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Friday, August 11, 2017

The BioNap Weekly Newsletter!

Hi Everyone!

I decided to publish my Newsletter on the web this week. If you're new to the Weekly BioNap Round-Up, welcome! Below is a taste of what you get each week by subscribing to my Newsletter completely free! Just enter your email in the box above.

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Now onto the research!

Zynerba Pharmaceuticals (ZYNE) - ZYNE announced this week that the Phase 2 STAR trial with ZYN002 (CBD gel for epilepsy) failed. This was very surprising to me because epilepsy is one of the indications for which CBD is already approved. On the primary endpoint, the low-dose of ZYN002 (n=63) showed an 18.4% reduction in seizures during the treatment period. The high dose (n=62) showed only a 14.0% and the placebo (n=63) showed an 8.7% reduction. Despite what looks encouraging for the low dose formulation, results did not match up with PK data showing that the high dose achieved roughly twice the CBD plasma concentration of the low dose, so at this point, it is unclear if the issues with STAR were penetration, formulation, or design. None of the secondary endpoints hit significance. Safety looked ok, but not great. That being said, on the conference call, the CEO noted high enrollment (>65%) into the open-label STAR-2 trial and that many patients were seeing a self-reported clinical benefit. Results were confounding with the data from STAR-1.

Results from a second Phase 2 trial with ZYN002 called STOP in patients with knee osteoarthritis are expected later this month. I'm obviously now skeptical we'll see positive data, but the dose is 25% higher than in STAR and this goes after a completely different mechanistic target (TRPV1). Nevertheless, ZYNE takes a hit in Charisma and Credibility after this Phase 2 failure, but the 5C score is still pretty good at 16 points because they score '4' points in Cash and have a clean Cap Structure.

Athersys, Inc. (ATHX) - ATHX announced this week that the EMA has agreed to the design of the MASTERS-2 study assessing MultiStem in patients with ischemic stroke. This was expected and in-line with the U.S. FDA SPA agreement. I'm skeptical that MultiStem actually does anything. I recommend avoiding Phase 3 stories where the Phase 2 data failed. Read my report for more details. ATHX scores only 12 points, lacking in Catalysts and Credibility. The Cash position is $28.6 million. They raised $2.4 million in the Q2 through a CSPA with Aspire Capital.

Lipocine Inc. (LPCN) - LPCN reported financial results this week. The company has $27.8 million in cash. They have been using their ATM to keep the cash balance about $25 million. They also announced the NDA for LPCN1021 has been resubmitted. It will be a 6-month review. LPCN will have some decent news flow over the next six months, but I'm no more than 50/50 confident in LPCN1021 approval. There's more info in my report.

Kadmon Holdings (KDMN) - If you read my Newsletter last week, you saw that I noted KDMN's cash position is a '1' and they are very likely to enter into a financing in the near future. On August 4, 2017, they filed a $150 million mixed shelf. I have not seen the EFFECT filing yet. Whether it's an ATM or public offering, something is brewing here!

Curis, Inc. (CRIS) - CRIS reported financial results last week. I updated their score in the 5C Model. If you read the SEC Form 10Q, they make it pretty clear they plan to start using that $30M ATM with Cowen in the coming months.

Pulmatrix, Inc. (PULM) - PULM reported financial results last week. The Cash position is $11.0 million and they are burning around $3 million per quarter. They have an ATM active and have been using it aggressively. The biggest Catalyst on the horizon for the second half of the year is a potential partnership for PUR0200. If that happens, the stock will have a nice pop - assuming its a good deal for PULM. PUR0200 is the company's once-daily, inhalable (iSPERSE) formulation of tiotropium bromide (LAMA) for COPD, currently in Phase 2/PK BE trials. I'm usually not a fan of inhaled drugs, but PULM does have some cool technology and they are going after the right indications.

CTI Biopharma (CTIC) - CTIC reported financial results. The Cash position is solid at nearly $75 million thanks to a public offering in June. Credibility in CTIC remains low. Phase 3 data with pixantrone in the PIX306 trial (combo with rituximab/gemcitabine in NHL) are now not expected until the first half of 2018. Last update the company was expecting data late 2017. CTIC scores only 12 points.

Matinas BioPharma (MTNB) - MTNB reported financial results for the Q2. My concerns here are Cash and Catalysts. The company exited June 2017 with only $11.2 million. The burn rate is ~$3.5 million, so they are only good until March 2018. However, the company plans to start a P2 pk/tolerability study with MAT2203 in leukemia patients and a P1b MAD study with MAT2501 in the H2-2017, so the burn rate may pick-up. MTNB stock has taken a big hit since the MAT2203 Phase 2 VVC trial failure in June. This really hurt Credibility and Charisma. Management argues the VVC trial failure is not material to the future development of MAT2203 because women with VVC are not the target commercial population. Instead, MAT2203 is being designed to prevent IFI in immunocompromised patients (e.g. with ALL). I understand this and agree that the VVC data really have minimal commercial impact on MAT2203; unfortunately, it does call into question the mechanism of action. Phase 1 SAD MAT2501 data weren't exactly confidence inspiring either, so right now Credibility in the technology platform is low. Positive Phase 2 data in leukemia patients can turn that all around, but these data are 12 months away and the Phase 3 trial is not likely to start until early 2019. In the meantime, MTNB needs to raise cash and it sounds like (based on the Q2 call) that they will be using the $30M ATM with Cantor to get it done. Given the lack of meaningful Catalysts over the next 3-6 months and the potential that $10-15 million in stock will be sold into the market likely means MTNB has some issues to work through before I see any recovery in the shares.

Bellerophon Therapeutics (BLPH) - BLPH reported financial results for the Q2. The Cash position is $15.0 million and they burn around $4 million per quarter. Top-line results from the Phase 3 INOvaction-1 trial with INOpulse in PAH are expected in 2018. Results of an interim analysis are expected early 2018 (slight delay from previous guidance of Q4-2017). The company is also planning to expand the label by moving into a Phase 2b study for PH-IPF later this year. Top-line results from a Phase 2 study in PH-COPD are anticipated here in August 2017. BLPH just entered into a small public offering in May 2017, raising $2.7 million net. There is an ATM active as well.

Inotek Pharmaceuticals (ITEK) - ITEK is still in a depressed state following the Phase 2 failure of trabodenoson in glaucoma back in July. A2/A3 adenosine receptors molecules have not fared well in glaucoma. Can-Fite's piclidenson failed a glaucoma study in 2016. ITEK is currently "exploring strategic alternatives". The company has $109 million in cash and a market capitalization of only $29 million. I'm not saying they are going to close up shop and return all cash to shareholders, but with the stock at $0.95 and Cash position at $2.95 (fully-diluted, before debt), this might be an interesting arb play. Debt (due 2021) is $49.2 million (-$1.31 per share). Net EV is $1.60 per share.

Neuralstem, Inc. (CUR) - Two weeks ago, I said CUR was heading under $1.50. It was $2.50 at the time. Today it's $1.05. Let's see if it holds above $1.00. I doubt it.

Arrowhead Pharmaceuticals (ARWR) - ARWR reported Q2 financial results. The Cash position here is solid at $75 million. The burn rate is only $5 million per quarter. ARWR is going through a major transition right now. They are revamping the pipeline around the Targeted RNA Molecule (TRM) platform. ARWR will host an Analyst Day on September 14, 2017. While I'm not expecting any big data presentations at that time, it will be an opportunity for management to reintroduce the company to the Street, specifically focusing on the mechanism and the target indications. I had previously rated the Catalyst score '1', but with this Analyst Day roughly one month away, I increased the score to '2'. The overall 5C score is now 14, slowly recovering from the wipeout of the pipeline back in November 2016.

EyeGate Pharmaceuticals (EYEG) - EYEG reported Q2 financial results. There's no change to the 5C Score at 13 points. This is an interesting story, a bit early, but worth delving into. Read my report for more details.

Northwest Biotherapeutics (NWBO) - NWBO is the epitome of a '1' in Cap. Structure. This past week, the company issued 5.0 million shares at $0.20 per share to an unaffiliated investor. Gross proceeds were $1.0 million. The investor also received 2.5 million 2-year Class D warrants exercisable at $0.23 per share and 2.5 million 2-year Class D warrants exercisable at $0.30 per share. A few days later, the company entered into an exchange with another investor holding 13.527 million Class B warrants exercisable from $1.00 to $2.00 per share where the investor was able to exercise at $0.20 per share, netting NWBO $2.7 million, even though the warrants were going to expire worthless on August 24th. To say, "Thanks," for throwing the company another $2.7 million, this investor received another 13.527 million five-year warrants exercisable at $0.27 per share. NWBO has a basic share count of 196.8 million and a fully-diluted number of 341.6 million. Ugh!

ARCA Biopharma, Inc. (ABIO) - Well, we know why ABIO took a big hit over the past few weeks. There was a major seller of the stock - the company itself! ABIO had been aggressively using its ATM ahead of the GENETIC-AF interim analysis. They sold 1.6 million shares in July. In fact, that used the entire ATM facility they just entered into with JonesTrading in January 2017 - $7.3 million.

Results of the interim analysis were good in a sense that Gencaro (bucindolol) seems to be working and may be superior to Toprol XL (metoprolol). I've said all along that I think the drug works and the trial will be successful. I agree with management's estimate for potential peak sales around $600 million. That being said, the results were clearly less than ideal. The DSMB told ABIO to finish the Phase 2b trial. Bulls were hoping that the adaptive design of the trial meant ABIO could move directly into Phase 3 under the same protocol. That's not the case now. The current Phase 2b trial will complete later this year and results are expected late Q1-2018. ABIO has been working on GENETIC-AF for almost four years now! They've enrolled 250 patients. The planned Phase 3 portion was 370 patients. I don't see how the Phase 3 trial starts until late 2018. It likely will cost $40 million and take 4-5 years. ABIO has a market value of $18 million. They need a miracle rescue. In the meantime, Gencaro looks like a good drug, but ABIO looks like a bad stock.

InVivo Therapeutics (NVIV) - One step forward, two steps back. That's been NVIV over the past year. The recent news to halt enrollment in INSPIRE is crushing. The company is currently working with the FDA to modify the protocol for enrollment, which will no doubt make it even more difficult to get patients into the program. It's been nearly three years and all NVIV can manage to report is 19 patients enrolled, 6 converted at six months, and 3 deaths. Those are not great odds. I think the company will announce an updated protocol in the near future, but unfortunately, as we saw earlier in the year, IRB approvals are going to take another few months to work through all 30+ sites. I don't think INSPIRE will fully enroll until 2018, and then we have another six months after the last patient before the company can report the final primary endpoint data. That's potentially a year away. In the meantime, NVIV's cash balance of $21.8 million at June 30th is enough for about 12 months of burn. They are also freely exchanging warrants for stock, for no damn reason other than someone convinced them it was the right thing to do. Expect an offering in the coming months, and it's going to be ugly. NVIV's 5C score is 13 points; the trend is negative.

Bellicum Pharmaceuticals (BLCM) - BLCM's 5C score drops 1 points to 19 after the Q2 results. Nothing really wrong with the story, but the cash position is now down below 2 years. It's still solid at $130 million, which equates to 7 quarters of burn. Things seem to be progressing, albeit slowly with the pipeline. Timelines on some of the trials have slipped but haven't completely fallen off a cliff. The company should have more data on BPX-501 at ASH later in the year and we finally got (some) confirmation on the pathway in the U.S. I think the company will have a very busy December and 2018, but things might be slow until December. The market does not like slow, so the stock took a big hit. At least the new CEO reset expectations. In that sense, I think the selling was overdone. BLCM is still a fundamentally good story and if you're a long-term investor, worth a look.

Antares Pharma (ATRS) - ATRS keeps chugging along! The 5C Score is among the highest in my model at '20' points. The business is not super sexy, but it's growing and they are projecting break-even operations in 2018. The biggest near-term catalyst is the Xyosted PDUFA on October 20, 2017. If approved, I think Xyosted (QST) has $200 million peak sales potential. Shares could easily double if that happens. In the meantime, the company scores '5' in both Cash and Cap., and with a major Catalyst two months away, ATRS is a name you should have on your radar.

Anavex Life Science (AVXL) - Not much to report on AVXL right now. The Phase 2b PK/PD study is ongoing. Not exactly sure when we will see data there. Other programs in Rett and PD are planned for the H2-2017, but not likely to read out until 2018. The Cash position is decent at $24.8 million, but that's because they have been selling stock to LPC. They raised $4 million in the Q2 through the CSPA with LPC, not a huge amount but given the lack of Catalysts having a big seller in the market has clearly hurt the shares.

Dimension Therapeutics (DMTX) - We are finally getting closer to seeing some data from DMTX with IMD candidate, DTX301 in OTC deficiency. The Phase 1/2 open-label study should report data late 2017. This program is unpartnered. IND's on DTX401 (GSDia) and DTX201 (Hemophilia A with Bayer) are expected early 2018 (slight timeline slip).

Corbus Pharmaceuticals (CRBP) - It's not surprising to see CRBP take a bit of a breather over the past few months. There's not much on the near-term horizon. That being said, they Q4 should be interesting. Phase 2 open label extension data with anabasum in systemic sclerosis is expected in November at ACR. Phase 2 top-line data from the skin-predominant dermatomyositis trial is expected in the Q4, and the Phase 3 systemic sclerosis trial is expected to commence in the Q4. We may even see additional trials start in cystic fibrosis later this year. In the meantime, the Cash position is sold and there is an ATM available to keep it that way.

AVEO Oncology (AVEO) - AVEO's 5C score is on the rise! In June, the company announced the TIVO-3 trial (tivozanib vs. sorafenib in rRCC) reached full enrollment at 322 patients. Top-line data are expected in the Q1-2018. Phase 1/2 TiNivo (tivozanib + nivolumab in RCC) dose selection work has been successfully completed and the trial moved into the Phase 2 portion. Finally, CHMP gave a positive opinion to tivozanib in advanced RCC. A final decision from the EMA is expected in late August 2017. If approved, AVEO earns a $4 million milestone from EUSA Pharma. AVEO's Cash position is decent at $30 million thanks raising $14 million in June ($9 via an ATM and $5 via a loan with Hercules). The company has some nice upcoming Catalysts and Credibility is improving.

ContraFect Corp (CFRX) - CFRX's score is up 2 points in the past few weeks. The company raised $36.9 million in net proceeds in July, albeit at somewhat ugly terms (32 million shares at $1.25 + 16 million warrants at $1.55) and it reaffirmed guidance that the Phase 2 CF-301 data will be available in the Q4-2018. Yes, that's still a long way away but the previous Catalyst score was only '1' and I usually reserve scores that low for companies with no clinical activity. So, I moved it to '2'. Still lacking, but considering they now have ~$56 million in cash and a market cap of $54 million, with good Charisma, CFRX might make an interesting recovery trade in the coming weeks.

Neos Therapeutics (NEOS) - NEOS reported decent Q2 results, with Adzenys XR-ODT Rx steadily on the rise. The drug has actually become the preferred alternative dosage treatment for ADHD, as more patients (35%) started on Adzenys XR-ODT than any other alternative dosage form product. Patients switching from another ADHD medication accounted for approximately 74% of all new Adzenys XR-ODT prescriptions, as reported by IMS, as of the week ended July 21, 2017. On June 19, 2017, the Company announced that FDA approved Cotempla XR-ODT, the first and only methylphenidate extended-release orally disintegrating tablet for the treatment of ADHD in patients 6 to 17 years old. Cotempla XR-ODT will be commercially available in a portable, child-resistant blister pack in the fall of 2017, just in time for "back to school" season. Finally, the PDUFA for NT-0201 (amphetamine XR liquid suspension product candidate) is September 15, 2017. If approved, NEOS anticipates a launch of this product in January 2018. If you're keeping score, that's two major catalysts in September, plus the company just raised $30 million in cash in June. Bio5C score here is a strong '18' points. Keep an eye on this one!

22nd Century Group (XXII) - XXII posted revenues of $3.9 million in the Q2, but that's not the story. The story is the FDA and new commissioner, Scott Gottlieb, MD, getting behind the company's VLN strategy. Based on the earnings release, it seems like the PMTA will go back under review in the coming months, with the MRTPA likely to be filed after PMT approval in 2018. Other business opportunities, including X-22 and zero-THC hemp are also real and represent nice upside to the story. And of course, BAT is still lingering with "shit or get off the pot" action date in October 2017. At this point, I'd love to see BAT come on board, but then again, if they do not then XXII is free to go out and negotiate with MO or one of the major Japanese players. XXII's 5C score is moving higher, just like the stock price. The Cash position is "ok for now" given the recent warrant exchange, Credibility is improving, and there are some nice Catalysts coming in the next 6-12 months.

Achillion Pharmaceuticals (ACHN) - ACHN is a name that scores very well in my model because they are loaded with Cash ($369 million) and have a rock solid Cap. structure with great ownership (J&J, Orbimed, RA Capital). That being said, I'm not in love with the pipeline. A new triple-combo for HCV is so 2012... and the recent interim Phase 2 data with ACH-4471 I find concerning. Yes, the company has a good conference call with lots of positive spin, but they only have data on 4 patients and only 1 of those 4 really achieved a strong response. Plus, another patient discontinued because he, "Just didn't feel like participating". Yeah, ok. He probably went to enroll in Alexion's Phase 3 trial with ALXN-1210 vs. Soliris®! You get a 100% chance at getting a better drug with more convenient dosing. I think ACHN needs to speed up development of ACH-5228, the company's next-gen compound for PNH because they look to be pushing the dose limit with ACH-4471 based on the Phase 1 MAD study and right now the efficacy looks inferior to what's already approved.

Pieris Pharmaceuticals (PIRS) - PIRS went into the Q2 report as the top-scoring Bio5C name and it will likely stay that way after all reports are updated. The Cash position is solid at $99 million and another $12.5 million from AZN is expected later this quarter when the first patient is dosed in the Phase 2 PRS-060 trial. The IND on PRS-343 has been accepted and that Phase 1 trial should start later this year. All other programs are on track. It's been a few months since the company signed up a major international pharmaceutical company. There aren't that many left not working with PIRS! It's only a matter of time.

RedHill BioPharma (RDHL) - RDHL provided its "Semi-Annual R&D" update to the Street earlier this week. There is plenty going on at RDHL, including expected data read-outs on Bekinda in IBS-D in September, a Type-B meeting update from the acute gastroenteritis study in October, starting the confirmatory Phase 3 trial with Taclicia later this year, continuing the RHB-104 MAP-US study, expanding RHB-104 into Phase 3 nontuberculous mycobacteria (NTM) infections, re-filing the NDA for Rizaport, and keeping the two commercial products, EnteraGam and Donnatal, on track. I think RDHL is incredibly under-valued.

Sangamo Therapeutics (SGMO) - Guess who just moved into the No. 2 spot on the 5C rankings! SGMO's business is going well. The Pfizer transaction in May was the catalyst the company needed to grab investors attention and raise additional cash to keep the pipeline moving forward. I'm a big fan of this name. Now the cut-off for Bio5C coverage is $500 million, and SGMO is $662 million, but I'm going to break the rules because I really want to keep following this story.

Cidara Therapeutics (CDTX) - CDTX continues to score well in my model thanks to the strong Cash position, stellar institutional support, and "really cool" platform. The biggest near-term catalyst is the Phase 2 STRIVE data with CD101 in the Q4. Read my report for more info on this event.

Opiant Pharmaceuticals (OPNT) - I repeat what I said last week in my newsletter: I really wish the company would have kept Narcan® royalties instead of selling them to SWK, but at least the product is doing well. The company announced a $3.75 million milestone payment from SWK (via Adapt Pharma) this week because Narcan sales eclipsed $25 million in the first half of the year. Wow, that blew away expectations! I was not expecting that until 2018. Opioid addiction is now a "National Crisis" and Narcan is a key product. Again, I just wish Opiant participated more in the upside.

Viking Therapeutics (VKTX) - VKTX is chugging along, slowly. The NASH data in June were excellent. If only management could keep timelines with the currently ongoing Phase 2 clinical trial in patients with elevated LDL-C and NASH. Data seems to be pushed back every time the company provides an update. They amended the protocol to "widen" the enrollment criteria, which is a concern, but it was obviously too strict earlier in the year because enrollment has been painfully slow. In the meantime, VK5211 data in patients with hip fracture the Q4 is the biggest near-term catalyst. I'm optimistic here but losing patience. VKTX scores a nice '15' points. More Cash and a better Cap. structure would be nice.

Titan Pharmaceuticals (TTNP) - TTNP saw a 93% increase in Probuphine revenues in the Q2; unfortunately, that was to only $77,000. Braeburn, who owns 45% of Titan, is expanding its distribution and marketing efforts, with a specific focus on payors and reimbursement, but I'm not sure this will really help much; Probuphine looks like a dud. TTNP remains committed to filing the MAA in the Q4 (TTNP owns full rights in the EU), so maybe we will see a deal shortly thereafter. The future of the company is ProNeura for Parkinson's (with ropinirole) and hypothyroidism (with T3). The IND for ProRop (that's what I'm calling it... so get on board) was resubmitted in July 2017. Hopefully, the FDA approves and the company can get into Phase 1 Pk/tolerability studies in the coming months. I really like the ProRop opportunity. It makes sense (as much as buprenorphine) but would likely not have a REMS or the DEA controlled substance issue that seems to be holding back Probuphine. Still have to get neurologists/MDD's to implant the device, though. As for ProT3, the company is doing in vivo preclinical work and will make an IND "go/no-go" decision shortly. I think they would like to see a partnership here before moving into Phase 1. Cash is a concern, but TTNP secured $7 million from Horizon Tech Finance in July 2017, so the runway is well into 2018. It's just a small absolute number, which makes aggressively moving the pipeline forward a challenge.

Aurinia Pharmaceuticals (AUPH) - AUPH is a top Bio5C idea. Yes, the Phase 3 AURORA trial just got underway in May and is not likely to report data until late 2018, but with '5' scores in Cash, Cap., and Charisma, this is a name worth holding while we wait. Fundamentally, it's hard to find a small-cap biopharma company better positioned than AUPH. Read my report and tell me if you agree!

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All the Best,

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At publish, I am long BLCM, CFRX, and AUPH. I have a business relationship with RDHL.
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