LOS ANGELES, CA
A significant bunch of biotech deals were being discussed and closed at the recent biotech conferences in San Francisco.
Investors of all sizes were wagging their tongues about a number of upcoming developments and new opportunities in the market (bullish) following a busy week of presentations and simultaneous financial gatherings in the city by the bay. It looks to us like 2013 may be marked as a year of heavy biotech IPOs.
One particular privately held firm that may be looking to go public, caught our attention with their proposed once-a-week injectable basal insulin that is currently in preclinical development. AntriaBio's product looked highly intriguing as the formulation has been designed to release insulin slowly and uniformly over a period of seven days without an adverse initial burst of insulin. The subcutaneous injection would target a huge market of patients with type 1 and type 2 diabetes for the control of hyperglycemia. No official word yet on whether the firm is going to become publicly traded, but retail biotech investors seemed intrigued by the innovation which stemmed from nearby Menlo Park. Driving some of the excitement was the fact that the product has a history of development and venture capital with support from a top-notch management team behind it.
On the public side, we heard several rumors involving some of the stocks we've covered in this space, starting with two Israeli firms -- Pluristem Therapeutics Inc. (NASDAQ: PSTI) and Medgenics, Inc. We remain very bullish on both firms given important upcoming catalysts that some retail investors appear to have lost track of.
In addition to an almost certain Orphan Drug Designation that could be announced at any moment, Pluristem is also due to receive a very large multi-million dollar milestone payment tied to their progress of the development of PLX cells for the treatment of Pulmonary Hypertension from United Therapeutics.
Interestingly, there was also loud chatter about possible courtship activity involving Pluristem and a big pharma. Some mentioned both United Therapeutics (again) and Lonza as possible deal partners. Either would provide skeptics with further validation of Pluristem's various platforms which address several growing markets.
It's no secret that Lonza ($3.14B market cap) provides emerging and established innovators of novel therapeutics with expertise and advanced technologies while United Therapeutics ($2.65B market cap) already knows the firm, having signed an agreement with them in June of 2011. Under the terms of that agreement, United Therapeutics made an upfront payment of $7 million and Pluristem is eligible to receive regulatory milestone payments and other payments accumulating together with the upfront payment to a total of approximately $55 million and reimbursement of costs of its development and clinical activities. There are clearly a growing number of misguided shorts in the stock which run the risk of being intemperately squeezed at any moment. We would advise accumulating at these price levels given the discounted prices, very healthy cash position and multiple possibilities for strong catalyst reactions.
Speaking of catalysts, our favorite low-float biotech Medgenics is also rumored to be on the verge of announcing some important milestone developments in their quest to help solve the world-wide hepatitis epidemic. We are watching their progress on multiple fronts closely, as the stock tends to move up quickly on positive news. Medgenics' sustained production and delivery of interferon-alpha for the treatment of hepatitis using their INFRADURE technology has been drawing attention from experts in the field.
As we see across the biotech landscape, a number of competitors are scrambling and failing to fill the need for PEG-interferon and ribavirin therapy, the current standard known all too painfully to patients of the hepatitis virus. The race is on for an effective treatment that can improve patient compliance and reduce side effects.
A bet on Medgenics' own "miniature bio pump," which is impacted into the patient and continuously produces and releases the desired protein into the body, could pay off big -- especially when one considers that the technology has multiple applications in several billion dollar markets.
One stock we get a lot of e-mail about is the penny-priced, Phase III drug developer CEL-SCI Corp. (NYSE MKT: CVM). In December, they raised another round of gross proceeds, this time a total of approximately $10.5 million through a registered offering to institutional investors.
We've been seeing an increasing number of big block trades in that stock. It's logical to assume that some of those investors are expecting positive announcements involving further expansion of the firm's Phase III study of their immunotherapeutic agent Multikine® (Leukocyte Interleukin Injection), which is being developed as a potential first-line treatment for advanced primary head and neck cancer. Each time they have raised money, the firm has successfully and steadily been increasing the number of patients and clinical study sites with an eye on accelerating the approval process.
Still, other investors who know the company and follow the company may be taking positions as the already overly-aggressive flu season kicks off. We all know that this is a stock that tends to peak in the winter months because of the firm's activities in that space.
In a recent shareholder letter, CEO Geert Kersten stated that CEl-SCI's L.E.A.P.S. collaborative study with the National Institutes for Allergy and Infectious Diseases (NIAID) on pandemic flu was progressing well. "The testing conducted by NIAID with our L.E.A.P.S. compounds has shown significant promise in animal models of the disease and has been submitted for publication," said Kersten. "We believe that the data will potentially be very relevant when the next strain of drug resistant flu makes an appearance."
Finally, while it continues to trade sideways, we are seeing increased volume and attention being paid to Lpath, Inc. (NASDAQ: LPTN). That firm continues late-stage clinical testing and development of their product candidates iSONEP and ASONEP which target bioactive signaling lipids in order to treat diseases like Wet AMD, cancer, inflammation, fibrosis and a host of other indications. The stock appears to be getting close to eating through all of the over-hang left from the December 13th share offering which provided just under $12 million to the company.
We are paying particularly close attention to iSONEP which is being developed via a partnership with Pfizer (announced in December of 2010). That potential treatment for Wet AMD targets nearly 2 million patients in the U.S. alone and a positive outcome of that clinical trial could be enough to get Lpath taken out via a long rumored buy-out. We love the shares at these prices and the fact that the firm is now on a major exchange.
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