Sunday, November 29, 2015

Cleveland BioLab, ($CBLI) May go Nuclear on Entolimod EUA approval



Catalyst:
Reverse split, low float, emerging biotech with a Russian billionaire strategic investor with a near term pending  FDA Emergency Use Authorization (EUA) approval for Entolimod in support of use as a medical radiation countermeasure.

 
A minimal efficacious dose of CBLB502 was determined and doses above the minimal efficacious dose formed a plateau at approximately 75% survival, compared to 27.5% survival in the placebo treated group. These results  demonstrated with a high degree of statistical significance (p < 0.0001 for the trend up to the 40 ug/kg dose and p = 0.0021 for the trend up to the 10 ug/kg dose) that a single administration of CBLB502 given 25 hours after TBI led to a nearly three-fold increase in overall survival in the subject animals 

Based on these stellar results, in September 2014, the FDA "greenlighted" the Pre-EUA Entolimod submission:
 Yakov Kogan, Ph.D, MBA, Chief Executive Officer of Cleveland BioLabs, stated, "The outcome of our FDA meeting is very positive and we are pleased with the agreements we have reached with the agency. Our achievement of animal-to-human dose conversion and the FDA's acknowledgement of the conceptual soundness of our dose-conversion methods are significant milestones in Entolimod's development under the FDA's Animal Rule."

6/15/15 -The Company filed a Pre-EAU dossier for Entolimod which would be indicated for reducing the risk of death following exposure to potentially lethal irradiation occurring as the result of a nuclear disaster. There are currently no approved available alternatives and once pre-EAU status is achieved, Entolimod may be purchased by the US government  and possibly foreign nations for  stockpiling.   Radiation countermeasure is a $200M US and global market. Project Bioshield established the Strategic National Stockpile (SNS), and procurement contracts to date have totaled $3.3B, with mean awards for anthrax, smallpox etc of $301M each. The Company recently responded to FDA questions on its pre-EAU submission and expects the review will continue into early 2016.

Yakov Kogan, PhD, MBA, Chief Executive Officer, stated, "We are very pleased to have achieved this significant milestone. We believe that Entolimod efficacy and operational feasibility are best in class and that our pre-EUA submission is compelling and aligned with our previous FDA discussions. Our top priority will be to work with the FDA to facilitate their review of our application. There is no Prescription Drug User Fee Act (PDUFA) goal associated with review of a pre-EUA. However, we estimate a 6- to 9-month period for evaluation of our application, depending on the extent of the FDA's comments and questions. We have submitted the dossier electronically with the intent of facilitating the review process. We believe that a positive review of our submission may serve as the basis for the future commercialization of Entolimod."


Capital structure:-9/30/15
10.7M O/S shares ( 13.3M fully diluted)
2.2M warrants,  ( $13.95 exercise price)
3.2M Float
$43M market cap
$22.6M cash or $2.11 cash per/sh
$13.2M working capital
 0 LTD



**6/25/15-Strategic Investor, David Davidovich, Russion billionaire, buys 6.5M shares at $3.87, (35% premium).  The stock reacted strongly this day trading from $2.75 to $7.24 on massive volume of 21.8M shares.  Mr. Davidovich stated, "I believe in the strong potential of CBLI's products and its team and hope that my investment will provide the company with the necessary support to fully realize its goals."
 
Conclusion:  
 As traders actually start researching this very near term catalyst situation,especially as it pertains to the current world terror environment, they will see that Entolimod has a very high probability of obtaining EUA approval for radiation exposure from a nuclear attack. After all, the DoD has already granted  CBLI $15M in contracts and the FDA "greenlighted" the EUA  filing based on Entolimod meeting its primary endpoint and reporting strong, 3 fold survival results (p=.0001). Traders will also see that CBLI is a reverse splitter, has a  very clean balance sheet and also has a Russian billionaire that controls a majority of the float. Once EUA approval is secured, speculation (50M doses @ $20 etc) will abound as to what the actual contract awards will be. An eventual USA stockpiling award of $100M-$200M (2-4x+ mkt cap) will not be surprising to me. Other ex USA countries may follow suit shortly thereafter.

Technically, the stock has strong support in the $3.50 area and on 11/27 the price peaked above the 50EMA as the MACD bottomed.  Looking ahead, a break above $4.50, 200 EMA resistance, could signal that the run has started, a move above $5.20 on volume could bring the 7/25/15 spike high of $7.24 into play. Above that level anything is possible as witnessed by the recent spectacular gains in KBIO.

Disclosure: I am long CBLI. I may Buy, Sell or Hold this security at my sole discretion. I wrote this article myself,  this is NOT investment advice, it expresses my own opinions and is informational ONLY. I am not responsible for any errors or omissions contained herein. Do your own due diligence before making any investment. I am not receiving compensation for it. I have no business relationship with Cleveland Biolabs, Inc. SEE FULL DISCLOSURE BELOW
 

Thursday, October 17, 2013

Advaxis (ADXS): Uplisting Should Expand Valuation by 300%

Yesterday Advaxis (ADXS), a next generation immunotherapy biotech company, announced the pricing of its public offering of 5.7m shares at an offering price of $4.00, with estimated proceeds of $23m.  The shares are being uplisted and will start trading today on the NASDAQ.  Aegis Capital was the sole acting book-running manager.  Coincidentally, Aegis also ran the book for Cancer Genetics (CGIX), which uplisted on August 14th and it went on a spectacular run from $9 to nearly $23. The completed uplisting to the NASDAQ is a major catalyst and I expect the stock to respond in a big way over the short term.

Another potential big near term catalyst is that Advaxis will be presenting three abstracts at the Society for Immunotherapy of Cancer November 8-10th:
  
The abstract titled “Listeria monocytogenes (Lm)-LLO immunotherapies reduce the immunosuppressive activity of myeloid-derived suppressor cells and regulatory T cells in the tumor microenvironment” has been selected for oral presentation during the session, “Tumor Microenvironment and Innate Cells Recognition" on November 8, 2013 from 9:40 AM to 12:00 PM. Anu Wallecha, Ph.D., Director of Research and Development at Advaxis, will report on the localized effects of Lm-LLO immunotherapies on the tumor microenvironment in preclinical studies using transplantable mouse models.

The abstract titled “ADXS11-001 immunotherapy targeting HPV-E7: Updated survival and safety data from a Phase 2 study in Indian women with recurrent/refractory cervical cancer” has been selected for poster presentation during the Vaccine session. Robert Petit, Ph.D., Chief Scientific Officer of Advaxis, will present final 18-month survival and updated safety data from the ongoing trial.

The abstract titled “Biomarker identification in serum samples from patients with recurrent cervical cancer treated with ADXS11-001 immunotherapy” has been selected for poster presentation during the session “Biomarkers and Immunoscoring”. Poonam Molli, Ph.D., Senior Scientist at Advaxis, will report on the correlation of changes in cytokine and chemokine levels pre- and post-dosing with ADXS11-001 from the Phase 2 study in Indian women with recurrent/refractory cervical cancer.
     
“The three presentations of Advaxis data at SITC reflect our growing understanding of the unique attributes of the Advaxis platform technology for immunotherapies. Dr. Wallecha’s presentation will highlight the ability of Lm-LLO immunotherapy to counteract immune suppressor cells that enable persistence of the tumor. We will report final 18-month survival and final tumor response data from our 110 patient Phase 2 study in India in women with recurrent cervical cancer. Dr. Molli’s presentation will illustrate the remarkable immune stimulation that occurs in patients after treatment with ADXS11-001. Together, these data paint a picture of an immunotherapy that has a strong positive impact on the immune system while at the same time counteracting immune suppression in the tumor microenvironment that can lead to apparent prolonged survival and objective tumor responses from a single immunotherapeutic agent,” commented Dr. Petit.

Slide2


Advaxis has all the ingredients for a nice short term momentum run: reverse split, uplisting, tiny market cap and float, plenty of cash to fund ADXS-HPV phase 3 trials and key near term clinical data presentations. I anticipate that ADXS has near term appreciation potential back to its recent September highs of near $11.

Disclosure: I am long ADXS. I wrote this article myself,  this is NOT investment advice, it expresses my own opinions. I am not receiving compensation for it. I have no business relationship with Advaxis, Inc. SEE FULL DISCLOSURE BELOW

Tuesday, September 3, 2013

Oculus Innovative Sciences (OCLS): 3 Near Term Catalysts That Could Provide 200% Upside

Catalyst #1 

Ruthigen IPO

2013 has been an extremely hot year for biotech IPOs. The average biotech IPO has priced 4% above the S-1 price range and many IPOs are trading at nearly twice their offering price.  Most traders are unaware that the small biotech firm, Oculus Innovative Sciences (OCLS) is planning to spin off its wholly owned subsidiary Ruthigen. The  S-1A was filed on August 8, 2013 and although the exact timing is still unknown, the Ruthigen IPO maybe coming in short order. Ruthigen is focusing on the development of RUT58-60, a drug candidate intended for the prevention of infection in trauma and surgical procedures. RUT58-60 is a new unique chemical formulation of Oculus's Microcyn that contains twice the concentration of hypochlorous acid, along with magnesium and no sodium hypochlorite.  RUT58-60 is designed to prevent and treat infections, including  MRSA and C diff,  RUT58-60's addressable market includes 46 million surgical and trauma procedures performed in U.S. hospitals and more than 200 million procedures globally.  Tetraphase (TTPH), which is developing antibiotics to treat multi-drug bacterial infections,  maybe the closest comparable recent IPO to Ruthigen. Tetraphase's IPO priced at $7 and currently trades at approximately $8.50/$175m market cap. If we assume that Oculus will retain a 50% ownership and that Ruthigen will be valued at between $50m-100m, it is possible that this spinoff alone could add over $3-$6 to the Oculus share price. An additional benefit to Oculus as a result from the Ruthigen IPO is $8 million of clinically triggered milestone payments.

Catalyst #2

501(k) Clearance

Oculus submitted its 510(k) application for their uniquely formulated Microcyn Technology-based hydrogel for scar management sometime between May 14th and June 14th, 2013 and is anticipating FDA clearance as early as mid September.

From the March 14th press release: "The company is encouraged by the initial clinical trial results from the management of scars trial and expects to complete data analysis and submit the 510k application to the FDA for review within the next 60 to 90 days. In accordance with FDA regulations, the company expects to release the data immediately after completion of FDA's review. The FDA's standard review time from submission to clearance is ninety days, although industry averages suggest this process can take up to six months. According to a LifeSci Advisors 2012 report, there are currently no FDA-approved pharmaceuticals indicated to reduce scar severity and several available procedure-based and over-the-counter treatments are either invasive, costly or have been reported with limited clinical efficacy or high recurrence rates," said Jim Schutz, CEO of Oculus. "We believe the rapid patient enrollment is indicative of the need for effective and safe management of scars. We remain optimistic about achieving our intended results and upon FDA clearance, anticipate that our U.S. dermatology partner, AmDerma/Quinnova, will launch later in 2013." AmDerma/Quinnova has agreed to pay Oculus a milestone payment at the time of the FDA pre-market notification clearance that will reimburse Oculus for the cost of this trial."


Catalyst #3 

Guidance
On the August 9th earnings conference call,  Oculus provided the following guidance for their next quarter "we expect total revenue to be higher than 3.6 million, cash operating expenses to be in the $3.8 million range and EBITDA to be in the range of 1.2 million negative. The Ruthigen expenses for this quarter are expected to be about 1.3 million, which includes salaries, consultant services and preclinical studies IND application for the primary drug candidate for the prevention of infection in abdominal surgery." So its quite possible that for this next quarter ended September 30, after backing out the Ruthigen IPO expenses, Oculus will be EBITDA positive.


 Conclusion:
"This is a year of transition for Oculus, setting the stage to create long-term value and stronger revenue growth with several exciting near-term opportunities," said Jim Schutz, Oculus CEO. "First, our drug subsidiary, Ruthigen, continues to progress towards a planned IPO, which we believe will add significant short-term value in the form of cash and potential for increased stock price. Second, Vetericyn's animal healthcare sales are picking back up after a slow spring with a strong start to the summer. Third, we see continued strong unit growth in Latin America that has averaged 50% plus over the last three quarters as compared to the prior years' quarters. Fourth, we anticipate an FDA clearance for our new scar hydrogel and subsequent launch before the end of this fiscal year. And finally, international sales, especially in Europe, should show solid growth before our fiscal year end as a result of additional product approvals and added partners. We believe the stage is set for a return to positive year-over-year revenue growth later this year and next."

At its recent price of $2.75, (off of its 52 wk high of $7) Oculus trades at a market cap of just $18.2m, with $5.4m of that in cash. Any one of the above 3 catalysts could put this tiny biotech with only a 5.5m float (1-7 reverse split 4/1/2013) stock in motion, but the combination of all 3 possibly coming together in the near term could provide for an explosive 200% upside move.




Disclosure: I am long OCLS. I wrote this article myself,  this is NOT investment advice, it expresses my own opinions. I am not receiving compensation for it. I have no business relationship with Oculus Innovative Sciences. SEE FULL DISCLOSURE BELOW


Sunday, August 4, 2013

Sunshine Heart: 10 Reasons Why This Game Changing Cardio Device Company Could Be Acquired for $50 share

#1 Biotech pick for the next 12-24 months.

#1) Huge Market Opportunity:  Sunshine Heart (SSH) is targeting the enormous New York Heart Association's (NYHA) Class III and ambulatory Class IV Congestive Heart Failure (CHF) market. This is a huge, unmet, untapped opportunity with approximately 1.5m patients in the US and another 3.7M patients in the EU. If the Company merely penetrates 10% of this market, the opportunity could reach over $5bln.

#2) C-Pulse The C-Pulse Heart Assist System is a game changing device that has three major distinct advantages over the current device based therapies offered to Class III CHF patients:

1) Zero contact with the patent's bloodstream.

2) Much less invasive implantation method.

3) Ability to temporarily disconnects the device.

The Company has already completed a twenty patient single arm feasibility study and presented six month data on fifteen of the twenty patients in November 2011. The data showed that  twelve of the fifteens patients saw a reduction in NYHA class, seven showed a one class reduction and two patients showed a two class reduction in class. Astoundingly, two of the patients improved so much that they were able to permanently disconnect from the C-Pulse device. Recently the Company announced that "two additional patients have been identified as potential candidates to be weaned from the device based on significant symptomatic improvement".
 
On November 20, 2102, Sunshine Heart received unconditional FDA approval for the C-Pulse(R) system's U.S. pivotal trial. The Company estimates enrollment for the event-driven pivotal trial will take approximately 2.5 years. The primary endpoint of the trial will be reduction in worsening heart failure events leading to hospitalization, advanced heart failure therapies and heart failure related mortality. A one year safety follow-up is expected. The lead investigator for the trial will be Dr. William T. Abraham, Director of the Division of Cardiovascular Medicine at The Ohio State University Medical Center.

On May 9, 2103, Sunshine Heart announced the implant of the first patient in the European OPTIONS HF C-Pulse System Multi center Study. The post market study is intended to treat patients with moderate to severe heart failure. "We are extremely pleased to announce the implant of the first patient at the German Heart Institute - Berlin in our European multi center post market study," said Dave Rosa, Sunshine Heart's Chief Executive Officer. "In particular, we are encouraged to see early success of our next generation cuff in its ability to improve the ease of implant and allow for better predictability of proper securement. We anticipate the activation of additional sites in the coming months and look forward to updating the market with our progress as enrollment proceeds."

#3) Fully Implantable C-Pulse  A fully implantable device, using existing transcutaneous energy transfer (TET) has already been proven in animal studies. The Company has recently executed an agreement with Cirtec MedicalSystems, a leader in advanced engineering and manufacturing capabilities, specializing in minimally invasive surgical and delivery devices for development of a fully implantable C Pulse Pump. The Company is targeting the completion of a chronic animal trial in late 4Q13 for the pump and intends to provide more information as progress is made.

#4) Re-hospitalization Rates  In October 2012, the Affordable Care Acts Hospital Readmission Reduction Program was instituted and includes a penalty system to incentivize hospitals to ensure their heart failure related re-hospitalization rates meet a defined benchmark rate of less than 24.7% at 30 days. If hospitals exceed this benchmark, they risk repayment reimbursements as a penalty. In the Company's pilot study, at least 17 of the 20 patients had been hospitalized due to worsening heart failure in the year prior to receiving the C-Pulse implant. Post implant, the re-hospitalization rate was only 15%, at 12 months. In  addition, the average number of days stayed in the hospital was nine compared to nineteen for patients who received LVADS. As a note, the patients who received the C-Pulse device using the minimally invasive manner vs thoracotomy, only required a hospital stay of four days.
in October this year the Affordable Care Acts Hospital Readmission Reduction Program was instituted and includes a penalty system to incentivize hospitals to ensure their heart failure related rehospitalisation rates meet a defined benchmark rate of less than 24.7 percent at 30 days. If hospitals exceed this benchmark then they risk repayment of reimbursements as a penalty. - See more at: http://www.biospectrumasia.com/biospectrum/influencers/121257/c-pulse-heart-failure-bay/page/4#.UfO72W1Meb6

Read more at: http://www.biospectrumasia.com/biospectrum/influencers/121257/c-pulse-heart-failure-bay/page/4#.UfO72W1Meb6
in October this year the Affordable Care Acts Hospital Readmission Reduction Program was instituted and includes a penalty system to incentivize hospitals to ensure their heart failure related rehospitalisation rates meet a defined benchmark rate of less than 24.7 percent at 30 days. If hospitals exceed this benchmark then they risk repayment of reimbursements as a penalty - See more at: http://www.biospectrumasia.com/biospectrum/influencers/121257/c-pulse-heart-failure-bay/page/4#.UfO72W1Meb6

Read more at: http://www.biospectrumasia.com/biospectrum/influencers/121257/c-pulse-heart-failure-bay/page/4#.UfO72W1Meb6
in October this year the Affordable Care Acts Hospital Readmission Reduction Program was instituted and includes a penalty system to incentivize hospitals to ensure their heart failure related rehospitalisation rates meet a defined benchmark rate of less than 24.7 percent at 30 days. If hospitals exceed this benchmark then they risk repayment of reimbursements as a penalty - See more at: http://www.biospectrumasia.com/biospectrum/influencers/121257/c-pulse-heart-failure-bay/page/4#.UfO72W1Meb6

Read more at: http://www.biospectrumasia.com/biospectrum/influencers/121257/c-pulse-heart-failure-bay/page/4#.UfO72W1Meb6
Section 3025 of the Affordable Care Act (ACA) added section 1886(q) to the Social Security Act establishing the - See more at: http://www.policymed.com/2012/08/cms-begins-penalizing-hospitals-for-readmissions.html#sthash.dafEu5Gc.dpuf
Section 3025 of the Affordable Care Act (ACA) added section 1886(q) to the Social Security Act establishing the - See more at: http://www.policymed.com/2012/08/cms-begins-penalizing-hospitals-for-readmissions.html#sthash.jffpa7Q7.dpuf
Section 3025 of the Affordable Care Act (ACA) added section 1886(q) to the Social Security Act establishing the Hospital Readmissions Reduction Program, which requires the Centers for Medicare & Medicaid Services (CMS) to reduce payments to Inpatient Prospective Payment System (IPPS) hospitals with excess readmissions, effective for discharges beginning on October 1, 2012.  - See more at: http://www.policymed.com/2012/08/cms-begins-penalizing-hospitals-for-readmissions.html#sthash.jffpa7Q7.dpuf
Section 3025 of the Affordable Care Act (ACA) added section 1886(q) to the Social Security Act establishing the Hospital Readmissions Reduction Program, which requires the Centers for Medicare & Medicaid Services (CMS) to reduce payments to Inpatient Prospective Payment System (IPPS) hospitals with excess readmissions, effective for discharges beginning on October 1, 2012.   - See more at: http://www.policymed.com/2012/08/cms-begins-penalizing-hospitals-for-readmissions.html#sthash.jffpa7Q7.dpuf
Section 3025 of the Affordable Care Act (ACA) added section 1886(q) to the Social Security Act establishing the Hospital Readmissions Reduction Program, which requires the Centers for Medicare & Medicaid Services (CMS) to reduce payments to Inpatient Prospective Payment System (IPPS) hospitals with excess readmissions, effective for discharges beginning on October 1, 2012.   
CMS defined readmission as an admission to a subsection (d) hospital within 30 days of a discharge from the same or another subsection (d) hospital.   
“Almost one in five Medicare beneficiaries that leave a hospital end up being readmitted within 30 days,” said Janet Corrigan, PhD, MBA, president and CEO of NQF. “Those readmissions cost about $15 billion annually, and many have the potential to be prevented. These new measures help push us as a nation to address this serious problem.”  
- See more at: http://www.policymed.com/2012/08/cms-begins-penalizing-hospitals-for-readmissions.html#sthash.jffpa7Q7.dpuf
Section 3025 of the Affordable Care Act (ACA) added section 1886(q) to the Social Security Act establishing the Hospital Readmissions Reduction Program, which requires the Centers for Medicare & Medicaid Services (CMS) to reduce payments to Inpatient Prospective Payment System (IPPS) hospitals with excess readmissions, effective for discharges beginning on October 1, 2012.   
CMS defined readmission as an admission to a subsection (d) hospital within 30 days of a discharge from the same or another subsection (d) hospital.   
“Almost one in five Medicare beneficiaries that leave a hospital end up being readmitted within 30 days,” said Janet Corrigan, PhD, MBA, president and CEO of NQF. “Those readmissions cost about $15 billion annually, and many have the potential to be prevented. These new measures help push us as a nation to address this serious problem.”  
- See more at: http://www.policymed.com/2012/08/cms-begins-penalizing-hospitals-for-readmissions.html#sthash.jffpa7Q7.dpuf

Section 3025 of the Affordable Care Act (ACA) added section 1886(q) to the Social Security Act establishing the Hospital Readmissions Reduction Program, which requires the Centers for Medicare & Medicaid Services (CMS) to reduce payments to Inpatient Prospective Payment System (IPPS) hospitals with excess readmissions, effective for discharges beginning on October 1, 2012. - See more at: http://www.policymed.com/2012/08/cms-begins-penalizing-hospitals-for-readmissions.html#sthash.dafEu5Gc.dpuf

#5) Management: All proven winners whom have vast experience in grooming companies for a successful buyout.The management team is led by Mr. David Rosa, CEO.  Prior to joining Sunshine Heart, Mr. Rosa was Vice President of Global Marketing for Cardiac Surgery and Cardiology at St. Jude Medical, Inc. While at St. Jude, he directed the launch of twenty seven new products within the Company's cardiovascular division. 

William Peters, MD, serves as Medical Director and Chief Technical Officer invented the proprietary C-Pulse technology and served as Sunshine Heart’s initial CEO upon co-founding the Company in 1999. In addition to C-Pulse, Dr. Peters has developed a number of other successful cardiac technology innovations, including an endovascular cardiopulmonary bypass system for minimally invasive cardiac surgery, which was commercialized by Heartport Inc., a NASDAQ-listed company that later was acquired by Johnson & Johnson.

The Board of Directors is headed by Mr. John Erb who was appointed Chairman on September 13, 2012. "Mr. Erb currently serves as the Chairman of Vascular Solutions (NASDAQ:VASC), Chairman ofOsprey Medical (ASX:OSP), and current Chairman and CEO of U.S. based Cardia Access. He has been part of recent acquisitions such as SenoRx (C.R. Bard), CryoCath Technologies(Medtronic Inc.), CHF Solutions (Gambro) and IntraTherapeutics (Sulzer Medica). Mr. Erb has also served in Senior Management roles with Schneider Worldwide, a leader in the cardiovascular space prior to its acquisition by Boston Scientific".The other members have significant connections with major global medical device companies, including; Johnson & Johnson, Medtronic and Boston Scientific

#6) Unmet Need  Despite the current therapies (LVADs, Pacemakers, CRT-D and drug therapies) heart failure morbidity and mortality remain high. Five year mortality rates range from 15-50%, depending on the severity of the disease. There is a huge need for additional therapies, especially for patients with advanced heart failure. Current devices only work to slow the progression of the condition and either shock the heart or perform the work for the heart. The C-Pulse system employs extra-aortic counter pulsation technology which actually reduces the workload of the left ventricle and increases the blood flow to the heart thereby allowing the muscle to undergo a level of recovery.

#7) Potential Suitors Currently, the M&A activity in the biotech sector is at running at a fevered pace and the market is richly rewarding companies that engage in strategic acquisitions. Sunshine Heart is trading at an absurd valuation and would be an ideal fit for many players in the cardiac device space. The C-Pulse system has serious potential to become the standard of care in the massive and fast growing Class III and ambulatory Class IV CHF market. There are many potential suitors, among them; Thoratec, Heartware, St. Jude, Medtronics and Johnson and Johnson, all of which are most likely salivating over this opportunity right now.

#8) Strategic Investor  A Little known fact to most investors is that according to page 91, of the S-1 filed on August 8, 2102 the Company has a "strategic investor"
A strategic investor, which is not a current stockholder of our company, has indicated an interest in purchasing approximately $3 million of our common stock in this offering at the public offering price. However, because this indication of interest is not a binding agreement or commitment to purchase, the underwriters may determine to sell more, less or no shares in this offering to this investor, or this investor may determine to purchase more, less or no shares in this offering. The underwriters will receive the same discounts and commissions from any shares of our common stock purchased by this strategic investor as they will from any other shares of our common stock sold to the public in this offering. In connection with this investment, we intend to enter into an agreement with this investor pursuant to which it will have the right to designate a board observer, who would be entitled to attend all meetings of our board of directors, and all committees thereof, in each case subject to customary exclusions, as well as the right to review certain of our clinical and regulatory data. The investor would maintain these observation and inspection rights for two years following the date we receive approval from the FDA to sell our C-Pulse System in the United States so long as it beneficially owns at least 0% of the number of shares purchased in this offering.
#9) Poison Pill  On June 14, 2013, Sunshine Heart adopted a stockholder rights plan  and declared a dividend distribution of one right  for each outstanding share of Sunshine Heart. The Rights Plan is intended to protect the Company and its stockholders from efforts to obtain control of Sunshine Heart that its Board of Directors determines are not in the best interests of the Company and its stockholders, and to enable all stockholders to realize the long-term value of their investment in Sunshine Heart. The Rights Plan is not intended to interfere with any merger, tender or exchange offer or other business combination approved by the Board of Directors. Obviously, the fact that they implemented this Rights plan signifies that there are plenty of potential suitors sniffing around the Company.

#10) Market Cap  At the same stage of development, Heartware (HTWR) (current market cap of $1.5b, $49.2 Q1 revenues) was valued at $200m vs Sunshine Heart's current market cap of $93m. Sunshine Heart is targeting a much larger CHF market segment ($5 bln) than Heartware, at $7.50, SSH is trading at an unprecedented level in relation to its long term potential.  Many recent acquirers of developmental biotech firms have paid in excess of $1bln for assets with much less potential. What most investors don't realize is that Sunshine Heart only has 12.3mln shares outstanding, so while a takeover at $50 share might seem outlandish, it would still only value the company at approximately $600mln.

 Conclusion: In the near term, the excitement will start to build for Sunshine Heart's shares as additional patients are weaned off the C-Pulse system (i.e."cured"), new clinical trial sites are activated in the U.S., the completed feasibility study data is published in a major medical journal, clinical updates are given on the open label European study, progress is given on the development of the fully implantable version of the device and additional research houses initiate coverage. If the C-Pulse system were an investigational new drug, (based upon the early feasibility study, which results should only get better with device enhancements etc,)  the pundits would be hailing this as one of the biggest potential blockbuster drugs of all time. I believe the reason Sunshine Heart is currently trading at such an obscene low valuation is that investors simply think that for the time being, this is "dead money". They believe they will have to wait many years for the phase three trial results to report and therefore will have to wait for a corresponding time for a significant rise in share price. I think this is a huge miscalculation as I believe one of the big players in the field will step in (possibly causing a bidding war) well in advance of the phase three trial readout and make a takeover bid of at least $50 share/$600m. The Company wont be able to refuse it.

Disclosure: I am long SSH. I wrote this article myself,  this is NOT investment advice, it expresses my own opinions. I am not receiving compensation for it. I have no business relationship with Sunshine Heart.


Monday, July 8, 2013

Mast Therapeutics: MST-188, the next Orphan Drug to get Adopted.

Orphan drugs have been all the rage recently, Sarepta Therapeutics (SRPT) rocketed from $3.30 to $45 in just three months after presenting results for Eteplirsen, its novel orphan drug for Duchennes Muscular Dystrophy. Aegerion Pharmaceuticals (AEGR) has nearly tripled since January after the  FDA approved its orphan drug, JUXTAPID, for Homoozygous Familial Hypercholesterolemia (HoFH), a rare, fatal disease. Enter Mast Therapeutics (MSTX), (formerly Adventrx Pharmaceuticals) which now has the most advanced new molecule, MST-188, in a phase three clinical trial, for the treatment of the highly unmet orphan indication, sickle cell disease (SCD) vaso-occlusive crisis. Mast Therapeutics also has plans to develop MST-188 for complications of arterial disease (ALI).

Sickle Cell Disease

Sickle cell disease, SCD is a group of inherited red blood cell disorders. Healthy red blood cells are round, and they move through small blood vessels to carry oxygen to all parts of the body. In someone who has SCD, the red blood cells become hard and sticky and look like a C-shaped farm tool called a “sickle”. The sickle cells die early, which causes a constant shortage of red blood cells. Also, when they travel through small blood vessels, they get stuck and clog the blood flow. This can cause pain and other serious problems such infection, acute chest syndrome and stroke. Sickle cell disease (SCD) affects millions of people throughout the world and is particularly common among those whose ancestors came from sub-Saharan Africa; Spanish-speaking regions in the Western Hemisphere (South America, the Caribbean, and Central America); Saudi Arabia; India; and Mediterranean countries such as Turkey, Greece, and Italy.
It is estimated that:
  • SCD affects 90,000 to 100,000 Americans.
  • SCD occurs among about 1 out of every 500 Black or African-American births.
  • SCD occurs among about 1 out of every 36,000 Hispanic-American births.
  • SCT occurs among about 1 in 12 Blacks or African Americans.
People with SCD have less access to comprehensive team care than people with genetic disorders such as hemophilia and cystic fibrosis. More than $1.0 billion is spent annually in the U.S. to treat patients with SCD  It is estimated that, in the U.S., sickle cell disease results in over 95,000 hospitalizations and, in addition, approximately 69,000 emergency department treat-and-release encounters each year. When a patient with sickle cell disease makes an institutional visit, vaso-occlusive crisis is the primary diagnosis in approximately 77% of hospital admissions and 64% of emergency room treat-and-release encounters.


Big Pharma Interest in SCD

 In October 2011, Pfizer signed a $340m development deal with GlycoMimetics obtaining exclusive worldwide rights to its investigational compound GMI-1070. The compound is a pan-selectin antagonist currently in phase 2 development for the treatment of vaso-occlusive crisis associated with sickle cell disease. More recently in November 2012, Novartis signed an option deal with Selexy for its phase 2  novel drug for SCD, SelG1, which is an anti-P selecting antibody.  The deal is valued at up to $665m in upfront, acquisition and milestone payments.


 FDA Orphan Drug Status
 
The Orphan Drug Act (ODA) provides for granting special status to a product to treat a rare disease or condition upon request of a sponsor. The combination of the product to treat the rare disease or condition must meet certain criteria. This status is referred to as orphan designation. Orphan designation qualifies the sponsor of the product for tax credits and seven years of market exclusivity. A marketing application for a prescription drug product that has been designated as a drug for a rare disease or condition is not subject to a prescription drug user fee unless the application includes an indication for other than a rare disease or condition.  MST-118  has received orphan drug designation for SCD in the U.S. and the EU

MST-118-SCD

MST-188 (formerly ANX-188) is a purified form of a nonionic, triblock copolymer (poloxamer 188). It is an investigational agent that binds to hydrophobic surfaces on damaged cells and improves membrane hydration and lowers adhesion and viscosity, particularly under low shear conditions. MST-188 has the potential to reduce ischemic tissue injury and end-organ damage by restoring microvascular function, which is compromised in a wide range of serious and life-threatening diseases and conditions. Mast is developing MST-188 as a treatment for complications arising from SCD.

After completing the acquisition of Synthrx, Inc. in April 2011, Mast Therapeutics (formerly Adventrx Pharaceuticals) acquired the worldwide rights to ANX-188, (formerly PP-188) a potential treatment for patients in sickle cell crisis, which is a severe and painful condition often with life-threatening complications. An earlier patient phase 3 study, which was completed by Glaxo SmithKline, (the prior sponsor) was published in JAMA, (n=249). This trial narrowly missed its primary endpoint, duration of crisis,  (p=.07) in patients of all ages but in the pediatric (<16 yrs old) sub-population, (n=73) the drug was associated with reducing the duration of painful episodes by 22 hours (p=.01).  Using a Kaplan-Meier post-hoc analysis of the proportion of patients <16 years old remaining in crisis, yielded a highly statistically significant p=.007 and showed a clear separation in the time curves.  MST-188 appears to have a favorable safety profile with no differences between the 2 treatment groups in the overall incidence of adverse events and no evidence of increased risk of bleeding during the treatment period.

Based upon the much higher response rates observed in pediatric patients in the prior trial, on January 30, 2013,  Mast Therapeutics initiated a  forty center, randomized, double-blind, two-arm, placebo controlled, pivotal phase 3 clinical study, focusing only on pediatric patients ages 8-17 (n=388). The primary endpoint of the trial is the reduction of  the duration of vaso-occlusive crisis in SCD patients. Using a two-sided alpha of .05, the study is 90% powered to detect a 16 hour difference between treatment arms. The secondary endpoints  will compare re-hospitalization rate (for vaso-occlusive crisis) within 14 days of initial discharge from the hospital and the occurrence of acute chest syndrome within 120 hours of randomization. This phase 3 trial will take approximately 24 months to complete and assuming a successful outcome,  a potential product launch in 2015.

As part of its discussions with the FDA, Mast Therapeutics committed to conduct a parallel QTC/QTc study of MST-188 to obtain additional safety data. This single center, double blind,randomized study initiated dosing on February 11, 2013. Sixty patients were to be enrolled and  the study will assess whether MST-188 has an effect on QT prolongation. The study was scheduled to complete dosing in the first quarter of 2013 with results expected to be announced in the middle of the year.


MST-Acute Limb Ischemia (ALI)

On February, 28, 2013 Mast Therapeutics announced its plans to develop MST-188 in the complications of arterial disease, initially as an adjunct to thrombolytics in acute limb ischemia (ALI), a complication of peripheral arterial disease. ALI is a progressive circulatory problem in which obstructed arteries reduce the blood flow to tissues peripheral arterial disease affects an estimated 8 to 12 million people in the United States and there is significant morbidity and mortality.

R. Martin Emanuele, Senior Vice President, Development, said: "Data from experimental models demonstrate the potential for MST-188-188, when used alone or in combination with thrombolytics, to improve outcomes for patients with thrombotic arterial disease, whether manifesting as acute limb ischemia, stroke or some other variant.  Studies in animals and humans suggest that ANX-188 can shorten time-to-thrombolysis, improve blood flow, delay re-occlusion and reduce reperfusion injury, each of which may improve the effectiveness of existing thrombolytic agents."   Santosh Vetticaden, Chief Medical Officer, said: "We plan to evaluate the potential of  MST-188 in arterial disease initially by evaluating it in acute limb ischemia.  Near-term goals include seeking orphan drug designation for ANX-188 in ALI, meeting with FDA to discuss our development plan in ALI and, assuming FDA agrees with the plan, initiating a phase 2, clinical proof-of-concept study in late 2013 or early 2014.  Currently, we estimate that third-party costs to conduct this study will be approximately $2 million and that it will take approximately 15 to 18 months to enroll.  Ultimately, we plan to leverage the data in ALI to find a partner to develop  MST-188 in larger indications within arterial disease, such as stroke." 

On March 25, 2013, following a positive opinion adopted by the Committee for Orphan Medicinal Products (COMP), the European Commission designated MST-188 as an orphan medicinal product.
Brian M. Culley, Chief Executive Officer, said: "Now that we actively are recruiting patients in EPIC, our pivotal phase 3 study of MST-188 in sickle cell disease, we intend to pursue strategic alliances more aggressively.  We believe orphan designation and the expectation of 10 years of marketing exclusivity in the EU will enhance partnering interest in Europe.  In addition to enabling development in multiple countries and enhancing the overall commercial opportunity for MST-188, partnerships will help fund its development within the U.S." Mr. Culley continued: "Our recently announced plans to investigate MST-188 in acute limb ischemia, a complication of peripheral arterial disease, also may bolster our partnering efforts.  Indeed, we already have been approached by at least one pharmaceutical company that wished to discuss our near- and long-term plans in arterial disease, which we announced just three weeks ago."


Catalysts:

Key objectives for the remainder of 2013 include:
  • Announcing results from the thorough QT/QTc study of MST-188, expected mid-year;
  • Soliciting FDA input on our planned phase 2 study in acute limb ischemia, expected in the third quarter;
  • Announcing results of nonclinical studies evaluating the physiologic significance of TEG results observed in prior nonclinical studies funded by the Defense Advanced Research Projects Agency (DARPA) Surviving Blood Loss (SBL) program, expected in the second half of the year;
  • Initiating a microvascular blood flow sub-study in EPIC, expected in the fourth quarter;
  • Initiating a phase 2 clinical proof-of-concept study of MST-188 in acute limb ischemia, expected in late 2013/early 2014;
  • Obtaining orphan drug designation for MST-188 for acute limb ischemia;
  • Submitting application(s) to request funding from the U.S. government to conduct a phase 2 clinical proof-of-concept study with MST-188 for resuscitation of shock following major trauma; and
  • Filling patent applications claiming key aspects of our proprietary manufacturing process.
On March 28, 2013, Mast Therapeutics engaged ESC Advisors to identify partnering opportunities for MST-188. Brian M. Culley, Chief Executive Officer, said: "Given the high unmet need and limited treatment options, sickle cell disease is experiencing significant levels of interest from strategic partners. MST-188 is now the only new molecular entity in phase 3 development in sickle cell disease.   Based on its stage of development, the absence of competitive, novel and late-stage products, its designation as an orphan drug in the U.S. and Europe and its potential utility in additional indications, we believe there will be substantial interest in MST-188 from potential partners, both in the U.S. and globally, and we intend to pursue strategic alliances aggressively. ESC's experience in transactions involving orphan product candidates will complement our internal capabilities and expand the scope of our current and future partnering discussions."

Other Considerations:

After the recent offering, Mast Therapeutics has a fully diluted market cap of approximately $60m. As of 3/31/13, the 10Q shows cash and cash equivalents of $32m. With the addition of the $22.9m from the 6/14 offering, cash now totals approximately $55m with zero debt. The Company is trading near its cash level, yet it has a very attractive phase 3 asset in MST-118, in the orphan indication of SCD, which due to trial redesign, has a VERY high probability of success. Mast Therapeutics is also developing the therapy in what could ultimately be a very large cardio indication.

Mast Therapeutics reminds me alot of Acadia Pharmaceuticals (ACAD), which had a similar situation and setup. After learning from mistakes made in the design of their failed first phase 3 trial for their parkinsons drug, pimavanserin, Acadia analyzed the data, redesigned a new phase 3 trial and subsequently set up a a new phase 3 trial for success.  After reporting positive phase 3 results on November 27, 2012, the stock exploded from $2.30 to over $6.50, and now trades around $18.

As outlined above, Mast Therapeutics has two shorter term catalysts that could move the stock; announcement  of the results from the thorough QT/QTc study of MST-188, expected mid-year and obtainment of orphan drug designation for MST-188 for acute limb ischemia. Longer term, once the stock gets on "catalyst traders" radars, it should experience the typical strong "biotech runup" into the SCD phase 3 clinical trial results.

Technically, on a short term basis, the stock is severely oversold and is digesting the recent stock offering in the 45c area. There is a gap to be filled at 61c, with major resistance at 75c -81c. On a longer term basis, a move above that major resistance level opens the way to the $1.50-$2.75 area.

Conclusion:

Over the last few years, Mast Therapeutics has completely transformed itself, appointing a new management team, board of directors and even changed its corporate name. The Company is dramatically different now with a laser focus on the development of its lead candidate MST-118.

Reduction of a sickle cell patient's duration of painful episodes is a highly unmet medical need, with with only one approved treatment option, hydroxyurea. If MST-188 is successful in the current phase 3 clinical trial, I believe it could become the new standard of care in the treatment for this very painful disorder. Annual U.S. incidence of SCD crisis produces 100,000 hospitalizations, if  just 35,000 of those patients undergo MST-188 therapy, annual peak sales could conservatively approach $300m. Assuming a 2015 launch and conducting a conservative NPV analysis yields a current price target in the $2.00-$2.50 range.


Disclosure: I am long MSTX. I wrote this article myself,  this is NOT investment advice, it expresses my own opinions. I am not receiving compensation for it. I have no business relationship with Mast Therapeutics.