August 15, 2007 The KonLin LetterTKL Technical & Fundamental Analysis Market Timing Low-Priced Stocks AKESIS PHARMACEUTICALS, INC. OTC BB: AKES - .45 Type 2 diabetes, which accounts for 90%-95% of cases in the U.S., usually begins as insulin resistance, a disorder in which the cells do not use insulin properly. AKES is a small, emerging start-up company that has a pipeline of innovative oral drugs for the treatment of diabetes and related metabolic disorders. These products are supported by issued and filed U.S. patents for both prescription and over-the-counter treatments, which uniquely combine anti-diabetic trace minerals with certain classes of diabetes oral agents. AKES' products have demonstrated preliminary evidence of efficacy in lowering and controlling blood glucose levels in patients with Type 2 diabetes. Blood sugar control via oral drugs represents a market opportunity in the billions of dollars, and many patients regularly cycle on and off drugs in order to maintain control of blood glucose levels. AKES licensed its lead product AKP-020 (bis(ethylmaltolato) oxovanadium (IV)), or BEOV, from the University of British Columbia. BEOV is a novel formulation of vanadium that has shown considerable potential as a treatment for patients with Type 2 diabetes. Vanadium is a highly promising diabetes drug shown in numerous published reports to be effective in animals and humans, which acts by enhancing insulin downstream from the insulin receptor; it is also known to modulate serum glucose. By enhancing insulin's action through the use of BEOV, AKES expects to enhance the reduction in serum glucose and reduce the associated toxicities. AKP-020 is in mid-stage clinical testing and AKES intends to conduct Phase 1b/11a trials with AKP-020in the second half of this year. Phase I data, which showed advantages of AKP-020 over unpatented vanadyl sulfate with respect to dosing, pharmacokinetics and bioavailability, without any signs of toxicity, provides a significant basis for initiating a Phase 1b/11a trial in a larger patient population. AKES is an emerging diabetes company that has yet to record any revenue, and lost (.15) per share for FY'06. For Q1'07, AKES lost (.03) per share vs. (.04) for the same period in the prior year. The company is reinstating Q1'07 and FY'06 financial statements to correct the amount of stock-based compensation expenses recorded by the company for those periods, which will not have an affect on cash flow from operations in total cash and cash equivalents. AKES has virtually no debt and $3.6 mil. in cash and cash equivalents, and of the 22,580,884 shares outstanding, approx. 80% are closely held. Recommended in the .40 area, the stock could see a strong rebound to the 1.10 level, since its novel vanadium compound has shown considerable potential as a treatment for patients with Type 2 diabetes. AKES' near-term focus is on developing AKP-020, and because the company is virtual, with only two employees, its fixed cost structure is extremely low. As AKES conducts mid-stage testing of its lead products, it intends to seek licensing or development opportunities with larger pharmaceutical companies. The complications of diabetes result in more than $130 bil. in public healthcare costs annually in the U.S., including direct healthcare costs, disability, work loss, and premature death. Approx. $6 bil. a year is spent on oral diabetes medication, with $1.4 bil. spent annually on metformin alone. Globally, at least 171 mil. people have diabetes, The World Health Organization estimates that the presence of diabetes could reach 366 mil. people worldwide by 2030, including 30 mil. in the U.S. alone. Also, Type 2 diabetes is increasingly being diagnosed in children and adolescents. Ultimate target 3. News Main Menu