CORAL GABLES, FL / ACCESSWIRE / October 14, 2015 / Every year, the Biological Technologies Office at the Defense Advanced Research Projects Agency [DARPA] grants $350 million to the life sciences space, for "Translational research in the areas of neurotechnology, human-machine interface, human performance, infectious disease and synthetic biology." As investors in the biotech space, there are numerous opportunities to gain exposure to these government grants which in some cases can make or break a company. Here are three companies with recently announced DARPA grants that could end up being the fuel that leads these companies to success.

Inovio Pharmaceuticals, Inc.

Inovio (NASDAQ: INO) announced on September 21 that DARPA had exercised its option to provide $24 million funding capital to Inovio, in support of the company's efforts in the development of an Ebola vaccination. The latest funding brings the total granted by DARPA for the program to $45 million and follows a $21 million capital injection back in April this year. Inovio had to meet a number of milestones that were funded through the initial $21 million grant in order to qualify for the second payment. These included success in preclinical animal trials, and the completion of enrolment for a phase 1 human trial, designed to test both safety and efficacy of INO-4212, Inovio's lead Ebola candidate.

INO-4212 is a DNA immunotherapy treatment that trains the immune system to recognize and fight Ebola. Its mechanism of action is to replenishes the level of T cells as they are depleted by the virus, giving the immune system added soldiers to fight the infection. In preclinical trials, and as published as a feature in the Nature Journal of Medicine here, INO-4212 demonstrated impressive results. In tests on both mice and guinea pigs, the treatment neutralized 100% of virus challenges. The ongoing phase I could be a real upside catalyst if the company can replicate these results in humans.

Surprisingly, Inovio is down close to 20% from September highs. The new government funding mitigates some of the risks normally associated with a biotech in Inovio's position, so ahead of the phase 1 results expected as soon as next quarter, the current price might offer a nice discounted exposure to a longer term program.

Aethlon Medical, Inc.

On September 28, 2015, Aethlon Medical (NASDAQ: AEMD) announced the extension of its contract with DARPA. The extension will see a current, ongoing contract complete the final year of a five-year duration. Exactly what numbers are associated with the extension remains unclear. However, we do know that the contract has generated $4.87 million for Aethlon through milestone payments to date. The capital is funding the development of a medical device that the US military can use to reduce the incidence rate of sepsis in wounded soldiers. The specific technicalities of the device have not been released because they are classified.

However, from the relatively restricted range of devices viewable on the company's website, it is reasonable to conclude that Aethlon is using what it calls its ADAPT system, with alterations to suit its sepsis target indication. Sepsis is the presence of bacteria and pathogens in the blood and is a huge problem in wounded soldiers in a military environment. The current standard of care treatment for sepsis removes particles from the blood based on size alone. The inability to discriminate between what is a pathogen and what is not is reportedly a serious issue in the space, and Aethlon's ADAPT technology can be used to target specific molecules for removal. This has obvious benefit in a military environment, and so a government-adopted product could be a big boost for the company if approved.

As with the specifics of the technology itself, the initial contract came into force in 2011, and it is structured in such a way that Aethlon must meet predefined milestones each year before DARPA will release grant capital for the following year. Aethlon has reportedly met 23 milestones to date, and the granting of the extension to the final year of the contract suggests two things - one, that the company expects to finish the project within the five-year contract period and two, that it is on track to do so. With this said, we could be looking at September 2016 as an upside driver for Aethlon assuming that the final year of the project comes in on spec.

The company currently has a tiny market cap - circa $60 million so it can be volatile. With government uptake of its lead technology, however, the reward potential if successful could easily justify the risk.

Amyris, Inc.

Amyris (NASDAQ: AMRS) has had an up and down year. Having opened 2015 a little ahead of $2 flat, the company's stock traded to annual highs of just shy of $3 on decent data and on the back of the overarching bullish momentum seen across the space during the first half of this year. However, from its highs Amyris has spent the last few months in decline, before recovering to trade just shy of $2.30 currently, giving it a market cap of circa $360 million.

The company's pipeline includes candidates across a range of indications using synthetic molecules designed to decrease cost associated with manufacturing cosmetics, agriculture, construction and fuels.

On September 23, 2015, Amyris announced it had signed an agreement with DARPA that is potentially worth $35 million, and the company has gained some considerable strength as a result, rallying nearly 30% since the announcement. The gains come as a result of the impact the capital should have on Amyris' pipeline. If all goes to plan, the capital will reportedly add hundreds of new molecules to the company's pipeline, while also reducing the time and cost to commercialization by ten times on both counts. The potential implications for Amyris' development and commercialization process are significant.

The company has developed products previously in collaboration with DARPA, as illustrated by this 2012 partnership, and if it can replicate the success of the previous project, we could see a near term upside revaluation on the back of the partnership. Upside catalysts near term from Amyris will likely relate to its ongoing solvent development program, for which the company just announced a record low manufacturing cost associated with its product Myralene - an industrial solvent. Shipments will reportedly start going out this quarter, and sales are expected to increase 560% over the next 12 months.

DARPA grants have succeeded with Amyris before, and they can succeed with any one of these companies going forward, making them ones to keep an eye on.

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