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MDNA.TO: New Data for MDNA55 and MDNA11 Presented at ASCO 2020…

15 hours 32 minutes ago

By David Bautz, PhD



Business Update

Updated Efficacy Results for MDNA55 Presented at ASCO 2020

On May 29, 2020, Medicenna Therapeutics Corp. (MDNA) announced updated results for the Phase 2b clinical trial of MDNA55 in patients with recurrent glioblastoma (rGBM) were presented at ASCO 2020. A copy of the presentation can be found here. A total of 44 subjects were evaluable for this analysis. The trial is a multi-center, open label, single arm study with the primary endpoint of median overall survival (mOS) and a secondary endpoint of objective response rate (ORR) following a single intra-tumoral infusion of MDNA55 in adult rGBM subjects (NCT02858895). The following table lists the demographic data for the patients. The red box indicates characteristics of rGBM tumors that are associated with worse prognoses, each of which were seen in at least 50% of patients.

To compare the survival of patients receiving MDNA55, a synthetic control arm (SCA) was established to identify rGBM patients matched on eligibility and prognostic characteristics including those with de novo GBM, wild-type IDH, and not eligible for resection. A propensity score weighting was then used to balance the baseline characteristics between the MDNA55 cohort and the SCA. Propensity scoring is a statistical method utilized to better align a treated group and an observational cohort. As the following graph shows, when using propensity score weighting the SCA is much better aligned (according to the propensity score) with the MDNA55-treated cohort than if it were not adjusted. Aligning the baseline characteristics between the two groups allows a more rigorous comparison to be made.

The following graphs show the survival curves for all patients and for those with high expression of IL4R compared to the SCA. The mOS was 12.4 months for all MDNA55-treated patients compared to a mOS of 7.2 months in the SCA. When examining only those patients who had high expression of IL4R the mOS was 13.2 months compared to 6.1 months for the SCA. This is particularly impressive given that high IL4R expression is associated with poor outcomes.

The following graph shows tumor response rate for the 41 patients for which scans were available. The data is presented as the best response following pseudo-progression, in which a tumor appears to be growing on radiographic imaging (due to an inflammatory response to treatment and not due to an increase in tumor mass) before decreasing in size. To account for this phenomenon, assessment of tumor response was analyzed using the criteria for modified Response Assessment in Neuro-Oncology (mRANO) (Ellingson et al., 2017). Approximately three-quarters of patients had a best response of less than 20% tumor growth (or tumor shrinkage).

The most interesting new data presented at ASCO 2020 had to do with the response to treatment in IL4R high and low patients. The following two graphs show tumor response from nadir in patients who had low IL4R expression (n=16) and high IL4R expression (n=21). Almost all of those who exhibited tumor control in the IL4R low group received a high dose of MDNA55. Conversely, there was no association with the amount of MDNA55 received and response in those with high IL4R expression. What this signifies is that in the IL4R low group a sufficient amount of MDNA55 is required in order to see a response since as there is a limited amount of receptor available for the drug to bind. In contrast, in the IL4R high group, the amount of MDNA55 given is of less importance because there is more receptor available for the drug to interact with.

These data indicate that MDNA55 could be utilized to treat all rGBM patients regardless of IL4R status as the safety of the high dose (180 μg) was similar to that of the low dose. The proposed patient population (n=32 from the Phase 2b trial that were either IL4R high or IL4R low with a high dose of MDNA55) had a mOS of 15.7 months compared to a mOS of 7.2 months for the SCA (graph on lower left). In addition, MGMT unmethylated patients in the proposed patient population (n=17) had a mOS of 15.8 months compared to a mOS of 7.7 months in the SCA (graph on lower right). As a reminder, unmethylated MGMT is associated with a worse prognosis in GBM patients, thus it is very encouraging to see MDNA55 having a positive effect in that patient cohort.

Medicenna will be conducting an ‘End-of-Phase 2’ meeting with the FDA during the third quarter of 2020. At that time the company will present data from the IL4R high subjects along with the IL4R low subjects that received a high dose of MDNA55, with the goal now being to target ‘all comer’ rGBM patients regardless of IL4R status. This will alleviate the company from having to develop and validate an IL4R expression assay and increases the potential patient population. Additional topics that could be discussed at the meeting include:

• Does the FDA want a Phase 3 trial conducted or to just expand the number of patients in the Phase 2b trial?

• If a Phase 3 trial is required, what will the control arm look like? Will Medicenna be able to use a synthetic control arm?

We anticipate the company receiving the minutes from that meeting early in the fourth quarter of 2020.

Preclinical Data on MDNA11 Presented at ASCO 2020

On May 29, 2020, Medicenna announced that preclinical data on MDNA11, one of the lead candidates from the interleukin (IL)-2 Superkine program, was presented at ASCO 2020. A copy of the presentation can be found here. IL-2 is a 16 kDa protein that activates a wide range of leukocytes, including T cells and natural killer (NK) cells through binding IL-2 receptors (IL-2Rα [CD25], IL-2Rβ [CD122], and IL-2Rγ [CD132]), with the arrangement of these receptors dictating the response seen. Binding of IL-2 to a heterodimer consisting of CD122 and CD132 is relatively ‘low affinity’, whereas a heterotrimer consisting of all three IL-2Rs is a ‘high affinity’ complex. The heterotrimer is typically found on activated T cells (including regulatory T cells, Tregs) while naïve T cells only express the heterodimer. Thus, modifying IL-2 signaling to enhance binding to the CD122/CD132 heterodimer complex could enhance T cell activation while diminishing the effect of regulatory T cells. An enhanced version of IL-2 that exhibited increased affinity to CD122 was first described in 2012 (Levin et al., 2012) and additional work has yielded a family of long-acting ‘IL-2 Superkines’ with enhanced features compared to IL-2.

We previously discussed another lead candidate from the company’s IL-2 Superkine program, MDNA19, which is differentiated from IL-2 in that it has enhanced affinity for CD122, which results in increased signaling in CD8 T cells, and does not bind to CD25, leading to substantially decreased signaling in Tregs. MDNA19 consists of the modified IL-2 covalently attached to the Fc domain of IgG, which is intended to increase its pharmacokinetic (PK) profile and extend its half-life. MDNA11 consists of the same modified IL-2 domain covalently attached to human albumin, which is another means to increase the compounds half-life and limit the frequency of infusions.

Similar to MDNA19, MDNA11 shows high affinity binding to CD122 (KD = 6.6 nM) and no binding to CD25. In addition, MDNA11 shows enhanced potency on CD8+ T cells and natural killer (NK) cells along with reduced activity on Tregs. The following table shows the EC50 values (a measure of potency with greater potency (corresponding to smaller numbers) for recombinant, human IL-2 and MDNA11 on naïve CD8+ T cells and Tregs.

Interestingly, as a monotherapy MDNA11 shows enhanced activity in a CT26 tumor model compared to MDNA19, as shown in the following figure on the left. MDNA11 also shows enhanced activity when used in combination with αCTLA4 therapy, as shown in the following figure on the right. All nine mice treated with MDNA11 + αCTLA4 exhibited complete regression of tumor while only 3/9 mice treated with MDNA19 + αCTLA4 showed complete regression of tumor.

There are multiple factors that may contribute to the enhanced in vivo activity of MDNA11 compared to MDNA19. MDNA11 shows a longer half-life than MDNA19 in non-human primates (NHP), with a T1/2 of 12.8 – 24.7 hours for MDNA11 compared to 7.3 – 9.1 hours for MDNA19. In addition, MDNA11 has a stronger effect on lymphocyte expansion and on non-Treg CD4 T cell expansion in NHPs at multiple doses. Lastly, the use of albumin to extend the half-life of MDNA11 could allow accumulation of the compound at tumor sites, as tumor cells are known to use albumin as a major energy source and a source of nitrogen (Stehle et al., 1997). The following chart shows various phenotypes and how MDNA11 and MDNA19 compare in regards to those phenotypes, with MDNA11 superior in a number of attributes.


We are very interested to hear the outcome of the ‘End-of-Phase 2’ meeting with the FDA regarding the regulatory pathway for MDNA55, particularly on the possibility for accelerated approval. While still a low probability event, there is precedent for submitting a BLA following a successful single arm, open-label Phase 2 clinical trial. Morphosys AG recently submitted a BLA for tafasitamab, the company’s anti-CD19 antibody, based on positive results from the company’s Phase 2 L-MIND clinical trial and the retrospective observational matched control cohort RE-MIND trial. This is a very similar situation to what Medicenna has with the results of the Phase 2b clinical trial and the SCA, however the L-MIND trial had results from 80 patients while Medicenna is going to the FDA with results from 32 patients. Regardless of whether Medicenna is allowed to apply for accelerated approval or not, we believe MDNA55 is a very promising clinical candidate for rGBM.

The news for the IL-2 Superkine program continues to get better as MDNA11 appears to be superior to MDNA19 and thus will be advanced into clinical testing in 2021. The IL-2 Superkine platform has enormous potential for the company as shown by the acquisition of SynthoRx, and the enhanced IL-2 THOR-707, by Sanofi for $2.5 billion. With multiple suitors bidding on SynthoRx we believe there are other companies who are eager to have an enhanced IL-2 asset, particularly one like MDNA11, which we view as having potential ‘best-in-class’ attributes.

Based on the data for MDNA55 presented at ASCO 2020 showing that the compound is active in rGBM patients regardless of IL4R status we have increased our potential worldwide peak sales for the drug to $1.2 billion in rGBM. This has increased our valuation to CAD$15 and Medicenna continues to be one of our top picks in the small-cap biotech sector.

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NETE: Net Element is Considering Strategic Alternatives To Unlock Shareholder Value

19 hours 19 minutes ago

By Lisa Thompson



The most important recent news is that the Board of Directors of Net Element (NASDAQ:NETE has decided to explore strategic alternatives to further unlock value for shareholders. This includes a sale of the company, licensing of its technology, spin-offs, or business combinations. Until there is a definitive decision, management does not plan to discuss the efforts. Certainly the public market has not put much of a valuation on the company and the value of its portfolios alone is worth more than is reflected in its current enterprise value.

Q1 2020 Results Were Much Better than Expected

Q1 came in better than expected as Net Element onboarded new customers in January and February and reaped a full quarter of revenues from customers it had onboarded in November and December. Business for the first two months of the quarter were very strong and this made up for weakness at the end of March. Transactions really dropped off in April and have made a slight comeback since then, giving hope that that was the bottom. While some customers begin to open up, the company fears others will be throwing in towels due to irreparable damage. In the restaurant vertical, Net Element has been hurt by the popularity of GrubHub delivery, because when their customer’s orders go through that service, GrubHub get the transaction rather than Net Element. It may take another six months from now to see where it all shakes out. Q2 will be bad, but could be the bottom. We are forecasting year over year sales down 35%.

Q1 2020 Results

Net Element grew revenues 5.3% in Q1 to $15.8 million compared with $15.0 million in Q1 2019. North American sales increased 5.5% year over year to $15.2 million, while international was flat year over year at $683,000.

Margins for North America declined to 15.4% versus 18.1% a year ago as competition stiffened. International sales margins increased to 30.3% versus 28.1% a year ago despite being at the same revenues level, as there was a reduction of credit card exchange fees in Russia from 1.7% to 1%.

The operating loss was $1.0 million versus a loss of $0.8 million last year. EBITDA for the quarter was a negative $221,000 compared with a positive $63,000 last year.

The GAAP loss was $1.4 million versus last year’s $1.1 million. The non-GAAP loss was $1.3 million versus a non-GAAP loss of $1.1 million in Q1 2019.

The non-GAAP loss per share was $0.32 per share compared with a loss of $0.28 per share last year.

This quarter there were 4.1 million average primary shares outstanding, compared to 3.9 million last year. On March 25, 2020, the share count was still 4.1 million shares.

On March 31, Net Element had $606,672 in cash, negative working capital of $2.6 million and $9.3 million in debt down from $9.4 million last quarter. Net Element moved quickly to submit two applications to the government for aid. One was for the Paycheck Protection Program, which it received in May in the amount of $491,492. It was also approved for the $150,000 the EIDL loan, which provides a 30-year loan with a 3.5%. In addition Russia has a stimulus plan and the Russian entities have applied there for whatever they qualify. In Q1 2020, Net Element had negative cash flow of $1 million, and negative free cash flow of $1.4 million after paying for commissions and equipment.

While we do not know the outcome of any possible strategic alternative valuations we do know that even using the lowest peer valuation of 1.2x EV/2020 estimated sales, the stock would be worth $15.80 per share.

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HTBX: The Antigen Chaperone: gp96

2 days 18 hours ago

By John Vandermosten, CFA



Full Year 2019 Results

Heat Biologics, Inc. (NASDAQ:HTBX) reported first quarter 2020 results in a May 15th release along with the submission of the 10-Q to the SEC. For the first five months of the year, Heat has been busy advancing preclinical work for a coronavirus vaccine, assembling data related to the Phase II HS-110 DURGA trial and raising significant capital to support the pipeline of projects. Heat management has also attended scientific and investor events sharing the company’s progress. The company is in the process of preparing a data package to share with the FDA in an End-of-Phase II meeting that we expect will be scheduled in the next few months. The IND for PTX-35 has been submitted and clearance is expected in 2Q:20.

Cash and equivalents as of March 31, 2020 were $26.4 million, compared to $14.8 million at the end of 2019. Heat continues with no debt on the books. Cash burn was ($5.8) million in the first quarter compared with ($4.2) million in 1Q:19. Add-back of stock based compensation and change in fair value of warrants partially offset by recognition of deferred revenue explained the majority of the difference between the ($6.3) million net loss and the ($5.8) million cash used in operations. Net cash provided by financing activities totaled $17.6 million, reflecting cash from the issuance of common stock and warrant exercise. Following the end of the reporting period, Heat raised an additional $2.9 million in capital from an at-the-market (ATM) facility.


The global threat of coronavirus has changed the landscape for many biotechnology research and development companies. The spread of the virus may delay trial progression and the availability of drug product. But, it also has accelerated programs that many companies, including Heat Biologics, have developed in infectious disease. Heat’s wholly-owned subsidiary, Zolovax, has been focused on developing medicines and vaccines for infectious diseases using the gp96 platform for many years.

The vaccine incorporates multiple SARS-CoV-2 antigens using the gp96 platform. The approach is expected to induce long-term immunity and provide protection against future infections. As no viral vector is used, Heat’s coronavirus vaccine avoids anti-vector immunity and viral activation while activating T and B cells with high immunogenicity. The activation of T and B cells drives induction of mucosal immunity and long-term memory response. In early March, the company filed multiple provisional patent applications for its technology that treat and prevent infection from the SARS-CoV-2 virus.


The HS-110 Phase II Durga trial provided the latest update to its interim data in mid-November 2019. Cohort A enrolled checkpoint-inhibitor naïve patients and Cohort B enrolled patients previously on checkpoint inhibitor therapy that have progressed. Both groups are treated with a combination of HS-110 and nivolumab. Initial results have been promising. There are two additional cohorts, designated C and D, which will examine HS-110 in combination with pembrolizumab, and pembrolizumab and chemotherapy which are intended to evaluate safety with an alternative checkpoint inhibitor. About 20 patients are expected to be enrolled in the C and D cohorts with 122 patients enrolled overall.

HS-110 Trial Design (1)

ASCO 2020 Abstract

Heat is scheduled to present at the 2020 American Society of Clinical Oncology (ASCO) annual meeting to be held virtually. The conference will run from May 29th to June 2nd and will feature the company’s poster entitled: “Tumor antigen expression and survival of patients with previously treated advanced non-small cell lung cancer (NSCLC) receiving viagenpumatucel-L (HS-110) plus nivolumab.” The abstract highlights Cohort A in the Durga trial, which combines HS-110 with nivolumab in the 47-patient study. Subjects enrolled in this group exhibited an overall survival duration of 28.7 months. The cohort was divided into patients based on whether their tumor-antigens were similar to those in HS-110. (≥8 vs <8 antigens in common). Where HS-110 had a higher similarity to the patients’ CTA, patients experienced a longer median overall survial.

gp96 Platform (2)

HS-130 and PTX-35

In an August 12, 2019 release, Heat announced that its IND for HS-130 had been submitted and received clearance from the FDA to begin a Phase I safety trial. On December 16, the first patient was dosed in the dose escalation trial. The combination study, which will pair HS-130 with HS-110, will enroll patients with advanced solid tumors refractory to standard of care. The candidate is in development to treat solid tumors and will employ the ComPACT technology which delivers the gp96 heat shock protein along with a T-cell co-stimulatory fusion protein (OX40L). The associated trial expects to enroll up to 30 patients and have primary endpoints of safety and optimal dose determination for its Phase II trial.

In November 2019 the period of the CPRIT grant was extended to May 30, 2020. Clearance for the PTX-35 IND is expected in 2Q:20, after which we expect the launch of the Phase I trial. CPRIT grant funds are expected to allow Pelican to develop PTX-35 through a 70-patient Phase I clinical program.

Corporate Milestones

‣ Below we list key milestones for Heat Biologics.

‣ Complete HS-110 Phase II NSCLC enrollment – 2Q:19

‣ HS-130 (ComPACT) IND filing and FDA Clearance – August 2019

‣ HS-110 interim data readout – November 2019

‣ HS-110 Phase II interim readout – 4Q:19

‣ PTX-35 IND clearance and first patient dosing – 2Q:20

‣ Various coronavirus vaccine milestones – 2Q:20

‣ ASCO Poster Presentation – May 29, 2020

‣ Discussion with potential partners – Ongoing

‣ Schedule End of Phase II Meeting with FDA – 2H:20

‣ Complete HS-130 Phase I trial – 4Q:20

‣ Develop Phase III / commercial manufacturing capacity for HS-110 – 2020


Heat Biologics Product Pipeline (3)

Sources of Capital

Heat Biologics started 2020 with a solid $15 million in cash on the balance sheet. With multiple programs in the pipeline, management saw the opportunity to accelerate development by raising additional capital. Financing activities provided $17.6 million during the first quarter from a public share offering.

Following the end of the quarter, Heat filed a shelf registration enabling the company to conduct up to $150 million in equity fundraising. Along with this effort, an agreement was signed with B. Riley FBR to serve as Heat’s sales agent and offer shares of common stock under an ATM facility. During the second quarter of 2020, $2.9 million was raised through the issuance of 5,352,234 shares under this program.


Heat Biologics made substantial progress in 2019 with advancements for all four cohorts in its Phase II NSCLC trial. A poster will be presented for HS-110 at ASCO at the end of the month featuring updated data for the Durga trial, after which Heat will schedule an End of Phase II meeting with the FDA to help chart the course forward for the treatment. Year to date, Heat has been opportunistic in raising capital and has established an ATM facility. They have also re-energized their work on infectious disease and have launched programs to develop a coronavirus vaccine using the gp96 platform.

Checkpoint inhibitors have been an exciting new area of immunotherapy; however, they are only successful in a minority of patients. Heat’s portfolio seeks to awaken the immune system and increase the effectiveness of checkpoint inhibitors even in patients previously treated with checkpoint inhibitors. Interim data suggest that there may be a synergy between the two approaches.

Progress in being made across the portfolio. In addition to HS-110 progress, HS-130 received clearance to commence a Phase I dose-finding trial and has dosed its first patient. We also anticipate the start of a trial for PTX-35 in the near term. The company has a favorable cash position and should have sufficient funds to support operations into 2021.

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1. Source: Heat Biologics Corporate Presentation. November 5, 2019.

2. Source: Heat Biologics Corporate Presentation. May 2020.

3. Source: Heat Biologics May 2020 Corporate Presentation.


2 days 19 hours ago

By John Vandermosten, CFA



On May 15th, 2020, AzurRx BioPharma, Inc. (NASDAQ:AZRX) filed its first quarter 2020 10-Q with the SEC for the three month period ending March 31, 2020. Highlights year to date include the appointment of a new CFO and board member, receipt of ~$3.5 million in French tax credits, confirmation of manufacturing and distribution agreements, and IRB approval to launch the OPTION 2 trial which should begin in the next few weeks. We expect to see an academic manuscript available for the OPTION study this fall at the North American Cystic Fibrosis Conference.

As expected, no revenues were reported during the first quarter of either 2019 or 2020. Operating expenses for the 1Q:20 period were $2.9 million, down 36% compared to the prior year. General and administrative expenses were $1.4 million, down 45% on a host of lower expense items, including stock compensation, legal, director’s fees, corporate communications and rent. These declines were offset by increases in other items including consulting, insurance, personnel, travel and entertainment and IT administration. Research and development expenses contracted 27% to $1.4 million. The change was attributed to lower stock based compensation, depreciation and amortization, direct clinical trial costs, consulting and personnel costs.

Cash on the balance sheet was $1.6 million and notes payable and convertible debt were held at $3.3 million as of March 31, 2020. Cash burn for the three month period was ($1.3) million which compares with ($2.6) million for the same quarter last year. Following the end of the reporting period, AzurRx issued 788,464 shares to Lincoln Park for proceeds of $457 thousand and received $1.4 million from the French tax credit.

OPTION 2 Trial

AzurRx will soon launch its next trial which will determine the optimal dose for the Phase III study. It will be a Phase IIb, open label, 2x2 crossover design designated the OPTION 2 Enteric Dose-Escalation Trial. The target population will be patients with EPI due to CF. Based on the results in the completed OPTION 1 trial, the scientific team will add the use of enteric capsules (1) to delay release of MS1819 until it reaches the lower gastrointestinal tract. The shift to enteric capsules was made after it was determined that approximately half of MS1819 was inactivated in the stomach. The enteric capsule will prevent the drug from degrading until it reaches the duodenum. The FDA is familiar with the enteric capsule and we do not anticipate any difficulties or requirements for additional studies with this change in MS1819’s formulation.

OPTION 2 Trial Design (2)

Severe EPI Trial

In early July 2019, AzurRx launched a Phase II trial investigating MS1819-SD in combination with standard pancreatic enzyme replacement therapy (PERT) for patients with cystic fibrosis (CF) that suffer from severe exocrine pancreatic insufficiency (EPI). These patients are unable to maintain weight and suffer from fat malabsorption despite taking the maximum dose of PERT. This population with an unmet need may be suitable for an expedited pathway to approval for MS1819-SD. The study will be conducted at multiple European sites including locations in Hungary and Spain with an enrollment target of 24 and a primary endpoint of safety and CFA greater than 80%.

MS1819 Trial Map (3)


AzurRx extended two agreements to manufacture and package, label and distribute MS1819 for the Phase II trials. In April, Delpharm was selected to act as the contract development manufacturing organization (CDMO) to manufacture drug product supply of MS1819 for the OPTION 2 trial. Delpharm is a French manufacturer of pharmaceutical products with 17 production sites in Europe and Canada. As of April 2020, a preliminary batch was manufactured in preparation for a current good manufacturing practices (cGMP) batch using the new enteric capsule formulation. Despite production work starting during the coronavirus pandemic, there have been no delays to its production and no delays are expected in the effort to launch the OPTION 2 study in 2Q:20. Shared in an early May release, Creapharm was selected to provide packaging, labelling and distribution of enteric drug product for use at Phase II trial sites throughout Europe and the United States. Creapharm is a French company with packaging plants in France and the United States. The partner will send packaged product to AzurRx trial sites in Poland, Hungary, Spain, Turkey and the United States. No pandemic-related delays are expected in Creapharm’s efforts.

AzurRx Pipeline (4)

Historical and Forward Looking Highlights

‣ Receipt of French Tax Credits – 1Q:20/2Q:20

‣ Various capital raises – 1Q:20

‣ Delpharm Manufacturing Agreement – April 2020

‣ TDN & IRB Approval to Start OPTION 2 Trial – April 2020

‣ Creapharm Packaging, Labeling & Distribution Agreement – May 2020

Abstract Presentation at Digestive Disease Week – May 2020

‣ Launch of OPTION 2 trial – 2Q:20

‣ Presentation of Phase II CF study at N. American CF Conference – October 2020

‣ Initial results of CF combination study – 1Q:21, coronavirus dependent

‣ Completion of OPTION 2 trial – 1Q:21, coronavirus dependent

Pathway Forward

To date, AzurRx has completed preclinical Phase I and Phase II trials in chronic pancreatitis and cystic fibrosis patients with exocrine pancreatic insufficiency. Data from the most recent Phase II CF trial demonstrated safety, non-inferiority in half of patients compared to varying doses of PERT and a high CNA of 93%, supporting the hypothesis that a protease is not needed for effective MS1819 therapy. Next steps require that an optimal dose be determined and further study be conducted in the OPTION 2 Phase IIb study which AzurRx expects to launch in 2Q:20. MS1819 will use an enteric capsule to determine the optimal dose for a registrational trial in 2021. Concurrent with the work on the OPTION 2 trial, AzurRx is conducting a small study in a small population of patients with severe EPI. In late April, AzurRx received approval to start the OPTION 2 clinical trial by the Therapeutics Development Network (TDN), which is a key partner in identifying cystic fibrosis patients to populate the company’s clinical trials. The sanction by the TDN allows the OPTION 2 trial to access up to 91 accredited US care centers that specialize in CF. Shortly after the TDN announcement, AzurRx also received Institutional Review Board approval to launch the OPTION 2 trial at US sites for CF patients with EPI.

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1. This is in contrast to the hydroxypropyl methylcellulose (HPMC) capsules that were used in previous trials and used in the ongoing combination study for severe EPI patients.

2. Source: AzurRx Corporate Presentation, May 2020.

3. Source: AzurRX Corporate Presentation, May 2020

4. Source: AzurRX Corporate Presentation, May 2020

TENX: Undiscovered Gem

2 days 19 hours ago

By John Vandermosten, CFA



First Quarter 2020 Financial and Operational Review

Tenax Therapeutics, Inc. (NASDAQ:TENX) completed enrollment of its Hemodynamic Evaluation of Levosimendan in Patients with PH-HFpEF (HELP) and announced that the last patient has completed their final visit as of April 9, 2020. The 37-patient open-label trial achieved an 84% initial response rate for screened patients and is expected to finish analyzing data and report topline results in 2Q:20.

We are very excited and optimistic about Tenax prospects for Levisimendan. Early evidence shows that Levisimendan can provide a statistically significant material benefit, shown by the 37 of 44 patients who achieved a reduction in pulmonary capillary wedge pressure (PCWP) of 7.8 mmHg, an average reduction in pulmonary arterial pressure (mPAP) of 4.8mmHg, an average reduction in right atrial pressure (RAP) of 5.3 mmHg, and an average increase in cardiac output (CO) of 0.4 liters/min. The improvements were generated during the open-label lead-in phase and achieved statistical significance, with the exception of cardiac output. Individuals with Group 2 pulmonary hypertension comprise a large population, many multiples greater than the $5 billion in revenue Group 1. We see a substantial opportunity for commercial success for Levosimendan as there are no other treatments available for this condition. While we are a long way from approval, the reward to risk is dramatically positive on a probability adjusted basis.

On May 15th, Tenax filed its 1Q:20 Form 10-Q with the SEC. No revenues were reported in the period and operating expenses totaled $2.7 million. Net loss per share was ($0.38). First quarter research and development costs of $1.3 million rose 178% from the $0.5 million spent in the comparable period reflecting screening and enrolling by the HELP trial. General and administrative expenses totaled $1.3 million, up 12%. Increased legal fees, investor relations costs and insurance costs were partially offset by other administrative fees. Net loss for the period was ($8.4) million or ($1.35) per share.

Cash and securities balance was $4.9 million as of March 31, 2020 and cash burn totaled ($2.7) million for 1Q:20. The company continues with no debt. We anticipate a decrease in expenses for the balance of 2020 as the HELP trial undergoes finalization, data lock up and data analysis and papers are drafted for conference presentation.

The HELP Trial

In November 2018 Tenax announced the activation of the first clinical research site for the PH-HFpEF HELP trial at Stanford University School of Medicine. In March 2019, the first of what would eventually be 37 patients was enrolled in the trial at 10 sites across the US. By March 12th 2020 all patients had been enrolled and by April 9th the final patient completed the final visit. Top line data is expected to be reported before the end of the second quarter as the company now finalizes the trial and conducts data lock up and analysis. Ample data were collected during the study which will provide fertile ground for researchers ro provide analysis. We anticipate publication at conferences in the latter half of the year. Tenax management will develop its own materials and Phase III trial design to present at the end-of-Phase II meeting with the FDA prior to year end. The HELP study reported zero drug-related serious adverse events. Two of the 37 patients did not complete the study.

A Phase III trial may begin in 2021, assuming the HELP trial results are favorable. Its design is highly dependent on the strength of signal generated by Phase II. A rough estimate of time, cost and size of the registrational trial range from 18 to 36 months, $30 to $50 million and 200 to 300 patients. While none of these estimates have been confirmed by the company, we believe they are reasonable based on the likely outcome of a successful Phase II.


‣ Enroll First Patient – March 2019

‣ Full Enrollment – 1Q:20

‣ Last Patient, Last Visit – April 2020

‣ Topline data – 2Q:20

‣ Presentation of data at conference – Fall 2020

‣ End of Phase II Meeting with FDA – 2H:20

‣ Launch Phase III – 2021

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1. The trial originally targeted 36 patients.

TTNP: First Quarter 2020 Financial and Operational Results

2 days 19 hours ago

By John Vandermosten, CFA



Titan Pharmaceuticals, Inc. (NASDAQ:TTNP) has been working hard to set up the ecosystem required for successful commercialization of Probuphine. The company has expanded its distribution network to cover the entire United States working in partnership with several well-known specialty pharmaceutical players and has improved its distribution process. Other partners including Knight Therapeutics and Molteni Farmaceuticci are advancing Probuphine and Sixmo in Canada and Europe respectively. Despite all of the effort, product sales growth has been elusive. In the first quarter, revenues were $1.3 million, with the majority sourced from grant revenues. The first quarter was summarized in Titan’s earnings release, Form 10-Q and conference call presented to investors on May 15, 2020.

Management announced an upcoming special meeting of shareholders to include shareholders of record on May 22nd, 2020. The company requires additional shares of authorized common stock so that it may raise additional capital to fund the R&D and commercialization efforts. Proxy materials will be send to shareholders later in May.

Total revenues the first quarter were $1.3 million compared to $945 thousand in the comparable prior year period. License revenues in 1Q:20 were zero, compared to $313,000 in 1Q:19; product revenue fell to $210,000 from $317,000 and grant revenue rose to $1.1 million from $315,000. Gross margin for product revenues improved over prior year levels to 18.6%; however, it remains on a very small base with the proportion of fixed costs distorting the potential for this line item. Research and development expenditures totaled $2.3 million increasing from $1.8 million the year before as Titan increased its activities related to the NIDA grant. General and administrative spend clocked in at $3.1 million, essentially flat with last year’s level. Total operating expenses were $5.4 million, up 9% from the first quarter last year. Net loss was ($5.6) million or ($0.07) per share compared to a net loss of ($4.5) million and ($0.34) per share (1). Net loss benefitted from a non-cash gain related to warrant valuation adding $1.1 million to the bottom line.

Over the last year, Titan has taken several steps to advance the commercialization of Probuphine. The company has forged partnerships with AllianceRx to help with payors and fulfillment, with AppianRx to provide patient support and with Accredo for product inventory management, billing and payment. Titan initiated an agreement with CVS Caremark in July 2019 for specialty product distribution, adding to its stable of distributors. Other milestones:

‣ Streamlined distribution, reducing the time from prescription to product delivery.

‣ Websites established for both patients and providers.

‣ Benefits verification duration reduced from over 90 days to 24 hours

‣ Targeted training of providers with a focus on the most productive

◦ Approximately 300 trained

‣ Shift to virtual training for providers over last few months

‣ Sales activities moved online or to the phone

Up until a few weeks ago, these efforts were led by Chief Commercial Officer Dane Hallburg. An 8-K announcement disclosed his departure on April 24th. His responsibilities will be taken over by others on the team.

Step Into Stability

Titan launched a new campaign to increase awareness for Probuphine called Step Into Stability. This is an effort, in partnership with public health officials and other institutions, to reduce daily buprenorphine dosing by educating patients, health plan members and providers. The effort identifies the benefits of the Probuphine implant compared to current therapy for the target patient which is taking 8 mg or less of oral buprenorphine for opioid use disorder.

Step Into Stability Flyer (2)

Phase IV Probuphine Studies

Titan is required to conduct two Phase IV post-marketing studies internally and one Phase IV in conjunction with other buprenorphine manufacturers. The first will be a small study, estimated to cost from $3 to $4 million, which will last for two to three years. It will evaluate the safety and pharmacokinetics of re-implantation of Probuphine into a previously used site on a patient’s inner upper arm as well as implantation into an alternate location in the lower abdomen. A second observational study is still in development and is estimated to cost around $8 million and will last for four years. It will assess implant procedure safety in an observational cohort design and is still being finalized. Management has announced that the post-marketing studies are on hold given Titan’s current financial condition and low volume of sales. The company has advised the FDA of their status and will provide updates to the agency as new information arises.


Starting in October 2017, Titan conducted a feasibility assessment with Opiant to develop a product for prevention of opioid relapse and overdose in individuals with opioid use disorder (OUD). In September of 2018, Titan secured a grant from the National Institute for Drug Addiction (NIDA) to further this research using a ProNeura based six-month implantation formulation of nalmefene. The grant will provide $2.67 million during the first year and $6.08 million in the second year. The goal during the first two years is to complete IND-enabling work. Based on further discussions with the FDA during the second quarter, Titan was advised to pursue the traditional 505(b)(1) pathway for approval of nalmefene due to the lack of safety data in a long acting formulation. This approach will require an additional study to be performed and additional preclinical work to be completed for another project that is already underway. There are additional years of funding that may be accessed if certain milestones are achieved. With the additional work required, Titan expects to file the investigational new drug application (IND) in the second quarter of 2021.

Molteni and the EMA

Sixmo, Probuphine’s trade name in Europe, was approved by the European Commission (EC) in late June 2019 for all 28 member states. The launch of Sixmo will be accompanied by a clinical and medical affairs program and a Phase IV post marketing safety study. Initial efforts will focus on high volume addiction centers that have a wide reach into the adjacent community in the top two or three countries in the EU. Pricing approval is delayed due to the difficulties associated with the coronavirus. In the United States, work is continuing in preparation for the manufacture of Sixmo and the first batch is expected to be produced by the end of June. Management anticipates that first sales will take place in the second half of 2020.

Knight Therapeutics

Canadian partner Knight launched Probuphine in October 2018 and is focused on commercializing the product in rural Canadian areas for patients without ready access to a physician. The company’s press release highlighted Health Canada’s approval of the implant in 2018 and Knight’s exclusive right to distribute the drug and their launch of the product. To date, Knight has been able to obtain product pricing approval and formulary listing from health authorities in Quebec, New Brunswick, Newfoundland, Nova Scotia, Manitoba, Alberta and Saskatchewan. Current efforts are focused on obtaining listings in British Columbia and Ontario. No license revenues were received in the first quarter and we believe that sales have been slower than expected.

Titan Pipeline

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1. Note that share count increased materially from 2018 to 2019.

2. Source: Probuphine website accessed March 30, 2020.

3. Source: Titan December 2019 Corporate Presentation.

CFRX: Four Abstracts Published in 30th ECCMID Abstract Book; Financing Overhang Removed as Pfizer Makes Second Investment…

5 days 18 hours ago

By David Bautz, PhD



Business Update

Four Abstracts Published in 30th ECCMID Abstract Book

On May 11, 2020, ContraFect Corp. (NASDAQ:CFRX) announced four abstracts were published in the 30th European Congress of Clinical Microbiology and Infectious Diseases (ECCMID) abstract book. Both the on-site and online portion of ECCMID 2020 were cancelled due to the ongoing coronavirus epidemic and accepted abstracts were recently published. Contrafect’s published abstracts included two on exebacase, one on CF-370 (a lysin targeting Pseudomonas aeruginosa), and one on amurin peptides.

Therapeutic innovation in bone and joint infections: evaluation of the activity of exebacase (CF-301 lysin) on clinical strains belonging to Staphylococcus epidermidis species.

Four patients with post-operative prosthetic joint infections (PJIs) have been treated with exebacase under Temporary Authorizations for Use from the French National Agency for Medicines and Health Products Safety in collaboration with Dr. Tristan Ferry at the Hôpital de la Croix Rousse in Lyon, France.

The abstract describes the four patients as two having signs of septic arthritis and two of them having fistula. Importantly, no adverse events occurred during arthroscopy. Following one year of follow up, the outcome was favorable in the two septic arthritis patients with disappearance of clinical signs of septic arthritis.

The patients that have been treated thus far had longstanding, treatment refractory PJIs. Following intra-articular treatment, the promising signals seen in these patients has led to the temporary authorization to use exebacase being extended to patients with Staphylococcal PJI that occurs shortly after surgery to hopefully avoid significant damage to the joint.

Biofilm formation in prosthetic joints is a very challenging infection to clear with traditional antibiotics, which typically leads to additional surgery and possibly replacement of the joint to ultimately get rid of the infection. The company has previously shown exebacase is able to rapidly clear biofilms, as shown in the following figures, thus we view the application of the drug in treating difficult-to-clear prosthetic infections as a natural next step in its development life cycle.

Exebacase resensitizes methicillin-resistant Staphylococcus aureus (MRSA) to oxacillin in a rabbit model of infective endocarditis

Exebacase was tested in a rabbit model of endovascular MRSA infection with multiple dose regimens of exebacase administered alongside oxacillin. Results showed that combination therapy reduced MRSA counts by 5 log10 CFU/g tissue compared to oxacillin treatment alone, exebacase alone, and growth controls (P<0.0001). The reduction in MRSA CFUs is indicative of resensitization of MRSA to oxacillin, and may support the use of exebacase to increase susceptibility of resistant strains of S. aureus to different classes of antibiotics.

First evidence of systemic efficacy of a pathogen-targeted, engineered lysin (GN-370) against carbapenem-resistant Pseudomonas aeruginosa (P. aeruginosa), in a rabbit pneumonia model

CF-370 is an engineered lysin targeting Pseudomonas aeruginosa, a Gram-negative bacterial species that is listed as a serious threat in the Centers for Disease Control and Prevention (CDC) 2019 Antibiotic Resistance Threats Report. This abstract reported the results of CF-370 in a rabbit pneumonia model. Treatment with exebacase resulted in 100% survival compared to only 40% survival in vehicle control animals. In addition to showing a survival benefit, CF-370 showed synergistic effects with meropenem as bacterial counts in all target tissues decreased by an additional 2 log10 CFU/g versus meropenem or CF-370 alone (P≤0.02). This in vivo proof-of-concept establishes that it is possible to successfully target a Gram negative bacteria with a lysin.

First report of the discovery of amurin peptides: direct lytic agents with broad activity against carbapenem-resistant Enterobacteriaciae, Acinetobacter, and Pseudomonas, including colistin-resistant strains

The following table shows three lead amurin peptide (AM) candidates that exhibit potent in vitro activity as judged by low minimal inhibitory concentrations (MICs) against clinical infection isolates including Enterobacteriaceae, A. baumannii, and P. aeruginosa. Those strains include those that are carbapenem-resistant and resistant to multiple antibiotics, including antibiotics of last resort.

Update on Phase 3 DISRUPT Trial

In January, 2020, ContraFect announced the first patient had been dosed in the Phase 3 DISRUPT (Direct Lysis of Staph aureus Resistant Pathogen Trial) study of exebacase in patients with Staphylococcus aureus bacteremia, including right-sided endocarditis (NCT04160468). The randomized, double blind, placebo controlled trial is being conducted at centers in the U.S. and will enroll approximately 350 patients randomized 2:1 to receive either exebacase or placebo, with all patients receiving standard of care antibiotics. Thus far, the trial is continuing to enroll patients during the ongoing coronavirus pandemic and clinical trial sites remain open.

The primary endpoint of the trial will be clinical response at Day 14 in patients with methicillin-resistant S. aureus (MRSA) bacteremia, including right-sided endocarditis. Clinical response is defined using objective clinical criteria including: 1) resolution of S. aureus bacteremia/right-sided endocarditis signs and symptoms that were present at baseline; 2) no new signs or symptoms of bacteremia/right-sided endocarditis; 3) no complications of bacteremia/right-sided endocarditis; 4) no changes in anti-staphylococcal antibiotics after treatment with study drug due to persistence, worsening, or recurrence of signs or symptoms of bacteremia/right-sided endocarditis; 5) blood cultures negative for S. aureus by Day 14; and 6) the patient is alive. Clinical response is being determined by an independent, blinded clinical adjudication committee.

Key secondary endpoints include clinical response rate at Day 14 for all S. aureus bacteremia patients (including both MRSA and methicillin-sensitive S. aureus [MSSA]), 30-day all-cause mortality in MRSA patients, and clinical response at Day 60. The company will also evaluate the impact of treatment with exebacase on length of hospital stay, length of stay in the intensive care unit, and 30-day readmission rates for both all-cause and S. aureus infection readmissions. An interim futility analysis will be conducted after the first 60% of patients enrolled into the trial are evaluable for efficacy.

The following table shows the statistical parameters for the primary efficacy endpoint and key secondary efficacy endpoints from the trial. The primary endpoint is 86% powered to show a 28% increase in clinical response rate at Day 14 with the use of exebacase plus standard of care antibiotics compared to standard of care antibiotics alone.

Breakthrough Therapy Designation for Exebacase

On Feb. 24, 2020, ContraFect announced that the US FDA has granted Breakthrough Therapy designation to exebacase for the treatment of MRSA bacteremia, including right-sided endocarditis, when used in conjunction with standard of care antibiotics. The FDA established the Breakthrough Therapy program to speed the development of medicines for serious or life-threatening diseases with preliminary clinical evidence that may show the investigational product could substantially improve at least one clinically significant endpoint over currently available therapies.

Breakthrough Therapy designation was granted to exebacase based on data from the Phase 2 clinical trial showing treatment with exebacase led to a 42.8 percent higher responder rate at Day 14 in patients with MRSA infections compared to treatment with standard of care antibiotics alone (74.1% vs. 31.3%; P=0.01). Exebacase carries both Breakthrough Therapy and Fast Track designation, which will allow for a rolling BLA submission and priority review.

Financial Update

On May 15, 2020, ContraFect announced financial results for the first quarter of 2020. As expected, the company did not report any revenue for the first quarter of 2020. Net loss for the three months ending Mar. 31, 2020 was $7.6 million, or $0.49 per share, compared to net income of $11.6 million, or $1.46 per share, for the comparable period in 2019. The decrease was the result of the decrease in the non-cash gain for the change in fair value of warrant liabilities. R&D expenses for the first quarter of 2020 were $5.1 million, compared to $4.1 million in the first quarter of 2019. The increase was primarily due to increased manufacturing costs and development costs for CF-296. G&A expenses in the first quarter of 2020 were $3.0 million, compared to $2.3 million for the first quarter of 2019. The increase was primarily due to an increase in administrative headcount and personnel costs along with legal fees.

As of Mar. 31, 2020, ContraFect had approximately $16.7 million in cash, cash equivalents, and marketable securities. In May 2020, the company raised net proceeds of approximately $48.8 million in a public offering and separately raised $3 million from a private placement with Pfizer, Inc. This was the second investment in ContraFect by Pfizer, with the first coming in Dec. 2019. We estimate that ContraFect now has sufficient capital to fund operations past the expected interim analysis for the Phase 3 DISRUPT trial, which will occur once the trial is 60% enrolled. Following the recent financing’s we estimate that the company has approximately 27.8 million common shares outstanding and when factoring in warrants and stock options a fully diluted share count of approximately 42.0 million.


We are glad to hear that the ongoing coronavirus epidemic is not having a substantial effect on the DISRUPT trial and that the clinical trial sites remain open and continue to enroll patients. We look forward to additional guidance from the company on when 60% enrollment, and the interim futility analysis, will occur. The recent presentations on Gram-negative lysins and amurins show that ContraFect is building a deep pipeline of advanced anti-infective agents beyond exebacase. Given the robust gains in the biotech sector over the past few months we view it as a good time for companies to raise cash, and the fact that Pfizer has made a second investment is a very promising sign. After accounting for the recent financings our valuation has decreased to $22, however we continue to view ContraFect as a top pick among small cap biotech stocks.

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DYAI: Steady as She Goes

5 days 18 hours ago

By John Vandermosten, CFA



First Quarter Financial & Operational Results

Dyadic International Inc. (NASDAQ: DYAI) released first quarter financial and operational results on May 14, 2020. Revenues were $0.3 million and represented research and development proceeds from partners working to develop C1. Total expenses were $2.7 million and net loss was ($2.2) million after adding interest income. On a per-share basis, net loss was ($0.08). Total cash and investments were $31.3 million as of March 31, 2020, equivalent to ~$1.14 per share.

2020 has begun with a steady stream of additional relationships and expansions of existing relationships. Since our brief update at the beginning of the year, Dyadic has entered into six additional affiliations. Opportunities for product development in infectious disease have emerged and the relationships have expanded with the Israeli Institute of Biological Research (IIBR) and Zoonoses Anticipation and Preparedness Initiative (ZAPI). Other work by partners to develop a treatment or vaccine against the coronavirus using C1 has also emerged. This includes efforts by a consortium of academics from Erasmus Medical Center, Utrecht University, University of Veterinary Medicine Hannover and Ufovax, a spin-off company from Scripps Research.

First quarter 2020 revenues fell 22% to $0.3 million reflecting a contraction from six revenue generating customers to five in 1Q:19 vs. 1Q:20. Total expenses in the three month period declined 5% to $2.7 million. Research and development (1) was down 27% to $1.0 million due to contract completion of the research service agreement with BDI and one fewer research collaboration, partially offset by additional spend for the glyco-engineering project. General and administrative expenses rose 16% to $1.7 million on account of higher insurance and service cost, noncash compensation, business development and investor relations costs partially offset by lower executive compensation and decreased legal expenses. Net loss was ($2.2) million for the period, essentially flat with the comparable quarter in 2019. On a per share basis, net loss was ($0.08) also matching the per share loss in the same period last year.

Cash burn expanded to ($2.0) million in the first quarter on an increase in accounts payable and a decrease in accrued expenses compared to trends in 1Q:19. Cash and equivalents were $31.3 million on March 31, 2020 down from $34.2 million at the end of 2019.

Animal Health

Dyadic has relationships with three of the four leading animal health companies. The latest addition is a fully-funded feasibility study to develop two proteins that was completed in March. One of the other relationships (designated “Leading Animal Health Co. in our summary below) is advancing to the second part of the project. The first part analyzed the productivity and quality of the protein, and the second will evaluate its feasibility to advance to animal trials. Animal health is particularly attractive to Dyadic as it could provide a faster route to commercialization and ultimate royalty and licensing revenues for the company. There are now a total of six collaborations in this space. Cost pressures are acute in animal health and require efficiencies that can effectively address large populations of livestock and pets. In a competitive landscape where cost is key, C1 is a leading technology that can provide needed efficiency.

The work with ZAPI is providing exposure of C1’s capabilities not only to the European public-private partnership that serves to respond to new infectious disease threats, but also to the other partners involved in the effort. Other partners include large pharmaceutical firms such as AstraZeneca, Boehringer Ingelheim and the academic community in the veterinary and infectious disease spaces.

Research Collaborations

Since the beginning of 2020, Dyadic has entered into six new agreements to explore the use and potential of C1 to express proteins and other biological materials. There have also been two expansions of existing agreements with IIBR to create both a vaccine and antibody and ZAPI where two additional targets were added.

One of the new agreements pairs Dyadic with WuXi Biologics. WuXi is a global contract development and manufacturing organization (CDMO) with a broad portfolio of services to the biologics industry including drug discovery, microbial expression and fermentation, cell culture derived products and other platforms to help sponsors and developers advance candidates through the research and development and commercialization process. The deal that Dyadic entered into with WuXi is a non-exclusive research license. We see this as an important collaboration as it provides C1 services broadly for mass production. Many of the interested parties that have signed agreements with Dyadic do not have the facilities to produce commercial volumes of product and the availability of a CDMO with C1 as one of its offerings provides a clear pathway to commercialization for these sponsors.

Another new feasibility study announced is in partnership with Ufovax (2), a spin off from Scripps Research in La Jolla, California. Ufovax will employ C1 to produce a single-component self-assembling protein nanoparticle (1c-SApNP) for HIV and coronavirus. Another relationship recently made public is an arrangement with the University of Oslo to conduct a feasibility study to develop an influenza vaccine. The results of the work may lead to further collaborations and expansion of the vaccines produced with C1. Also of interest is the consortium of academics that are working on a coronavirus vaccine. This collaboration was a product of relationships forged at ZAPI and has led to Dyadic partnering with three of the top 20 experts in the field to produce larger quantities of more potent vaccines and drugs at lower cost using C1.

Exhibit I – Summary of Dyadic Collaborations (3)

Dyadic continues to engage additional prospects and to sign non-disclosure agreements with them. One of the most important collaborations is with Sanofi where Dyadic was able to express all seven of the therapeutic and vaccine proteins that were identified in the project. More than 50% of the proteins were expressed above target levels and now Dyadic is preparing the final presentation to Sanofi to determine next steps. A decision is expected on whether or not to move forward is expected to occur mid-year 2020. We are optimistic on the other research collaborations with large pharmaceutical companies as they allow potential acquirers of this technology to evaluate C1’s potential and have a stake in its success. With numerous interested parties invested in developing the technology we anticipate that if a bidding war begins, substantial value will accrue to Dyadic shareholders.

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1. Total R&D includes Cost of R&D Revenue, R&D and R&D Related Party amounts.

2. UFO is short for “uncleaved prefusion-optimized” rather than what we initially hoped was a focus on the study of alien DNA. It refers to a process for efficiently producing envelope proteins.

3. Source: Zacks Research and Dyadic corporate filings. Green highlight indicates animal health collaboration. Blue highlight indicates academic collaborator.

ACHV: When Quitting Gets You to the Finish Line

5 days 19 hours ago

By John Vandermosten, CFA



First Quarter 2020 Review

Achieve Life Sciences, Inc. (NASDAQ:ACHV) reported first quarter results in an early morning press release and conference call held on May 14th 2020. The company concurrently filed its 2019 10-Q with the SEC. While disruptions related to the coronavirus have required new safety measures, Achieve now anticipates a 2H:20 start to the first of two Phase III trials. Year to date 2020 highlights include publication of an AI study on nicotine effect, engagement of FreeMind Group to obtain funding for a vaping study, presentation at the SRNT 2020 Annual Meeting, and a small capital raise. During the conference call management announced that they have submitted all required documents to the FDA and anticipate starting the Phase III ORCA-2 trial this fall pending receipt of funding.

First Quarter 2020 Financial Performance

Cash burn was ($4.5) million for the first quarter, compared with ($4.9) million in the comparable prior period. Cash and equivalents and short-term investments as of March 31, 2020 were $12.2 million, a reduction from fourth quarter levels. Following the end of the first quarter, Achieve completed a private placement and raised $1.9 million gross proceeds.

Vaping Trial

In February, Achieve executed an agreement with FreeMind Group to identify and secure non-dilutive capital from government and private sources to fund a Phase II study on the efficacy of cytisinicline for smoking cessation in vaping and e-cigarette users. Data cited by the company from the Annals of Internal Medicine identified nearly 11 million users of vaping products and e-cigarettes. It will measure vaping abstinence for six and 12 weeks using carbon monoxide and serum cotinine levels to determine the primary endpoint. Achieve has applied for a three year grant that, if awarded, will provide $5 million per year to fund the effort.

Presentation of Data at SRNT, New Orleans

On March 12th, Dr. Mitchell Nides, principal investigator for the ORCA-1 trial, presented an analysis of data for the study. Further analysis did not find any differences in benefit from cytisinicline treatment based on race, gender, age or body mass index. Neither did smoking history, nor type of previous cessation product affect the utility of the drug. No clinical site differences were observed and there was no treatment difference between slow and fast nicotine metabolizers.

Phase III Trial

All materials required to start the ORCA-2 trial were submitted to the FDA in April, cytisinicline tablets are ready for disbursement, the contract research organization has been selected and 15 clinical sites have been identified. We anticipate a second half start for the first of two Phase III cytisinicline studies. The primary endpoint for the trial will be smoking abstinence during the last four weeks of the treatment period and the secondary endpoint will be abstinence at 24 weeks. Achieve met with the FDA in December to finalize trial details to ensure protocol modifications meet the agency’s approval.

Exhibit I – Phase III Trial Design (1)


Data from the New Zealand RAUORA (2) study will be presented at a conference later this year. This head to head trial comparing cytisinicline and varenicline (3) may demonstrate superior safety and efficacy for Achieve’s in-development product and if so will provide strong justification for commercialization. The study enrolled 2,140 Māori and their extended family in a randomized, non-inferiority trial. Enrollment is complete and data is likely in the process of being prepared for publication.

Capital Raise

In April 2020, Achieve issued 5,615,653 shares of stock in a private placement that raised gross proceeds of $1.9 million at $0.33 per share. The deal included 75% warrant coverage, issuing 4.2 million warrants with an exercise price of $0.362. Warrants have a five year life. An additional 505,409 broker warrants were also issued at an exercise price of $0.3795. Net proceeds after expenses were $1.6 million.

Achieve also updated its agreement with Lincoln Park Capital, obtaining the right to sell $11 million of common stock shares. The duration of the agreement was extended to 54 months stretching the original term until March 2022. No shares have been sold through this arrangement in 2020.

Key Events

‣ Presentation of additional analyses of ORCA-1 at SRNT New Orleans – March 2020

‣ Complete animal toxicity study – 2Q:20

‣ Possible RAUORA Data Presentation at SRNT Switzerland – September 2020

‣ Second chronic toxicology study submission to FDA – 4Q:20

‣ Launch Phase III trial – 2H:20


We believe that the historical use of cytisinicline lends support to its safety and efficacy which we anticipate will be confirmed in the upcoming Phase III trials. These registrational efforts will generate the necessary data to obtain FDA approval, presenting a relatively low risk pursuit for a new chemical entity in the United States. Achieve has completed its Phase IIb trial and maximum tolerated dose investigation and management has guided toward a second half 2020 start to the ORCA-2 trial pending funding. An additional capital raise or interest from a larger collaborator may provide sufficient dollars to complete the effort. Partners with a primary care salesforce and other infrastructure already in place are most attractive.

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1. Source: Achieve Life Sciences S-1 Filed November 6, 2019.

2. Rauora is the Māori word for rescue

3. Branded Chantix from Pfizer in the United States

PHIO: Intasyl Advantage vs. Gene Editing

5 days 19 hours ago

By John Vandermosten, CFA




‣ Partnership/Sale of Dermatology and Ophthalmology Programs – TBD

‣ Expansion of collaboration with Helmholtz Zentrum München & Medigene – March 2020

‣ IND enabling study results for PH-762 – 2020

‣ PH-762 (ACT – Melanoma with partner) into clinic – 2H:20

‣ PH-762 (IT – Melanoma) – 2021

‣ PH-804 (ACT – with partner) – 2021

First Quarter 2020 Financial & Operational Update

Phio Pharmaceuticals Corp. (NASDAQ:PHIO) reported first quarter 2020 results and filed its Form 10-Q on May 12, 2020. Year to date, Phio has continued to generate valuable preclinical data supporting Intasyl’s use in immuno-oncology and forge new or expanded collaborations with Helmholtz Zentrum München, Medigene, Karolinska Institutet and Carisma Therapeutics. In May, Phio announced participation in several upcoming events to present data to the scientific and investment community. The company was also able to raise additional capital in preparation for clinical trials later this year. Phio is dependent upon its partners for advancing PH-762 for adoptive cell therapy (ACT) and anticipates this candidate will enter the clinic by 2H:20. The company is also advancing its internal program for intra-tumoral injection for the same candidate.

As of March 31, 2020, cash stood at $13.3 million and debt remained at zero. Cash burn was ($2.2) million for the quarter, similar to the amount in the comparable period. Cash from financing was a net $8.5 million reflecting the issuance of stock and warrants and the proceeds from warrant exercise. Following the end of the reporting period, Phio announced an additional capital raise of $4.0 million in gross proceeds. Phio management expects current cash reserves to sustain the company for at least the next 12 months.

New Intasyl Data

On March 31st, Phio reported continuing preclinical evidence of Intasyl-enabled compounds effectively reducing tumor-microenvironment (TME) immunosuppression. Details of the findings will be presented at an upcoming scientific conference. A mouse version of PH-762 and PH-894 were injected intra-tumorally into a murine model of hepatocellular carcinoma and compared to a placebo arm. The Intasyl compound completely inhibited tumor growth in contrast to the placebo-treated animals which experienced exponential tumor growth. The work showed that PH-762 and PH-894 can penetrate solid tumors and reduce tumor growth by activating the immune response in an animal model. PH-762 inhibits PD-1 receptor expression in T cells while PH-894 silences the expression of bromodomain-containing protein 4 (BRD4), which impacts cell differentiation. This compound has demonstrated an ability to improve T cell function and persistence by differentiating T cells into an effector memory phenotype.


One of the bright spots for Phio has been the collaborations forged over the last year. New and existing partners continue to leverage the Intasyl platform to execute on their own cutting-edge technologies. Phio’s leading efforts include ACT, intra-tumoral injection, chimeric antigen receptor macrophages (CAR-M) and the development of a combination therapy in immuno-oncology (IO). In March 2020, the company called upon Medigene’s expertise to assist in the development of clinical candidates in conjunction with Helmholtz Zentrum München.

Exhibit I – Recent Partnerships and Partnership Expansions (1)

Pipeline Candidates

Phio’s pipeline includes lead candidate PH-762 for melanoma and PH-804 for a variety of immuno-oncology targets as well as other compounds focused on checkpoint receptor inhibition, adoptive cell therapy (ACT) and tumor microenvironment. Cell differentiation is another program that is seeking to extend the life of modified immune cells to combat exhaustion.

Exhibit II – Phio INTASYL Immuno-Oncology Pipeline (2)


Phio continues to advance its pipeline towards the clinic and engage in additional collaborations. There are many synergies among the targeted indications in preclinical work which should reduce costs and provide the greatest number of ultimate options for Intasyl development. Immuno-oncology is an attractive area for development as the FDA frequently provides preferential consideration for candidates pursuing a cancer indication and there is broad demand for therapies in this domain. Phio’s Intasyl platform has many favorable characteristics including low cost, a high degree of safety, and the ability to enhance the IP of partner products among other benefits. Phio has indicated that they maintain sufficient cash to support activity for the next year, a runway that may be extended with funds generated from asset sales or accessing funds under purchase agreements.

We think it is necessary for the company to develop a partnership with a peer that can provide both funding and validation of Phio’s projects. A partnership will also have the benefit of increasing investor interest in the company. While Phio has an impressive portfolio with clinical data supportive of safety and efficacy, financial support will be critical to their ultimate success. As it is too early to assign a valuation to the immuno-oncology platform, we continue to base our current valuation on the Phase II assets RXI-109 and Samcyprone. We remind investors that we attach a value to development programs as they enter the clinic and will assign a value to PH-762 and PH-804 at that time.

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1. Table created by the author

2. Source: Phio Corporate Presentation, January 2020

UHAL: Not expected to run out of cash! Fourth quarter numbers were much better than expected. Revenue is improving from the low in April 2020 and the relaxed restrictions should boost revenue from these levels. U-Box continues to grow and is profitable.

5 days 19 hours ago

By Ian Gilson, PhD, CFA



AMERCO (NASDAQ:UHAL) reported its fourth quarter and annual results for fiscal 2020 (ending on March 31, 2020) on May 27, 2020 with a follow-up on May 28, 2020.

Management stated that the company “was not going to run out of cash.”

The company discussed the impact on revenue for April and May 2020 as compared to the same months in 2019. April was down 30% year over year and May was down 15%. These are better numbers than the auto rental companies that are heavily biased by airport driven passenger counts.

The 4Q20 numbers were much better than we had expected, mainly because March 2020 was less affected by the COVID-19 virus pandemic than anticipated. Truck revenue was $518 million as compared to our estimate of $500 million and $529 million a year ago.

Overall, excluding an income tax benefit, the 4Q20 loss was $1.21 a share as compared to a profit of $0.04 a share last year.

Included in the 4Q20 is a $146 million tax credit from the application of the CARES Act regarding the tax carry-back of 5 years of federal tax payments. The company has filed for this with the US tax department and the usual time between filing and payment is 90 days. Applying the net operating loss carryback plus changes in depreciation methods should result in cash refunds of over $380 million.

Overall cash and credit availability at the end of April was over $400 million and AMERCO has borrowed $200 million against this tax benefit. Our forecasts for 2021 and 2022 assume a profit for both fiscal years, albeit at a much lower lever than 2018 and 2019. Given the uncertainties caused by COVID-19, the potential of a second wave of infection in 2020 and the possible lack of a widespread use of a vaccine until 2020 our estimates have a lower rate of confidence than usual.

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CVM: Last Event Completed; On To Analysis

6 days 11 hours ago

By John Vandermosten



Second Quarter Fiscal Year 2020 Operational and Financial Results

CEL-SCI Corporation (NYSE:CVM) reported second quarter fiscal year 2020 operational and financial results for the three month period ending March 31, 2020. Following a near nine year duration of the IT-MATTERS trial evaluating Multikine in head and neck cancer, the company announced the final event has taken place. During the quarter, the final Independent Data Monitoring Committee (IDMC) review took place, additional capital was raised, and a global pandemic brought the LEAPS platform into the spotlight. Following the announcement of the final event, we anticipate the two contract research organizations (CROs) will follow the standard checklist to generate topline data over the next few months.

During the second quarter of fiscal year 2020, CEL-SCI recognized grant income of $300,000 funding the LEAPS platform and the development of a rheumatoid arthritis vaccine. This compares to $150,000 that was received in 2Q:19. Research and development expenses of $4.4 million in the second quarter rose 55% over prior year restated levels. General and administrative expenses were $2.6 million for the three month period, up from a restated $1.6 million the prior year, a 58% increase (1). Increased R&D expenses are attributed to $0.6 million in greater cost from manufacturing facility preparation, $0.5 million higher stock compensation expense, a $0.3 million increase in depreciation from a new leasing standard and $0.2 million rise from other miscellaneous items. G&A expenses were up in 2Q:20 on account of a $0.7 million increase in stock compensation expense and a $0.2 million rise in unallocated expenditures. Other income totaled ($2.1) million, largely comprised of losses from derivative instruments ($3.0) million partially offset by $1.0 million from other non-operating items. After incurring $253,000 in interest expense, CEL-SCI reported a net loss of ($9.0) million, or ($0.25) per share. Removing derivative related changes and other non-operating gains had a $2.1 million impact on net income and a $0.06 impact on EPS.

Cash balance as of March 31, 2020 stands at $14.3 million, an almost $6 million increase from year end 2019 levels. CEL-SCI benefitted from a net $14.6 million positive financing cash flow partially offset by cash burn of ($4.6) million. CEL-SCI continues to hold no debt.

Final Event in IT-MATTERS Trial

After almost a decade of duration, the IT-MATTERS clinical trial experienced its final event, reported in a press release on May 4, 2020. The event-driven trial for head and neck cancer enrolled its first patients in 2011 in the US, Canada, UK, France and 20 other countries. 928 patients were ultimately enrolled, with the final individual added in September 2016. The primary endpoint for the study is an overall survival benefit of 10% over standard of care alone in defined areas of the head and neck. Based on timelines for other trials we have seen, we think CEL-SCI will present findings at a conference before the end of the year.

The trial had three arms including:

1) Multikine plus CIZ (1) followed by SOC

2) Multikine (CIZ-exclusion) followed by SOC

3) SOC therapy as the active comparator

Only the M+CIZ and SOC groups were used to contribute to the event total for the trial. Over the near nine year duration, an independent data monitoring committee (IDMC) provided periodic checks approximately every 6 months to ensure patient interests were met and the trial was conducted ethically.

Now that the final event has taken place, there will be additional steps that occur over the next few months as data is validated and analyzed. CEL-SCI reported that the data is now being prepared for lock and analysis. The company’s two contract research organizations (CROs), ICON and Ergomed, will generate remaining queries, verify data, complete the medical review and build the final database. ICON will perform the data analysis and control.

Our experience with event-based trials suggests that it can take from two to three months (2) to complete the follow up steps after the last event is reported. Management did not provide any guidance on expected timeline and we caution investors that coronavirus-related disruptions could extend the period of analysis relative to our estimate. However, in our conversations with other management teams, no material delays have been noted for other trials and data analysis in our anecdotal review. We expect possible finalizing steps for the IT-MATTERS trial to include:

‣ Follow up safety visits

‣ Adjudication of events

‣ Follow up with discontinued patients

‣ Data base lock

‣ Analysis of primary and secondary endpoints

‣ Full review of dataset and safety results

‣ Presentation of results at major oncology conferences

‣ Publication of results in journals

Once the full dataset is available, CEL-SCI will meet with the FDA and other regulatory authorities to develop a plan for the submission of a biologics license application (BLA). Management did not provide any guidance regarding a timeline but we caution investors that unexpected delays due to the global pandemic may extend the final stage thus, the timing of any reporting of data could differ from the 2 to 3 month range that we expect. The CROs are fully responsbile for the timing for the development of the data analysis and CEL-SCI management is required to disclose material information once available. Therefore, we expect a report of topline data will come within a few days of it being available to the company.

We believe that one of the major oncology conferences in the last months of 2020 will be targeted for presenting data. While the pandemic has forced the cancellation of many conferences, by fall, we believe that the major annual conferences will be held virtually if not in person. The mid-September European Society for Medical Oncology Congress (ESMO) may be an appropriate conference for CEL-SCI’s Multikine results to be presented. The ESMO Immuno-Oncology Congress in the second week of December may also be appropriate.

We congratulate CEL-SCI on the completion of their nine-year trial for Multikine and eagerly await topline results. As we have explained in our research, we believe that Multikine will, more likely than not, be safe and effective. Our belief is based on earlier Phase II results where the longer-than-expected length of the trial and the IDMC’s consistent recommendation to continue the trial suggest extended life when compared with historical precedents.

Infectious Disease Review

While most of the attention for CEL-SCI has been focused on the final events for the IT-MATTERS trial and Multikine, the company’s second platform, Ligand Epitope Antigen Presentation System or LEAPS, has come into focus after its years-long work on pandemic flu. The coronavirus’ spread across the globe has dominated the news over the last several months and media focus on potential solutions that may eventually address viral outbreaks has intensified.

While antivirals can be used for severe cases of influenza, antiviral resistance can emerge quickly, illustrating the need for novel, more effective therapeutic approaches. LEAPS has been used by attaching influenza proteins to an immune-binding ligand which is then used to activate dendritic cells that are injected into the host. In mice, LEAPS were effective in treating infection with an antiviral drug-resistant influenza virus.

In 2009, CEL-SCI conducted its first clinical study comparing blood sampled from H1N1 and healthy patients who had been administered the LEAPS-H1N1 treatment. In a 2009 clinical trial of H1N1 patients, LEAPS was used and targeted a conserved region of H1N1 Pandemic Flu, Avian Flu (H5N1), and the Spanish Flu, a region that was not associated with exacerbating cytokine storm. The study drew blood from hospitalized H1N1 patients and activated their cells with the LEAPS H1N1 investigational therapy to assess the cell’s response for future treatment.

In 2013, CEL-SCI published data showing LEAPS was effective in stopping three different influenza strains, including a drug resistant and a pandemic strain. The journal article that summarized the findings of the research noted that:

“Our data demonstrate that Influenza-J-LEAPS-pulsed DCs reduce virus replication in the lungs, enhance survival, and modulate the protective immune responses that eliminate the virus while preventing excessive cytokines that could injure the host. This approach shows promise as an adjunct to antiviral treatment of influenza virus infections.”

The effectiveness of the treatment was evidenced by the mouse animal model not losing weight, reduced virus production in treated mice and less inflammatory immune response. Dr. Daniel Zimmerman, the inventor of LEAPS and SVP of research at CEL-SCI, believes that this approach could address a future influenza pandemic. While CEL-SCI is not actively advancing this program, a viral epidemic or pandemic could provide both the funding and motivation to pick up where they left off. We discuss the LEAPS program in further detail in a September article.

Since the publication of our previous report, CEL-SCI announced the initation of an immunotherapy March 9th to treat the coronavirus using the LEAPS peptide technology. The approach has shown promise in influenza and Dr. Zimmerman, CEL-SCI’s senior VP of Research believes that a LEAPS-based peptide for the coronavirus peptide will slow or stop the progression of the viral infection and prevent tissue damage from inflammation.

On March 23rd, the corporation further revealed a collaboration with the University of Georgia’s Center for Vaccines and Immunology to develop an immunotherapy treatment for the coronavirus using LEAPS. The two entities will start pre-clinical studies based on previous work done with H1N1 after the 2009 flu pandemic. The 2009 approach was succesful in reducing morbidity and mortality in animal models. The proposed peptides for the study are directed towards antigens within the nucleocapsid protein (NP) of the coronavirus that elicit cytolytic T cell responses. The approach avoids the spike antigens which have been targeted by other antibody-based vaccines, and instead targets NP antigens which are less variable between viral strains and less likely to change in response to antibodies produced by infection or vaccines.

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1. Restatements were related to classification of operating expenses from general and administrative expenses to research and development expenses. ~$0.3 million of 1Q:19 G&A expenses were moved to R&D. Total operating expenses remained the same for 1Q:19.

2. We reviewed six recent Phase III trials and measured the number of days between the report of the last event and when topline was announced. We found an average length of 82 days (just under 3 months) with a range of 48 days to 110 days. Companies included all reported their last event in 2018 or 2019 and included Intec Pharma, Amarin Corp, MedDay, Acasti Pharma, Ritter Pharma and Resverlogix.

LPCN: Cirrhosis IND Cleared

6 days 12 hours ago

By John Vandermosten



First Quarter 2020 Operational and Financial Results

On May 7, 2020 Lipocine (NASDAQ:LPCN) filed its first quarter 2020 10-Q and posted its earnings release for the three month period ending March 31, 2020. The company reported zero revenues and a net loss per share of ($0.14) compared to prior year revenues of zero and loss of ($0.14) per share. Activity in the first quarter was dominated by a rapid response to Tlando’s Complete Response Letter (CRL) received in late 2019. Management requested and held a Post Action meeting with the FDA to identify an appropriate response to address the Cmax related deficiency identified in the CRL. The agency and company agreed that a reanalysis of existing information would be sufficient leading to the resubmission of a new drug application (NDA) in February 2020. Development continues with LPCN 1144, which is currently being evaluated in the Phase II Liver Fat Intervention with oral Testosterone (LiFT) study. Other highlights year to date include a series of decisions favorable to Lipocine in their confrontation with Clarus. The company also received clearance for LPCN 1148 and may now start a Phase II trial for cirrhosis dependent on the availability of funding.

Operational expenses for 1Q:20 were $4.6 million, up 47% and net loss totaled ($5.8) million or ($0.14) per share. Research and development expenses totaled $2.5 million, with the 29% rise over prior year amounts reflecting increased costs related to the LiFT study, greater expense for Tlando XR development and greater personnel expense partially offset by lower expenditures for Tlando. General and administrative costs rose 77% over last year’s first quarter to $2.1 million on a $1.0 million increase in legal fees related to the Clarus litigation partially offset by a decrease in personnel costs and lower travel expenses.

Cash and marketable securities balance was $15.6 million as of March 31, 2020. There is another $5 million of restricted (1) cash which will remain on hold until Tlando is approved. Current and non-current debt totals $6.4 million. Cash burn for 1Q:20 was approximately ($3.4) million and net cash provided by financing was $4.9 million representing $5.7 million in proceeds from a registered direct offering and repayment of $833 thousand of debt to Silicon Valley Bank.


On November 11 of last year, Lipocine announced that it had received a CRL for Tlando. The CRL identified one deficiency stating that the trial did not meet one of the three secondary endpoints for maximal testosterone concentrations (Cmax). No deficiencies related to chemistry, manufacturing and controls were noted. FDA guidelines call for 85% of subjects to achieve a Cmax below 1500 ng/dL and no more than 5% of subjects presenting a Cmax between 1800 ng/dL and 2500 ng/dL and 0% above 2500 ng/dL. In the most recent dosing validation (DV) study, 85% of subjects were below 1500 ng/dL and 7% were between 1800 ng/dL and 2500 ng/dL. Although there were small variations from the FDA guidelines in the original SOAR study for subjects above 2500 ng/dL, the FDA did not identify this as a deficiency during the original New Drug Application (NDA) submission.

Following the Post Action meeting with the FDA, Lipocine was advised to address the outstanding deficiencies with a reanalysis of existing data. This recommendation relieved Lipocine of the time and cost of an additional trial and also allowed the resubmission of the Tlando NDA in February. We were pleasantly surprised to see the rapid resubmission and the assigned PDUFA date of August 28, 2020, as it was ahead of our anticipated timeline. While the resubmission is a positive, Tlando has faced significant hurdles gaining the favor of the FDA. We published a note on February 25th that discussed details regarding the resubmission.

LPCN 1144

Lipocine announced in August 2018 the pursuit of a new indication in nonalcoholic steatohepatitis (NASH). We discuss the indication and Lipocine’s efforts in an earlier piece that can be accessed here. Full enrollment of 36 subjects was achieved in November 2018.

In January 2019, Lipocine announced meaningful liver fat reduction in patients participating in its Liver Fat Study and informed investors that the company had filed an investigational new drug (IND) application to begin a Phase II study for NASH. Since LPCN 1144 is the same molecule as TLANDO, for which there were numerous safety studies completed, LPCN was allowed to perform a proof of concept (POC) clinical study under the original IND to assess liver fat changes. This 36-person study was conducted in hypogonadal men at risk of developing non-alcoholic steatohepatitis (NASH) and results were measured using the magnetic resonance imaging proton density fat fraction (MRI-PDFF) technique. Topline results were announced in 1Q:19 demonstrating a 4.0% to 8.2% percentage point reduction in liver fat depending on baseline liver fat category. We discussed the results in further detail in our NASH Topline article.

Lipocine launched its Phase II clinical study for LPCN 1144 and dosed its first patient last September. Prior to the start of the trial, Lipocine announced that the FDA would allow the Phase II LiFT trial to enroll eugonadal patients in addition to the NASH patients that were initially targeted. This expansion was based on research that we discussed in a July 29th note. The study is anticipated to last for 18 months and cost approximately $8 million.

LiFT, an acronym of Liver Fat intervention with oral Testosterone, is a paired biopsy Phase II study in NASH subjects. The study design will employ a three-arm, double-blind, placebo-controlled structure and enroll approximately 75 biopsy confirmed male NASH subjects with a NAS (2) score of greater or equal to four. The primary endpoint for the study is 12-week MRI-PDFF liver fat reduction and the first patient was enrolled in 3Q:19. As for the anticipated timeline, Lipocine expects top line liver fat reduction data in 4Q:20 as measured by MRI-PDFF at 12 weeks. Biopsy data at 36 weeks is expected to be available in the second quarter of 2021.

Exhibit I – LiFT Study Timeline (3)

On May 11th, the competitive environment for the NASH space was thinned by one with the announcement that Genfit’s (GNFT) elafibranor had failed in a Phase III trial that enrolled over 1,000 NASH patients. The drug was not better than placebo at improving NASH symptoms without worsening of fibrosis and did not achieve its primary endpoint. While elafibranor’s failure is not helpful for the patients that were hoping for its success, its likely withdrawal as a contender clears a potential competitor from the space. The leader in the space, Intercept Pharmaceuticals (ICPT), is expecting a response from the FDA in late June for its candidate, Obeticholic acid, or OCA.

LPCN 1148

Lipocine is preparing to develop its testosterone molecule to treat NASH cirrhosis patients. While the target market is smaller than that of pre-cirrhotic NASH, there are no other FDA approved products available. The positive relationship between testosterone and sarcopenia and the increased risks of advancing NASH cirrhosis makes this pursuit worthwhile. Pending funding, Lipocine plans to initiate a proof of concept trial to evaluate the potential of this candidate. The company’s Investigational New Drug (IND) application was cleared by the FDA in May 2020. We anticipate Lipocine will launch the Phase II trial after the start of commercialization of Tlando and upon availability of sufficient capital to fund the trial. Management has guided to a 4Q:20 or 1Q:21 start.

Exhibit II – Lipocine Pipeline (4)

Markman Hearing

On March 26th, Lipocine announced the outcome of the Markman Hearing, also known as a claim construction hearing. This meeting is an important precursor to a patent infringement lawsuit and provides the definitions of terms critical for a jury’s determination on whether or not a patent has value. A patent should not be too specific, as it provides insufficient protection to an invention, or too broad, in which case a court may rule it indefinite. In the hearing order (5), Judge Bryson did not agree with most of Clarus’ claims and sided with Lipocine on the majority of definitions and clarifications. While the terms and definitions are subject to an “evolving” construction, the order is favorable to Lipocine’s dispute against Clarus. While this order could be appealed again, it is unlikely in the opinion of Lipocine’s counsel. Lipocine and Clarus are currently engaged in the fact discovery phase of the lawsuit and the jury trial is anticipated to take place in February 2021. Lipocine need only prevail on one claim to merit damages, which places them in a strong position to succeed in the trial or provide incentive for Clarus to settle.

Citizen’s Petition

Clarus filed a Citizen’s Petition with the FDA in October of 2019 requesting that the agency provide clear, written guidance regarding safety and efficacy standards for oral testosterone drugs. The petition also requested that the FDA not approve any other oral testosterone drugs until the requested guidance was given. This was an effort to limit competition for oral testosterone candidates in development such as Lipocine’s Tlando. The FDA denied the petition without comment on February 27, 2020.

USPTO Decision Affirmed

The US Court of Appeals affirmed the decision of the USPTO in April 2020 to grant Lipocine’s Priority Motion in the interference case that cancelled Clarus’ claims to the ‘428 patent in January 2019. The USPTO, through its Patent Trial and Appeal Board (PTAB), had granted Lipocine’s priority motion in the related interference case and entered adverse judgment against Clarus. As we have previously shared, this outcome was expected as it is rare for a federal court to overturn a USPTO ruling. As a reminder, in 2Q:19 Lipocine filed suit against Clarus alleging that Jatenzo infringed on six of Lipocine’s patents. The injunction filing may slow down commercialization of Jatenzo and force Clarus to come to the table to negotiate a settlement. While the cost of pursuing such legal action could be high, we anticipate by the time the case works its way through the courts, cash flow from Tlando could be sufficient to support the legal efforts.


‣ Tlando CRL – November 9, 2019

‣ Tlando FDA post action meeting – January 2020

‣ Resubmission of Tlando NDA – February 2020

‣ Investigational New Drug (IND) clearance for LPCN 1148 – May 2020

‣ Tlando PDUFA date – August 28, 2020

‣ Primary endpoint results for LiFT – 4Q:20

‣ Patent Infringement trial – February 2021

‣ Complete Phase II LPCN 1144 – 2Q:21

SUBSCRIBE TO ZACKS SMALL CAP RESEARCH to receive our articles and reports emailed directly to you each morning. Please visit our website for additional information on Zacks SCR. 

DISCLOSURE: Zacks SCR has received compensation from the issuer directly, from an investment manager, or from an investor relations consulting firm, engaged by the issuer, for providing research coverage for a period of no less than one year. Research articles, as seen here, are part of the service Zacks provides and Zacks receives quarterly payments totaling a maximum fee of $40,000 annually for these services. Full Disclaimer HERE.


1. Tlando was not approved by the FDA by May 31, 2018, and therefore Lipocine is required to maintain $5.0 million of cash collateral at Silicon Valley Bank (the lender) until such time as it is approved by the FDA.

2. NAS: NAFLD (Non-alcoholic fatty liver disease) Activity Score. Discussion of the metric can be found here.

3. Source: Lipocine Corporate Presentation May 2020.

4. Source: Lipocine Corporate Presentation May 2020.

5. A link to the Markman Hearing Order can be found on this page:

PMN.TO: Diagnostic Testing to the Forefront

6 days 12 hours ago

By John Vandermosten



First Quarter 2020 Operational and Financial Results

ProMIS (TSX:PMN.TO) (OTC:ARFXF) has continued to identify new candidates for neurodegenerative diseases using its proprietary development platform. Efforts have also expanded into uses of the company’s monoclonal antibodies intracellularly via vectorization. Collaborations have been another area of activity for the company, with combined efforts announced with the Toronto Memory Program and BC Neuroimmunology. The Scientific Advisory Board has also been fortified with two new additions this year: Dr. Molinuevo and Dr. Frykman.

ProMIS has publicized the importance of biomarkers, their value in assessing efficacy and their role as the backbone of cost-effective trials. As part of the company’s strategy going forward, each program, from α-synuclein to TDP-43, has identified a blood based biomarker that can rapidly and effectively determine whether or not the experimental therapy is working. This effort to advance the utility of biomarkers was continued with the initiation of a natural history study of blood-based biomarkers in AD and a collaboration with BC Neuroimmunology (BCNI) to develop a test for AD. ProMIS will work with these partners to find a less costly and more efficient path to identify the presence of AD and the effects of a disease modifying therapy. Success in this effort may establish a precedent for using a biomarker to support accelerated approval in an FDA sanctioned trial. The work with BCNI has extended into the coronavirus realm and the partnership expects to validate results before the end of June.

Financial results for first quarter 2020 were published in a press release and SEDAR filings released on May 13, 2020. Research and development efforts consumed $1.0 (1) million in 1Q:20 compared with $1.8 million in the prior year quarter, a 45% drop. Lower spending on external contract research organization (CRO) costs, less share-based compensation and decreased patent expenditures were partially offset by higher contract research salaries, and external consulting expense. General and administrative expenses were $0.8 million, compared with the prior year’s $0.7 million. The 17% increase in spend was primarily attributed to warrant modification expense.

As of March 31, 2020, cash stood at $1.3 million, down from the prior year-end level of $1.7 million. Cash burn for 1Q:20 was ($1.4) million offset by a net $1.0 million in cash from financing. In March 2020, ProMIS secured approval from the Toronto Stock Exchange to temporarily reduce the exercise price on 44 million options to $0.13 per share in a modification that expires on May 22. This could raise several million dollars during the second quarter.


ProMIS is currently in private discussions with potential partners for the antibodies associated with α-synuclein, Tau and TDP-43 targets. Each of these assets has at least two different prospects. If a deal were to take place it would likely enable ProMIS to move the partnered molecule towards the clinic and also provide capital via upfront payments to advance PMN310 into a Phase I trial. While disruptions related to the coronavirus have slowed the pace of these talks, discussions continue and we anticipate they will soon resume their former intensity.

In recent presentations, press releases and in the corporate outlook, ProMIS has made references to vectorization of antibodies. Using gene therapy, the genetic sequence for intracellular antibodies (intrabodies) can be delivered to cells which can synthesize the desired antibody to address misfolded proteins inside the cytoplasm. This approach has the potential to allow one treatment to provide a durable therapeutic benefit.

In February, ProMIS announced a natural history study of blood-based biomarkers in AD. The collaboration was launched in a joint effort with the Toronto Memory Program, an established memory clinic that treats a large population of AD patients. The work will generate a baseline for the early detection of a treatment signal to help develop better therapies for this group of patients.

The company has also engaged with BC Neuroimmunology (BCN), which is led by ProMIS board member Dr. Hans Frykman. On April 15, ProMIS announced a collaboration with BCN to develop a high-throughput, highly specific serological asay to detect SARS-CoV-2 antibodies. About a month later, the partnership was expanded to include the development of a diagnostic assay for screening and diagnosis of AD. The diagnostic approach will use surface plasmon resonance (SPR) (2) technology, a highly accurate approach to detecting specific antibodies.

Exhibit II – ProMIS Neurodegenerative Candidate Portfolio (3)

Additions to the Team

In January 2020, Dr. José Luis Molinuevo ascended to the Scientific Advisory Board (SAB) bringing his experience as a neurologist, researcher, professor, principal investigator and clinician to the post. Dr. Molinuevo has focused on AD and other related diseases such as PD. He is the Scientific Director of the Alzheimer Prevention Program at the BarcelonaBeta Brain Research Center (BBRC) in Barcelona, Spain, which focuses on Alzheimer’s disease prevention from a clinical, cognitive, genetic, and biomarker perspective. Dr. Molinuevo is also an associate professor at the University Pompeu Fabra. His experience and knowledge of biomarkers and relationships throughout Europe are valuable assets that should provide support for later stage clinical trials in ProMIS’ portfolio candidates.

In conjunction with the announcement that ProMIS was collaborating in the development of a serological test for the coronavirus, the company also welcomed Dr. Hans Frykman to the SAB in April. Dr. Frykman is the CEO and medical director of BC Neuroimmunology lab and Neurocode Labs. For decades, the BC Neuroimmunology lab has provided clinical neuroimmunology testing in North America. Dr. Frykman is also a clinical assistant professor of medicine at the University of British Columbia.


ProMIS identified a new antagonist against the Receptor for Activated protein C Kinase 1 (RACK1). RACK1 has been implicated in neurodegenerative diseases including amyotrophic lateral sclerosis (ALS). The RACK1 antagonists are designed to prevent this protein from forming aggregates that impair proper neuronal functioning. RACK1 is an attractive target because it interacts with other proteins including TAR DNA-binding protein 43 (TDP43) and Fused in Sarcoma (FUS). TDP43 and FUS can assemble and prevent neurological machinery from functioning properly by impairing synthesis of cell proteins. The RACK1 antagonist is another example of the broad functionality of ProMIS’ discovery algorithms.

Significant Event Timeline

ProMIS has a number of recent and upcoming milestones related to development of its pipeline which we summarize below.

‣ Confidential discussions with potential partners for platform programs - Ongoing

‣ PMN310 scale up manufacturing – 2019

‣ Capital raise or partnership to fund entry into clinic – 2020

‣ Prepare IND and Phase I trial for PMN310 – 2020

‣ Pursue a vectorization deal - 2020

‣ Generate Phase I biomarker data with Toronto Memory Program – 2020

‣ Launch Phase I trial in PMN310 - 2021


ProMIS has continued to advance its preclinical programs, highlighting many new new antibody, antagonist and diagnostic candidates for development. Parallel with these endeavors is the continued interaction with the scientific, investment and corporate community to garner KOL support, financing and partnerships. Management has refined its message highlighting the need to focus on the toxic forms of misfolded proteins that are the root cause of neurodegenerative disease and the importance of biomarkers that can rapidly and inexpensively demonstrate efficacy. We continue to be impressed with ProMIS’ discovery platforms and their ability to identify unique features of toxic misfolded proteins. We believe that a pharmaceutical partner deal or large investment will allow the company to advance its candidates into the clinic.

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1. Currency is denominated in Canadian Dollars

2. SPR is an approach that employs covalently attached ligands which interact with an analyte. Light is refracted on an underlying sensor chip, the angle of which can determine the mass of a bound protein. See here for a detailed explanation.

3. Source: ProMIS Corporate Presentation January 2020.

MTBC: MTBC Weathering COVID Storm, Reaffirms 2020 Guidance. Growth Should Re-Materialize in 2H

6 days 14 hours ago

By Brian Marckx, CFA



Q1 2020 Results, Operational Update

MTBC, Inc. (NASDAQ:MTBC) reported financial results for their fiscal first quarter ending March 31, 2020 and provided an operational update. Q1 2020 revenue and adjusted EBITDA were both well ahead of our respective estimates. In addition, management reiterated full-year guidance of revenue between $100M and $102M and adjusted EBITDA of $12M to $13M. While we expect to see a significant decline in sales and profitability in Q2 as a result of adverse impacts from the COVID-19 pandemic, we think the second half of the year could show a significant rebound from MTBC’s growth initiatives. And while a substantial decline in on-site patient visits will hamper growth for at least the very near-term, significant growth in virtual visits (via telehealth) should help to stem some of the coronavirus-related financial impact. MTBC has also been very active in building out its partnership-related growth initiatives and continues to close new deals on a regular basis.

Noteworthy, management mentioned on the Q1 call that while patient visits fell about 40% through mid-March that that decline largely stabilized buy the end of that same month and that ~50% of that decline had already been recouped by around mid-May. Moreover, telehealth visits have ramped (on a relative basis) – accounting for just 1% of visits in the past to over 20% by the end of Q1.

Telehealth volume has been buoyed by changes in CMS reimbursement policy as well as MTBC’s efforts in informing and guiding clientele in how to leverage the platform. In order to help facilitate the move to telehealth, MTBC rolled out a reimbursement helpline and telehealth provider licensing. However and as we noted in our prior update, given that telehealth still accounts for a relatively small portion of all patient interactions, we do not anticipate that significant increase in these visits will offset much more than 25% of in-person generated revenue, at least in the very near term (we, however do expect that this pandemic is likely to be a catalyst to driving overall adoption of telehealth, especially based on payers’ policy changes, in place of in-office visits for the long-term).

Meanwhile, MTBC Force, the companies’ partnering strategic initiative has been very active signing several new clients to its RCM outsourcing services in just the last few months. MTBC Force, along with potential near-term acquisitions is where much of the near-term growth is expected to come from and help stem the COVID-19 related losses. And as management is already seeing some resurgence in activity as coronavirus fears wane, we think results could show a fairly quick and decided turnaround beginning as soon as the second half of the year.

Q1 revenue and adjusted EBITDA of $21.9M and $767k were well ahead of our $21.0M and -$204k estimates.

The wild card relative to whether MTBC achieves (or beats, for that matter) their 2020 financial guidance, in our opinion, is the level, significance and size of new partnerships and/or M&A activity. MTBC has also built-out their sales and marketing capabilities – expanding their team to approximately 20 people, from only around 2 the year prior. The company retained talent from CareCloud which should afford greater opportunity to expand organically. MTBC hopes to add another $4M to $5M in recurring annualized revenue during 2H 2020.

We note that their guidance, when initially announced, did not include expectations of any large mergers or acquisitions (but did include the likelihood of small, ‘tuck-in’ deals). The recent reiteration of guidance obviously does assume greater incremental growth coming from partnerships or M&A than what had previously been expected. Given the greater risk of unknowns associated with non-organic growth, this adds meaningful risk that MTBC falls short of guidance – although it may also imply a greater chance that they exceed guidance. That additional risk is factored into our financial model and valuation.

Perhaps a mitigating factor is the company’s history of finding under-valued acquisition targets and quickly and profitably integrating them. Part of the strategy to buy at depressed prices is to come with cash-in-hand (MTBC just filed S-1 for up to $17M of (current) Series A 11% preferred) and to find targets that are at or near the point of insolvency. Moreover, the company has been very active on the partnering front (i.e. MTBC Force) and the pandemic could very well increase the opportunities in this space.

We think that this COVID-19 pandemic has the potential to push many weaker players to that point and, with public and private financial markets in turmoil (and resultant flight to safer investments), their options could be highly limited. As such, MTBC could find themselves in an enviable position as it relates to buying (or partnering with) quality, yet distressed, assets at bargain basement prices. So while we think there is now meaningfully greater risk MTBC does not achieve their 2020 guidance, we also think that, based on the likelihood of more attractive M&A and partnering opportunities, the likely range of post-2020 growth is now much wider than what may have otherwise been the case.


We have updated our model following reporting of Q1 2020 results. Our revenue and adjusted EBITDA estimates (vs prior) are now: $95.2M / $10.8M (vs $95.7M / $11.2M) in 2020 and $102.7M / $18.0M (vs $103.3M / $18.5M) in 2021. The minor updates to our model have no significant effect on our price target, which remains static at $9.75/share.

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CSSE: Viewership Accelerated in Q1 and Crackle+ Should Emerge Even Stronger This Fall

1 week ago

By Lisa Thompson



Chicken Soup for the Soul Entertainment (NASDAQ:CSSE) is in a unique position in the streaming wars and is capitalizing on market trends accelerated by the pandemic shut down. It could emerge even stronger as viewers reevaluate their experience having explored more content avenues during the shutdown. For one, people have discovered Crackle and Popcornflix who never watched them before. Secondly, movie producers have no theatres in which to release their films, making TVOD (aka pay-per-view) an important channel and one that has given CSSE its greatest profits in recent weeks. The moviemakers have also discovered that TVOD even generates greater profits for them than theatrical releases when they are in the middle market—not a huge superhero blockbuster and not an indie cult choice. Third, with sports shut down, advertisers are giving Crackle a look as it attracts that desirable demographic of 18-34 year old males.

Certainly while consumers save money by eating at home and not going to events, SVOD has benefited, but coming out of these shut downs, spending will shift again to live experiences and subscriptions may be cancelled. One would expect cord cutting could accelerate, as viewers not only seek to save money, but have now learned they can survive without Comcast.

CSSE is the last man standing as an independent AVOD and management continues to talk to the 14 to 15 players that should be thinking about how AVOD fits into their plans. Crackle+ is years ahead of any de novo business strategy and at current valuation, billions in cost below the numbers thrown around by startups such as Peacock. We believe CSSE CEO, who is also the largest shareholder will do what ever is right to maximize the value of the company, including an outright sale.

Short term Crackle + continues to suffer from the reduction in ads primarily from local advertising (which are typically 40% of ad revenue) as businesses were shut due to the pandemic. After a disappointing April (down some 15%), May was considerably better, but maybe not back to pre-pandemic levels. As a result we are expecting revenues to come in close to what they were in Q1. Production has been shut down for any new content. Management believes it has enough content until Q1 2021, but there are four or five productions on hold waiting for locations to reopen and talent to consent to start up. While delaying completion, this also reduces some costs and well as increases the value of CSSE’s film library.

Since businesses across the world have shut down, viewership has grown substantially at Crackle as people have more free time, but less money, making AVOD services even more attractive. Crackle+ averaged approximately 50 million per month videos streams on Crackle and Popcornflix. Viewership began to spike in March leading to growth in ad impressions throughout the quarter with stable ad pricing. Again advertising demand was greater than supply in Q1, however local advertising showed some weakness near the end of the quarter, and weakened significantly in April. The company emphasized its strategy to depend more on new and original exclusive content. In Q1 this content was almost 15% of streaming hours in the quarter, and the highest percentage to date and showed less reliance on Sony content. It has had extreme success with Going From Broke, produced by Aston Kutcher and On Point, its basketball documentary series. This month it highlighting the Crackle exclusive movie Cooped Up and Screen Media’s Crown Vic.

Source: Chicken Soup for the Soul Entertainment

Q1 2020 Results

Chicken Soup for the Soul Entertainment came in with Q1 revenues below forecasts and EBITDA above forecasts. Net revenues were $13.2 million versus $2.2 million a year ago, up 1126%. The company is now combining Television & Short Form Production with Television and Film Distribution, and this segment reported $5.1 million in revenues compared to $1.8 million last year. Online networks grew to $9.0 million from $0.7 million a year ago and was on target with forecasts.

Gross margin after film library acquisition was 23.6% up from 22.2% a year ago. This was below the 30.4% in Q4 that had much higher revenues. The Production and Distribution segment has a higher margin than the online business and as that segment becomes a greater part of overall sales, margins should expand.

Operating expenses increased to $13.4 million versus just $3.2 million last year before the Crackle+ joint venture. The biggest increase was from amortization, which added $5 million in expense alone.

Other expense was $422,000 from $526,000 a year ago. Without one-time acquisition costs other expense would have been $323,000 versus $128,000, owing entirely to interest expense.

Net loss to common shareholders was a loss of $11.4 million down sequentially from $12.4 million in Q4 2019 and a loss of $3.4 million in Q1 2019. GAAP loss per share was $0.95 versus a loss of $0.28 a year ago and the share count remained steady. On a non-GAAP basis, taking out stock-based compensation and one-time charges, we believe the loss would be $0.75 per share versus a loss of $0.23 per share a year ago.

Fortunately the company is run on EBITDA due to its high amortization costs distorting the profitability of the enterprise. For Q1 EBITDA beat expectations and was a positive $2.0 million compared to $5.2 million in Q4 2019 and a negative $940,000 in Q1 2019.

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BMRA: Optimistic About New COVID-19 Test

1 week ago

By M. Marin



In response to the current global health crisis, Biomerica (NASDAQ:BMRA) has developed a high-volume rapid 10-minute point-of-care test for exposure to the COVID-19 virus. The test is easy to use and portable, which means that it can be used at point-of-contact locations at airports, schools, businesses and other high-traffic venues. Medical personnel and other trained individuals can use the test by obtaining blood from the patient through a finger prick.

BMRA has begun shipping in the EU following receipt of the required CE mark. We expect the company to leverage its existing distribution network to supply end-users. The speed with which the company came to market in the EU reflects the expertise it has developed through its core operations that enables BMRA to leverage the technology, in our view.

BMRA also seeks EUA-FDA approval for commercial sales in the U.S. pursuant to the FDA’s EUA (Emergency Use Authorization) process that is designed to accelerate the commercial launch of a test during an emergency such as the COVID-19 pandemic.

The high-volume production version of the COVID-19 test is intended for large customers that are performing a significant number of screenings on an ongoing basis. Given the unmet demand for COVID-19 testing, we believe the new test could be highly additive to BMRA’s top-line and to the bottom line, depending on margins once the company has ramped production.

Separately, following a private placement of $2 million of convertible preferred shares, BMRA had a cash balance of $2.4 million at February 2020, up from $686,785 at May 2019. Subsequent to the close of 3Q FY 2020, BMRA raised roughly $5.4 million, which implies pro forma cash of about $7.8 million at April 14, 2020.

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EDSA: Interim Analysis of Phase 2b Trial of EB01 in second half of 2020…

1 week ago

By David Bautz, PhD



Business Update

Update on Phase 2b Trial of EB01

Edesa Biotech, Inc. (NASDAQ:EDSA) is currently conducting a Phase 2b clinical trial of EB01 2.0% cream in patients with ACD. The randomized, double blind, placebo controlled, sample size adaptive design trial is expected to enroll approximately 46 patients in Part A randomized 1:1 between EB01 and placebo for 28 days of treatment. Following the enrollment of the first cohort, a blinded interim analysis will be conducted that can have the following outcomes: 1) stop the study for futility; 2) continue to the dose ranging portion of the trial with 80 additional subjects; or 3) continue to the dose ranging portion of the trial with 120 additional subjects. The primary endpoint of the trial will measure the mean percent change from baseline in CDSI at Day 29, with secondary endpoints examining symptom reduction, dose-response relationships, and safety. An outline of the trial is shown below.

In April 2020, the company filed a protocol amendment with the FDA for the ongoing Phase 2b trial. The amendment was filed such that changes to the study protocol could be made to mitigate the impact of the ongoing coronavirus pandemic. Included in the amendment were allowances for a reduction in the number of in-person office visits, remote telehealth appointments, and other procedural updates to simplify enrollment and patient care. Since March 2020, at least five investigation sites have paused new patient enrollment and the company is currently identifying new sites to replace or supplement current sites. While it is unclear exactly what impact the coronavirus epidemic will have on the timeline for completing the trial, we anticipate that there will be some delay in the interim readout, most likely into the second half of 2020.

Licenses Two Assets for Potentially Treating COVID-19

In April 2020, Edesa announced an exclusive licensing agreement with Light Chain Bioscience for two clinical-stage monoclonal antibody assets targeting toll-like receptor 4 (TLR4) and C-X-C motif chemokine 10 (CXCL10). Light Chain will receive Series A-1 Convertible Preferred Shares at a value of $2.5 million with a fixed conversion price, up to $6.0 million for drug product inventory and other milestone fees, and the potential to receive up to $363.5 million in aggregate development, approval, and commercial milestone payments. Light Chain will also be eligible to receive royalties based on sales. Edesa will be responsible for development, product registration, and commercialization.

The company will be prioritizing the development of both assets as potential treatments for the exaggerated immune response seen in some patients with COVID-19. These patients can eventually progress to acute lung injury (ALI) and acute respiratory distress syndrome (ARDS), both of which are life threatening and require intensive medical care. Below we highlight some of the data we were able to identify that supports the development of the anti-TLR4 and anti-CXCL10 assets for ALI and ARDS.


Toll-like receptors (TLRs) belong to the pattern recognition receptor family of proteins and are an important part of the innate immune system. They are responsible for detecting invading pathogens and initiating an immediate immune response. TLR4 recognizes a number of different pathogens, including bacterial lipopolysaccharide (LPS) (Miller et al., 2005), mannuronic acid polymers from Gram-negative bacteria (Flo et al., 2002), and viral components (Haynes et al., 2001). Its activation leads to production of pro-inflammatory cytokines and chemokines (Janssens et al., 2003).

In addition to being involved in the innate immune response to pathogens, TLRs are known to be involved in exaggerated immune responses, with TLR4 shown to induce inflammatory responses that can lead to ALI (Jiang et al., 2005). Additional examples for TLR4’s role in ALI and ARDS include:

Imai et al., 2008: This study looked at the role of TLR4 in ALI. Mice deficient in TLR4 (Tlr4-/-) were resistant to acid-induced ALI and while H5N1 influenza rapidly induced ALI in wild-type mice, TLR4 deficient mice were resistant to H5N1-induced ALI, suggesting a causative role for TLR4 in ALI.

Shirey et al., 2016: This research group had previously reported that Tlr4-/- mice are resistant to influenza-induced lethality and a novel small molecule TLR4 inhibitor (eritoran) reduced influenza-induced lethality. In this study, an anti-TLR4 antibody protected mice from lethal influenza infection.

Perrin-Cocon et al., 2017: A novel small molecule TLR4 antagonist (FP7) was tested in an in vivo mouse model of influenza. FP7 blocked TLR4 stimulation and protected mice from influenza-induced lethality and reduced inflammatory cytokine expression and ALI.

Zhou et al., 2018: An anti-TLR4 monoclonal antibody was studied in a rat model of ARDS. The rats treated with the anti-TLR4 antibody showed lower respiratory frequency, lung permeability, lung edema, inflammatory infiltration, and tumor necrosis factor (TNF)-α and interleukin (IL)-1β expression levels in lungs along with lower TLR4, TLR9, MyD88, and nuclear factor (NF)-κB expression in macrophages.

Domitrovic 2018: TLR4 monoclonal antibodies were evaluated both in vitro and in a rat model of ARDS. Stimulating macrophages with TNF-α along with anti-TLR4 antibody eliminated the upregulation and secretion of cytokines. Pre-treating rats with anti-TLR4 antibody prior to ventilation decreased lung injury, inflammatory infiltration, lung edema, and TLR4, TLR9, MyD88, and NF-κB expression.

Zhang et al., 2019: This study examined the role of TLR4 and NF-κB in ALI and found inhibition of the TLR4/NF-κB signaling pathway decreased oxidative stress and improved ALI.


CXCL10 is a chemokine that activates its receptor, CXCR3, which is predominantly expressed on T cells, natural killer (NK) cells, inflammatory dendritic cells, macrophages, and B cells (Loetscher et al., 1998). It plays a significant role in leukocyte recruitment to inflamed tissues, and because of this it can lead to excessive inflammation and tissue damage (Lee et al., 2009). Patients who suffer from ARDS are known to exhibit unusually high levels of CXCL10. The role of CXCL10 in ARDS and ALI is shown in the following publications:

Wang et al., 2013: This study showed that patients suffering from ARDS caused by H1N1 infection had significantly elevated levels of CXCL10 in their serum compared to a control group. An anti-CXCL10 monoclonal antibody increased survival time, reduced lung edema, and significantly decreased ALI in a mouse model of H1N1 infection.

Ichikawa et al., 2013: In this study, ARDS was induced in mice by both non-viral and viral means. Mice deficient in CXCL10 or CXCR3 had improved severity and survival of both viral and non-viral ARDS. The high levels of CXCL10 seen in ARDS mice appears to come from infiltrated pulmonary neutrophils, and the interaction of CXCL10 and CXCR3 acts in an autocrine fashion leading to pulmonary inflammation.

Lang et al., 2017: This study explored the role of CXCL10 in a rat model of LPS-induced ARDS. Expression of CXCL10 and CXCR3 increased after LPS-induction. An anti-CXCL10 antibody decreased the severity of ARDS through a reduction of pulmonary edema, inhibition of inflammatory mediators (IFN-γ, IL-6, ICAM-1), a reduction in inflammatory cells into the lung, and a reduction in CXCR3 expression in neutrophils and macrophages.

Financial Update

On May 15, 2020, Edesa announced financial results for the second quarter of fiscal year 2020 that ended Mar. 31, 2020. The company reported revenues of $0.11 million, which was derived from the sale of product inventory obtained in the reverse merger in June 2019. The cost of sales and services was $0.01 million for the second quarter of fiscal year 2020, due to the sales of product inventory obtained in the reverse merger acquisition. R&D expenses in the three months ending Mar. 31, 2020 were $0.5 million, compared to $0.11 million for the same period last year. The increase was primarily due to increased expenses associated with initiating clinical studies of EB01 along with increased salary and related expenses. G&A expenses totaled $1.1 million in the second quarter of fiscal year 2020 compared to $0.43 million for the same period of 2019. The increase was primarily due to increased salary and personnel expenses, increased legal fees, and public company expenses.

As of Mar. 31, 2020, Edesa had approximately $7.0 million in cash and cash equivalents. We estimate that the company has sufficient capital to fund operations for at least the next 12 months. As of May 13, 2020, Edesa had approximately 8.8 million shares outstanding and when factoring in the Series A-1 convertible preferred, stock options, and warrants a fully diluted share count of approximately 12.4 million.


While disappointed in the likely delay for the interim analysis for the Phase 2b trial of EB01, we are not surprised as most every company has experienced some type of delay due to the ongoing coronavirus epidemic. The interim analysis had previously been expected in mid-2020, but we now estimate that it will occur in the second half of 2020.

Based upon the publications we were able to identify, we believe there is sufficient evidence to support the development of both the anti-TLR4 antibody and anti-CXCL10 antibody as treatments to prevent ARDS caused by infection with the novel coronavirus SARS-CoV-2. The TLR4 antibody is farther along in development and thus we have added it to our model, although the development of an ARDS treatment, particularly as it relates to COVID-19, is highly fluid. For now, we model it as a potential $150 million opportunity, but this will likely change as more information becomes available regarding the asset and the potential market opportunity. Our valuation has increased to $10.00.

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EPIX: Additional Preclinical Data Presented at AUA 2020…

1 week ago

By David Bautz, PhD



Business Update

New Preclinical Data Presented at AUA 2020

On May 15, 2020, ESSA Pharma Inc. (NASDAQ:EPIX) announced new preclinical data was presented at the 2020 American Urological Association (AUA) Annual Meeting (the poster can be accessed here) for its lead clinical candidate EPI-7386, which is part of a novel class of compounds known as ‘anitens’ to treat prostate cancer in patients that are progressing on standard of care therapy. Anitens target the androgen receptor (AR), which is the main signaling mechanism driving the growth of prostate tumors, through binding to the N-terminal domain (NTD), which is unique compared to other available anti-androgen therapies that the target the ligand binding domain (LBD).

ESSA previously completed a Phase 1 trial with a first-generation aniten compound, EPI-506, that confirmed the safety and tolerability of this class of compounds. However, due to its short half-life and other negative pharmaceutical properties, the development of EPI-506 was discontinued while research continued on the development of next-generation anitens. This work led to the discovery of EPI-7386, a next-generation aniten that has a number of advantages compared to first-generation anitens. The following graphic shows where anitens bind on the AR compared to currently available anti-AR therapies, which fully differentiates anitens from other prostate cancer therapies that target the AR.

The data presented at the 2020 AUA Annual Meeting built upon results previously presented by the company (see here for a discussion of the results presented at the 2020 ASCO Genitourinary Cancers Symposium). Additional data presented on EPI-7386 included gene expression analyses and toxicology studies evaluating the safety of the compound.

The following figure shows gene expression data in LNCaP cells, which is an androgen-sensitive human prostate adenocarcinoma cell line, in the presence of EPI-7386, enzalutamide, EPI-7386+enzalutamide, vehicle, or R1881 (methyltrienolone). R1881 is a synthetic androgen and is considered the “gold standard” AR agonist. The heat map shows the expression of genes that are >2-fold higher in the presence of R1881 for 24 hours compared to vehicle. EPI-7386 and enzalutamide down-regulate a number of those genes both as single treatments and as a combination.

The boxes in the figure above highlight groups of genes that are down-regulated specifically by each treatment group, with the pathways those genes are involved in shown in the following table. The most interesting aspect of this data is that while EPI-7386 has an impact on most of the R1881-induced genes, EPI-7386 appears to affect a similar but slightly different set of genes than enzalutamide. For example, the genes in the green box (EPI-7386 specific effects) are mostly focused on cell cycle phase transition and DNA replication initiation and are more highly inhibited with EPI-7386 than with enzalutamide. In addition, the combination of EPI-7386 and enzalutamide appears to have a greater effect than either compound alone, particularly in genes involved in androgen response.

Looking at the gene expression data set a bit further, the following figure shows the fold decrease in expression for the nine most down regulated genes following combination treatment with enzalutamide and EPI-7386. A number of those genes are down-regulated to some degree by either enzalutamide or EPI-7386, however combining them together results in a much greater effect, in particular for KLK3 (prostate specific antigen, PSA). The number of genes that show a >4-fold change in expression is also greater in the combination arm compared with either enzalutamide or EPI-7386 used alone. These data support the company’s plan to initiate combination therapy trials with EPI-7386 and enzalutamide (and/or apalutamide and/or darolutamide) in earlier line patients that are not yet resistant to ‘lutamide’ therapy. The gene expression data shows that combination therapy may result in a greater response rate in these patients, and if that were the case it would undoubtedly pique the interest of potential Big Pharma partners.

An examination of toxicology data compared to efficacy data in mouse xenograft models shows that EPI-7386 is very well tolerated and we believe that the recommended Phase 2 dose is likely to be discovered fairly quickly in the upcoming Phase 1 clinical trial.

The following figure on the left shows the representative activity of EPI-7386 in a VCaP xenograft model, where 10 mg/kg EPI-7386 shows tumor growth inhibition while 30 mg/kg EPI-7386 shows tumor shrinkage. The table on the right shows representative pharmacokinetic (PK) data for different concentrations of EPI-7386 in different strains of mice.

Considering the PK parameters above in regards to efficacy in the xenograft models, the toxicology data shows that there is likely to be a very wide margin for safety in dosing EPI-7386. The dog toxicology data in the following table shows that a dose that is well-tolerated and below the highest non-severe toxic dose (HNSTD) results in an AUC value of 1,350,000 ng*h/mL. Comparing this to the data above shows that an efficacious dose in mice had an AUC of 220,000 – 534,000 ng*h/mL, two- to five-fold lower than the HNSTD.

Lastly, the following table gives PK estimates for different doses of EPI-7386 in humans based on in vitro in vivo correlation. A dose of 200 mg (the recommended starting Phase 1 dose based on the toxicology data) is predicted to result in an AUC of 137,278 ng*hr/mL while a dose of 400 mg is estimated to result in an AUC of 274,556 ng*hr/mL, which is very close to the AUC for the efficacious dose in the mouse xenograft model and well below the HNSTD. This data gives us confidence that EPI-7386 will be safe and well tolerated and could lead to discovery of the recommended Phase 2 dose in a relatively short period of time based on a starting dose of 200 mg.

To summarize:

• EPI-7386 shows efficacy in a mouse xenograft model with tumor growth inhibition at 10 mg/kg and tumor shrinkage at 30 mg/kg. These doses result in AUC values of 220,000 and 534,000 ng*hr/mL, respectively.

• Toxicology data shows that the HNSTD for rats is a dose that results in an AUC value of 2,350,000 ng*hr/mL and in dogs a dose that results in an AUC value of 1,850,000 ng*hr/mL. These values are approximately three- to four-fold lower than the AUC achieved for a dose of EPI-7386 that results in tumor shrinkage in a mouse xenograft model.

• Modeled human PK data shows that a dose of 200 mg (the recommended starting dose for the Phase 1 clinical trial based on the toxicology data) will result in an AUC of approximately 137,000 ng*hr/mL and a dose of 400 mg will result in an AUC of approximately 275,000 ng*hr/mL, which is very close to the AUC derived from a dose that results in tumor growth inhibition in a mouse xenograft model.

• Comparing the xenograft/PK/toxicology data leads us to believe that 1) EPI-7386 has a wide margin for safe dosing and 2) the recommended Phase 2 dose is likely to be determined rather quickly given how close the starting dose is to one that is predicted to show efficacy.

IND Cleared to Start Phase 1 Clinical Trial of EPI-7386

In April 2020, ESSA announced that the Investigational New Drug (IND) application received clearance from the FDA to initiate a Phase 1 clinical trial of EPI-7386 for the treatment of metastatic castration-resistant prostate cancer (mCRPC).

We anticipate the Phase 1 clinical trial enrolling approximately 18 patients who are resistant to second-generation anti-androgens therapies (e.g., enzalutamide) to evaluate the safety, pharmacokinetics, and maximum-tolerated dose of the compound in multiple-dose escalations. It will encompass a standard 3+3 trial design (three patients enrolled per dose cohort) with an estimated 10 patients being enrolled in the dose expansion cohort. The initial dose will be 200 mg, followed by 400 mg, 600 mg, 800 mg, and 1000 mg.

The primary objective of the dose escalation portion is to establish the safety and efficacy of EPI-7386 with the secondary objective being to determine the maximum tolerated dose and the recommended Phase 2 dose. In the dose expansion portion of the trial, the primary objective will be to further evaluate the safety, tolerability, and preliminary anti-tumor activity of the recommended Phase 2 dose.

The company is also planning to initiate a combination trial with EPI-7386 and a ‘lutamide’ (enzalutamide, apalutamide, or darolutamide) in mCRPC patients due to the robust preclinical data showing increased activity with combination therapy. We estimate that the company is fully financed to conduct all three trials (the dose escalation trial, the dose expansion trial, and the combination trial).


We value ESSA using a probability adjusted discounted cash flow model that takes into account potential future revenues for EPI-7386. We model for ESSA to partner the asset and to receive a 15% royalty on net sales.

For EPI-7386, we estimate that the company will initiate a Phase 1 trial in 2020, a Phase 3 trial in 2023, and file for approval in 2025. While the opportunity for accelerated approval is a possibility, we are maintaining our more conservative timeline for now. However, given the recent approval of Rubraca® for the treatment of BRCA1/2-mutated mCRPC based on Phase 2 data from the TRITON2 trial in 62 patients with a BRCA1/2 mutation, the chance for accelerated approval could certainly be available with strong efficacy.

For the initial indication, which is patients with mCRPC who are no longer responding to anti-androgen therapy, we estimate there are approximately 30,000 in the U.S. and 80,000 in the E.U. who would be eligible for treatment based on the number of deaths attributed to prostate cancer each year. While this represents a potential billion-dollar opportunity on its own, we believe the much larger opportunity exists in combination therapy with earlier stage patients. We estimate there are approximately 160,000 patients who have either non-metastatic CRPC, metastatic hormone sensitive PC, or ADT-failing metastatic CRPC. When including these patients in our model we believe EPI-7386 could achieve peak sales of $4 billion worldwide. Using a 35% chance of approval along with a 13% discount rate leads to a net present value for EPI-7386 of $316 million. Combining the net present value of EPI-7386 with the company’s current estimated cash balance and dividing by an estimated fully diluted share count of 38.2 million leads to a valuation of approximately $10.50 per share.

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DSS: DSS Continues to Exit Money Losing Operations While Investing In New Ventures

1 week 5 days ago

By Lisa Thompson



DSS’s Files to Raise $5 Million

Yesterday Document Security Systems, Inc. (NYSE:DSS) filed an S-1 to sell common stock to raise $5 million or a net $4.4 million dollars through Aegis Capital adding approximately 591,000 shares at yesterday’s price. The cash will be used to grow its businesses, acquire new businesses, working capital, and for expenses incurred to shut down its plastics business. This capital will be used to breathe new life into DSS and hopefully transform it to a profitable growing business while improving shareholder value.

DSS Shuts Down its Money Losing Plastics Division

While business restrictions show signs of easing, some things may be permanently changed, and one of those DSS believes may be the future use of plastic badges. The pandemics certainly has accelerated the concept of digital and touchless entry such as exemplified by boarding passes and venues may pull forward plans to use app-based entry that can be enhanced by biometrics and eschew the traditional plastic pass. The company cites hotel card keys, and smaller events being held in the future including sporting and trade shows as possible future outcomes. The pandemic was the final straw in DSS’s decision to shutter its plastics business, that had sunk to losses over past three years in the best of times and it losses were expected to increase in this, the worst of times. In Q1 it took a $685,000 goodwill write-off to exit the business. In its S-1 it says it will need to use another $400,000 in cash to shut down operations. The division will have revenues in Q2 but it will be considered a discontinued operation. The good news is this shut down should reduce losses at DSS. Last year this business lost $294,000. It has a lease on space in California that costs $233,000 a year it hopes to sublet.

DSS Reports A Record Q1 in 2020

Aided by the fourth quarter acquisition of the assets of RBC Life, DSS reported a record for a first quarter. Its total revenues were over $5 million versus $4.8 million a year ago, up 4.0%. Not knowing anything about RBC we had estimated revenue of $100,000 for the quarter, but it contributed $543,000 or 11.5% of sales. It is expected to continue to grow.

Printed product sales were down 9.6% to $3.9 million. Packaging Printing and Fabrication, and Plastic Cards, Badges, and Accessories, were flattish year over year. Walgreens shuttered its photo operations in store during the quarter leading to a build up of inventory that still lingers now. Shutterfly however with its completely online operation saw growth. Commercial and Security Printing as well as Technology Integrated Plastic Cards & Badges were down due to the lack of live events and travel. We expect worse results in Q2 as Walgreens continues to work off excess inventory.

Technology sales, services, and licensing increased 8.2% to $479,000, and the AuthentiGuard part of the business grew 43.9% year over year to $331,000, up from $230,000 in Q3 2019. AuthentiGuard was down sequentially as its major customer ceased production and DSS only get paid as the customer’s product is manufactured, packaged and labeled. It gets notified a month afterward, so it has little visibility into revenues.

Gross margins increased slightly to 34.6% from 34.3%, and gross margin dollars were up 4.9% due to higher revenues and higher than average gross margins contributed by RBC.

Operating expenses were $3.7 million compared to $2.1 million in 2019. Included in the $3.7 million was a $685,000 one-time charge for impairment of goodwill for the plastics division. Other than that, the biggest increase in spending was from sales and marketing, which increased $289,000 and SG&A, which grew $199,000.

In the quarter the company paid no income taxes and it still has $50.6 million in federal net operating loss carry forwards. For the first time the company reported minority interest. This was from the 48% of its new Medical REIT venture that started on March 3, 2020. The venture lost $140,000 from March 3rd to March 31st, and DSS reversed out $67,000 of it that it didn’t own. Going forward we have modeled in a full quarter of minority interest. Since this REIT is a start up it will have a number of quarters before it starts booking any revenue to offset these expenses, which are mostly salaries.

The net loss to common shareholders was $1.9 million versus a GAAP loss of $451,000 last year.

After a 30 for 1 reverse split, the GAAP loss per share this year was $1.23 versus a loss of $0.72 a year ago. Non-GAAP it was a loss per share of $0.79 versus $0.72 last year. The shares outstanding increased 164% to 1.5 million versus 583,000 in Q1 2019. Shares outstanding as of May 11, 2020 were 2,078,687.

SUBSCRIBE TO ZACKS SMALL CAP RESEARCH to receive our articles and reports emailed directly to you each morning. Please visit our website for additional information on Zacks SCR. 

DISCLOSURE: Zacks SCR has received compensation from the issuer directly, from an investment manager, or from an investor relations consulting firm, engaged by the issuer, for providing research coverage for a period of no less than one year. Research articles, as seen here, are part of the service Zacks provides and Zacks receives quarterly payments totaling a maximum fee of $40,000 annually for these services. Full Disclaimer HERE.

12 minutes ago
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