.

HGH-CTP and other CTP-based products in the pipeline have also thus far proven to accomplish their efficacy goals without adding toxicity or sacrificing the desired biological activity.

Furthermore, no safety concerns were noted thus far in clinical studies and the encouraging results have justified a quick transition into a Phase III trial, for which the company expects to an receive an approval from the FDA to commence later in 2012.

Additionally, the company is also on track regarding its plan to initiate a pediatric Phase II clinical trial in Europe for hGH-CTP in hormone-deficient children.  Recent statements by the company over the past months have indicated that the time frame for receiving the go-ahead from European regulators to initiate the trial is imminent, and there are some key notes that investors should take away from a potental approval by the European Medicines Agency (EMA) to commence the pediatric trial.

Most notably, the standards in Europe for conducting trials in children are very stringent, and the go-ahead from the EMA would underline the confidence the agency has in the already-compiled results of previous trials.  The Paediatric Investigation Plan (PIP), as outlined on the agency's home page and already submitted by Prolor, is generally required to include data from already-completed adult trials.

In the case of Prolor, an approval to commence the European trial should be viewed as a highly encouraging and significant event, given that results from the already-completed Phase II adult trial were included for review.  In order for Prolor to initiate the Phase II trial in adults, the review and approval process was based only on the preclinical data and Phase I data that had been collected to date.

For the pediatric trial, however, the approval to initiate a Phase II pediatric trial would also include the Phase II data from the already-completed adult trial.  Therefore, if the pediatric trial is approved, that means the adult Phase II data demonstrated enough success and efficacy for the EMA to consider it "safe and ethical" to move the trial to pediatric subjects - a boon for investors looking for a vote of confidence.

Such an event would raise confidence levels regarding the expected granting of an approval for the company to initiate a Phase III trial later this year, and it would also reconfirm the earlier successes of hGH-CTP.

Although the upcoming trial commencements are expected, it should be noted that these trial start approvals also bear significant indicators in relation to the perceived success of hGH-CTP, specifically in relation to the approval to start the European pediatric trial.

Given that the product may enter a market that is currently over $3 billion and growing, any noted progress in clinical trials could provide another share price catalyst. 

Prolor has also already received an Orphan Drug designation for hGH-CTP from the FDA and should also be considered a potential takeover target by a large pharmaceutical company, many of which are looking to plug pipeline gaps as high-profile drugs are expected to drop off label over the next few years.

Analysts have been taking notice.  

Given the successful Phase II trial and market potential of hGH-CTP, PBTH was slapped with a tag of 'Buy' by Morgan Joseph last year, with a price target significantly higher than where shares are currently trading. Some high-profile investors also started buying in, most notably by Dr. Philip Frost of Teva Pharmaceutical Industries (TEVA) - which feeds right into any buyout speculation.

Generally, the big players like to see later-stage results before turning a buyout idea into an actuality, but by the time Prolor is on the cusp of bringing its first product to market, any deal would most likely be a lot more expensive than it would be now - so now may be the time for the big players to jump in.

While the Prolor-Teva-Frost connection will be one to keep an eye on, the expected initiation of the next stages of clinical progression are the key indicators that should reinforce the confidence built thus far in the development of Prolor Biotech's pipeline.

Any announcements should not be taken lightly, specifically should the Phase II pediatric trial be granted an approval to start.

Disclosure: No position.

Contact VFC's Stock House: vfc@vfcsstockhouse.com

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