AzurRx BioPharma, Inc. (NASDAQ: AZRX) stock is trading roughly 14% higher since August after delivering several updates from its lead development-stage clinical programs. The good news- the dollar market potential from each can reach hundreds of millions. The better news- the combined value can hit into the billions. The best news- expect the excellent topline data to keep coming.
And that combination makes its $0.64 share price and a market cap of about $59 million more than short of an appropriate valuation; it also exposes a compelling investment opportunity. However, with news putting three drug candidates in play, the gap between share price and intrinsic value could close quickly. Still, even at higher prices, the AZRX proposition is an attractive proposition. Here’s why.
First, AZRX announced yesterday that the independent Data Monitoring Committee (DMC) approved initiating patient enrollment in Part 2 of its ongoing RESERVOIR clinical trial evaluating FW-1022 as a treatment for COVID-19-related gastrointestinal (GI) infections. FW-1022 is a proprietary, oral tablet formulation of micronized niclosamide developed to remove SARS-CoV-2 (SARS2), the virus that causes COVID-19, from the GI tract.
The recommendation is a milestone reached and comes after the DMC review of safety data collected from 9 patients enrolled in Part 1 of its RESERVOIR trial. Part 2 of the trial will get significantly bigger, enrolling up to 150 patients at clinical trial sites in the U.S., Ukraine, and India intending to demonstrate the efficacy of FW-1022 in clearing the COVID virus from the GI tract and expanding previous safety observations.
From an investor’s perspective, the better news is that topline study data is expected during the first quarter of 2022 and could show that relief is near for the millions of COVID-19 patients fighting the debilitating discomforting gastrointestinal symptoms caused by the virus. These symptoms continue even after the initial impact of the virus is cleared.
And not only is the DMC recommendation a nod to patients worldwide, but it also puts a potentially massive catalyst in play in the coming weeks as the relatively short term trial could indicate whether niclosamide treatment has the potential to improve “long haul” COVID-19 symptoms.
If so, AZRX could have a blockbuster drug positioned to earn grant funding, expedited review, and potential fast-track approval with no approved treatments available to patients. This program has been on the radar. Now, expect it to accelerate.
But while news from FW-1022 may provide a near-term catalyst, AZRX has plenty more firepower in its pipeline. And like FW-1022, they, too, are reaching new milestones.
PASSPORT Trial Submits IND
Also, this week, AZRX announced its submission of an Investigational New Drug (IND) Application seeking permission from the U.S. Food and Drug Administration (FDA) to begin a clinical trial evaluating proprietary formulations of niclosamide for Grade 1 and Grade 2 colitis and diarrhea in oncology patients receiving treatment with immune checkpoint inhibitors (ICIs).
The planned Phase 1b/2a PASSPORT clinical trial intends to determine the safety and potential efficacy of niclosamide, also known as FW-420, administered as an oral, immediate-release tablet and a topical rectal enema foam formulation. This study adds to AZRX’s advancing its proprietary formulation of micronized niclosamide in its Phase 2 RESERVOIR trial noted above. It also puts a second shot on treatment and revenue-generating goals by leveraging the expected power of niclosamide as a front-line drug to treat multiple conditions.
Moreover, the clinical development of FW-420 as a safe, effective, and non-systemic treatment addressing immune checkpoint inhibitor-associated colitis (ICI-AC) could tap into another unmet medical need. And with checkpoint inhibitors more mainstream in treating cancers, a drug to treat the potentially dangerous side effects involving immune checkpoint inhibitors could benefit from a substantial market need. Further, the study is timely.
According to AZRX, as many as 30% of patients treated with checkpoint inhibitors develop diarrhea that can progress to colitis. This condition can be debilitating and even life-threatening due to the compromised health of the patient. Targeting that population, AZRX is positioned to develop niclosamide as the first drug specifically designed to treat ICI-AC. Thus, it, too, can fill a substantial need by becoming a critical component to the treatment regimen for cancer patients receiving immune checkpoint inhibitors.
Expect news on this trial to fill the wires during the current and coming quarters.
Still, while two promising programs are great, three is better. And AZRX’s ongoing Phase2b study could be the near-term charm.
MS1819 To Treat EPI In Patients With Cystic Fibrosis
In August, AZRX published topline Phase2a MS1819 trial results that sent shares soaring. The gains are well-deserved as the data reported was nothing short of exceptional. The study is evaluating MS1819 in combination with the current standard of care, porcine-derived pancreatic enzyme replacement therapy (PERT), to treat severe exocrine pancreatic insufficiency (EPI) in patients with cystic fibrosis (CF). As noted, the data to date is excellent. How good was the data reported? Frankly, about as good as it can get.
AZRX reported that 100% of treated patients reached both primary and secondary endpoints. Better still, data showed clinically meaningful improvement in Coefficient of Fat Absorption (CFA) endpoints, and most importantly, showed that its combination therapy may benefit cystic fibrosis patients with severe EPI. In short, the results are a robust validation of AZRX’s MS1819 platform.
Specifically, data collected from 20 patients showed that MS1819 combined with PERT led to clinically meaningful improvements in the primary efficacy endpoint, the Coefficient of Fat Absorption. Even better, the results are clinically significant. Patients showed an average gain of more than six percentage points from baseline, compared to the five-point improvement in CFA cited by the clinical literature as clinically significant. Further, the data indicated positive improvements in weight gain and other secondary endpoints.
That efficacy profile is creating a sense of urgency at AZRX, which noted in its release that its development team is taking the next steps toward marketing approval by finalizing the development of a new enteric-coated microbead formulation they believe can enable more medication to reach the small intestine and enhance its therapeutic potential. The more excellent news is that, like its other clinical-stage programs, this trial, too, is relatively short in treatment duration.
In fact, unlike trials and data collection that can take years to compile, AZRX expects its formulation work to be completed by the end of this year. That combines well with an MS1819 treatment cycle that lasts roughly six weeks, with an evaluation conducted and completed during the next thirty days. The takeaway- the current efficacy data combined with the relatively short treatment cycle make this lead program one to watch. Multiple points of interest could be shared in the coming weeks.
Even better, with its healthy balance sheet, AZRX is positioned to accelerate the pace of program development. For AZRX, patients, and investors, that’s the most important consideration.
Balance Sheet Strength To Accelerate Development
Indeed, cash is king in the world of biotechs. And despite having roughly $13M in cash after its July capital raise, AZRX has never made a secret of its willingness to partner, license, or collaborate on drug development. Now, with compelling data in hand, they are well-positioned to consider multiple strategic options, with all of the above included. Of course, it never hurts to go it alone, either. After all, valuations at Phase 3 can be substantially higher than Phase 2 companies.
With that said, AZRX’s healthy cash position can serve as more than a bargaining chip; it’s also ample to fund its next stages of program development. Thus, if AZRX does intend to make a deal, it’s likely that the terms will be investor-friendly. If they decide to take its programs to Phase 3 on its own, that’s okay too. Either scenario should bring a considerably higher valuation to AZRX as the trials progress into later stages and into Phase 3. Hence, based on data, future expectations about the success of AZRX’s pipeline can be said in two words: Decidedly optimistic.
In fact, the inherent value from its broad pipeline of targeted, non-systemic large and small molecule therapies to treat gastrointestinal (GI) and infectious diseases should already have shares priced considerably higher than current values. And while the trend is indeed bullish, the disconnect is still substantial. As always, however, news can quickly cure market errors. That process has started.
A Strong 2021 And A Better Year In-Store
Undoubtedly, 2021 has delivered excellent news from AZRX. Still, the year’s not over, and the likelihood for more updates is probable. Moreover, updates in Q3 and Q4 could fuel momentum into 2022, with the power to send shares back toward 52-week highs of $2.63.
If so, that represents a potential 310% surge from current levels. Consider this, too. Updates from any of its three moving programs can generate a boost. News from all three can set the stock on fire. The best scenario, however, is that the latter will likely happen from the current setup.
And to those already invested in AZRX, they know that a surge in value is always just a single press release away. To those considering the opportunity, check the charts. AZRX responds exceptionally well to its updates.
Thus, with three programs in play and each set up to reach new milestones in the coming weeks, investors may be wise to consider the value proposition in AZRX sooner rather than later. Clearly, the trend is to the upside, and operations appear to be stronger than ever.
Combined, it’s a recipe for appreciation.
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