Equity Briefing: Speculators buying Lpath, Inc. in anticipation of key catalysts
(Thomson Reuters ONE) -
Early on Monday, shares of Lpath, Inc (Nasdaq:LPTN) are trading at four times
the daily average as speculators are taking positions in the firm ahead of
pending catalaysts.
In January 2012, the San Diego based firm temporarily suspended dosing patients
in two Phase II clinical trials looking at the use of bioactive lipids as a
novel therapeutic mechanism to improve wet-AMD and Pigmented Epithelial
Detachment. Lpath's unique technology platform, the ImmuneY2(TM) approach caught
the attention of Pfizer (NYSE:PFE). As partners in the trial, both firms are
targeting the wet AMD and a related complication called Pigmented Epithelial
Detachment market, which is slated to undergo rapid expansion due to the aging
demographics of the U.S. population.
The drug candidate, iSONEP(TM), had been well tolerated by all patients and had
shown signs of efficacy during a Phase 1 trial,but investors were caught by
surprise when the FDA determined that the a third-party fill-and-finish
contractor, Formatech, Inc., was not in compliance with FDA's current Good
Manufacturing Practice ("cGMP") requirements during a period in which iSONEP(TM)
clinical vials were filled.
Since then, the company has manufactured the additional drug substance required
to complete the trials, and are nearing completion of the fill/finish process
with an alternate contractor. The firm is reportedly preparing to resume dosing
patients.
Pfizer, which continues to support the drug candidate development, took
particular interest in iSONEP(TM), not only because it attenuates the
permeability of the retina, but because it also blocks inflammation and
fibrosis; potentially enabling the treatment to impact parameters that currently
available drugs cannot ameliorate.
Some cost increases related to manufacturing additional the clinical drug supply
and the cost of activities required to restart the clinical trials had prompted
Pfizer to request that Lpath consider potential alternatives, including the
possibility of rolling in additional clinical examinations under the key
studies. No formal have been announced publicly, but if the alternative
approach is taken, Lpath would recommence only the larger wet-AMD trial and
would deprioritize the Pigmented Epithelial Detachment trial pending additional
funding.
Lpath's wet-AMD drug could be priced extremely highly in a market where the
current standard-of-care agent, Lucentis®, is priced at $1,950 per monthly
injection. Post-approval, peak sales of iSONEP(TM) could reach roughly $3.6b,
according to Morgan Joseph analyst Raghuram Selvaraju, Ph.D.
For now, Pfizer has the right to exercise its option for exclusive worldwide
rights to iSONEP(TM). If Pfizer exercises its option, LPath will receive an
option fee as well as potential development, regulatory and commercial milestone
payments. In addition, if iSONEP eventually becomes a commercial product, LPath
will be entitled to receive double-digit royalties, tiered based on annual sales
of iSONEP(TM).
Industry observers believe Pfizer may simply acquire Lpath (whose market cap is
currently trading at just under $50 million) if pending clinical trials continue
to show that the bioactive lipids approach is a legitimate option for creating a
further pipeline of monoclonal antibody-based drug candidates. Said technology
could offer additional therapeutic options and in some cases, better treatments
for diseases in multi-billion dollar markets.
Already as part of the Pfizer Agreement, LPath has also granted to Pfizer a
time-limited right of first refusal for a different drug candidate, ASONEP(TM),
another formulation of the same S1P-targeted antibody which is slated for
several anticipated Phase II trials. LPath successfully completed a Phase 1
clinical trial for ASONEP(TM) in 2010, and scientists believe that it holds
promise for the treatment of Cancer, Multiple Sclerosis, Colitis and other
diseases.
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Source: Equity Briefing via Thomson Reuters ONE
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