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Friday, February 5, 2016

CanFite Targeting Big Markets With Key Drugs

The recent sell-off in the small and micro-cap biotech market has created some rather compelling buying opportunities for long-term focused investors. One name that I believe represents an attractive value at this level is Can-Fite Biopharma Ltd (CANF). Can-Fite is currently trading at just over $2.00 per share, equating to a market capitalization based on the NASDAQ-listed American Depository Shares of only $28 million on a basic count or $34 million fully-diluted. This level vastly undervalues the pipeline at Can-Fite in my opinion, which includes three drugs for a total of six different indications. And what makes the story even more compelling is that Can-Fite likely exited 2015 with over $17 million in cash and investments and no debt, putting the net enterprise value at only $11 million.

I believe Can-Fite is worth multiples of its current valuation. Below I provide a summary of the company's key pipeline assets and provide context and modeling support to justify my belief as to why I see the shares trading at a compelling value today.

Tuesday, February 2, 2016

RHB-105: The Medical Market Perspective (Part 1)

One of the most advanced clinical-stage candidates at RedHill Biopharma Ltd (RDHL) is RHB-105, a new triple combination therapy for the eradication of H. pylori infection in humans. RedHill has successfully completed a Phase 3 clinical trial with RHB-105, reporting positive results in June 2015 from the ERADICATE-Hp study. ERADICATE-Hp was a randomized, double-blind, placebo-controlled study evaluating RHB-105 as a first-line therapy for H. pylori bacterial infection. A total of 118 patients at 13 centers in the U.S. participated in the study. Subjects were randomized in a 2:1 ratio to receive either RHB-105 or placebo for a period of 14 days, and assessed for the eradication of H. pylori infection 28 to 35 days after completion of treatment.

Top-line results from the study demonstrated RHB-105 to be 89.4% efficacy in eradicating H. pylori infection. This was highly statistically superior over the placebo and 70% benchmark use for statistical modeling (p <0.001). More importantly, following the 14 day treatment period, patients on placebo were allowed to receive a current standard of care. Follow-up analysis from this portion of ERADICATE-Hp showed these patients achieved only 63% eradication.

RedHill anticipates releasing the final Clinical Study Report in the first quarter 2016, at which time we may learn additional information with respect to RHB-105 safety/tolerability, compliance, and patient reported Severity of Dyspepsia Assessment (SODA). The next step is for management to meet with the U.S. FDA to discuss the planned second Phase 3 trial with RHB-105, which will likely include an active comparator. RHB-105 has been designated a Qualified Infectious Disease Product (QIDP) under the U.S. GAIN Act, and thus is being developed under Fast Track status. The drug will also qualify for Priority Review and a total of eight years of market exclusivity post approval. I see significant potential for RHB-105 on a U.S. and global basis. The triple combination therapy looks like it will become the new standard of care in a rapidly growing and vastly under-served market.

For the purpose of this article, I discuss the medical market perspective of H. pylori infection; the growing incidence of infection, how it relates to peptide ulcer disease (PUD) and gastric cancer, and the unmet medical need due to growing antibiotic resistance and unstandardized care.

Friday, January 29, 2016

Looking at Depomed's Valuation

I continue to be long shares of Depomed, Inc. (DEPO) despite the significant selloff in the stock year-to-date. Depomed stock is down 18.2% YTD vs. the S&P-500 down 7.6%. That's a steep decline for a profitable specialty pharmaceutical company with solid fundamentals. For reference, the SPDR Biotech ETF (XBI) is down 29.7% and the iShares Nasdaq Biotechnology Index (IBB) is down 23.3% YTD. It is clearly "risk-off" in the healthcare sector right now. High-risk biotech stocks are getting destroyed as investors flee the space. For the record, Depomed is not a biotech stock. It's clearly a specialty pharmaceutical company, and they are profitable. Nevertheless, that's not helping keep the name above water so far in 2016.

I cannot predict when investors will return to these types of names. That being said, as an analyst and investor in this industry, I can still take a look at the valuation of Depomed and provide insight into why I believe the shares are attractive for long-term investors.

Monday, January 25, 2016

Buy This Pharma Company To Get Another Completely Free!

How Nuvo Research Splitting Into Two Companies Is A Win-Win For Shareholders

Last week, Nuvo Research Inc. (NRI.TO) mailed a Management Information Circular to shareholders explaining the impetus and logistics for the planned separation of the company into two separately traded entities, a specialty pharmaceutical business to be called Nuvo Pharmaceuticals Inc., and a drug development business to be called Crescita Therapeutics Inc. The split into two separate publicly-traded companies was initially announced on September 15, 2015, and received unanimous approval from the company's Board of Directors. Nuvo Research Inc. shareholders have been asked to attend the special meeting to be held at the International Plaza Hotel, 655 Dixon Road, Toronto, Ontario, M9W 1J3 on February 18, 2016, to vote on the proposed split.

Management believes that separating the company into these two distinct businesses will provide a number of benefits to shareholders, Nuvo Pharma and Crescita. Nuvo Pharma and Crescita will pursue independent growth strategies, each having greater flexibility to allocate capital and focus the respective businesses on maximizing return for shareholders. The split will also allow each company to have a sharper focus, enabling investors, analysts, and potential strategic partners to more accurately compare and evaluate each company. This will also help provide business-specific incentives to management, enhancing each company’s ability to better attract, retain, and motivate key personnel. 

The splitting of Nuvo Research Inc. into Nuvo Pharma and Crescita makes good strategic sense. I agree with management that separating the company into two distinct businesses should unlock value because right now investors I speak with are confused as to the key growth drivers for the company and how to accurately value the combined organization. Nuvo Research Inc. exited the third quarter ending September 30, 2015, with $50.8 million (CAD) in cash and investments ($35.5 million USD) and no debt. The market capitalization as of today is $65 million CAD ($45 million USD). Below I outline the potential growth drivers and take a stab at the potential valuation for each company. I conclude that there is significant value in Nuvo Research Inc. pre-split and believe long-term shareholders will be rewarded by participating in the transaction.

Wednesday, January 20, 2016

22nd Century Working With FDA On Modified Risk Cigarette

Earlier in January, I  alerted investors to the fact that 22nd Century Group (NYSEMTK: XXII) filed an MRTP application to the U.S. FDA for Brand-A, a code name for the company's modified risk very low nicotine (VLN) cigarette that contains roughly 95% less nicotine per cigarette versus commercially available brands. MRTP stands for Modified Risk Tobacco Product, a nomenclature that only came about after the signing into law of the Family Smoking Prevention and Tobacco Control Act of 2009. Earlier this week, 22nd Century Group notified investors that almost immediately after the filing of the MRTP application, the U.S. FDA reached out to management and requested an onsite meeting at the FDA headquarters. That meeting took place last week, and management came away encouraged by the FDA's attention to the filing and potential path forward to gain approval for Brand-A.

In my article below, I explain what MRTP is, how it came about, and why 22nd Century Group is sitting on a potential very big opportunity if the U.S. FDA approved Brand-A later in 2016.

Friday, January 15, 2016

Update On BriaCell Therapeutics Following Meeting With CEO

Last week in San Francisco, I had a good talk with Joseph P. Wagner, PhD, the CEO of BriaCell Therapeutics (BCT.V / BCTXF). He provide a good update on the current situation, which I report to investors in this article. Right now, the company's is in active preparation to begin the Phase 2 trial, with a goal to complete all the necessary work in the next few months. That's the main takeaway from the meeting. However, one thing I did find very interesting is that the companion diagnostic is further along in development than I suspected.