Prolor Biotech: A Critical Year For Company With Results Expected For Lead Drug In Development

| About: PROLOR Biotech (PBTH)

Following a strong rally in the first six weeks of 2012, Prolor Biotech's (NYSEMKT:PBTH) shares have fallen apart and are now down more than 25% from 2012 highs compared to a gain of just under 5% for the S&P 500 for the same time period. Despite the market pessimism and lack of news from the company, all is not lost as PBTH just needed a little bit of a breather before gearing up for an ever so important 2013. Plus, the company still has a rock-solid management team to guide it in the right direction

The story for PBTH is pretty straight forward. While other biotechs are developing new drugs that are filled with great uncertainty, PBTH on the other hand is developing a new generation of drugs that already work. The company targets therapeutic proteins already approved by the FDA, with proven safety and efficacy allows the company to lower the risk profile of its proprietary development portfolio compared to de novo therapeutic protein development. This increases the ease of therapeutic protein development because modifying an existing therapeutic protein is significantly easier and less risky than developing a new one. This strategy should also lead to less expensive, faster clinical trials since endpoints and study protocols will be the same as those used for existing therapies. These factors make the company not the traditional company that people associate with the industry group "biotech."

Prolor Biotech's proprietary therapeutic platform is the Carboxyl Terminal Peptide (CTP) technology. It can be attached to an array of existing therapeutic proteins, stabilizing the therapy in the bloodstream and extending its lifespan without additional toxicity or loss of desired biological activity. The company has 4 main product candidates in development with each of them targeting significant market opportunities. The most advanced candidate in the company's pipeline is a new generation of human growth hormone (hGH-CTP), which is scheduled to begin Phase 3 trials in 2012. The company also has two product candidates in clinical trials for hemophilia and a GLP-1 / Glucagon dual receptor for type II diabetes, which may have a dramatically better weight-loss profile than current GLP-1 therapies.

The focus on Prolor is clearly with hGH-CTP with the Phase 3 trial in adults results expected before year end 2013. Trial results for hGH-CTP have shown that a single weekly injection of hGH-CTP has the potential to replace seven consecutive daily injections of currently marketed human growth hormone. That conclusion was demonstrated in Phase II trial results for growth hormone deficient adults.

In the trial, the three main cohorts in the trial received a single weekly dose of hGH-CTP for a period of four weeks, containing 30%, 45% or 100% of the equivalent cumulative commercial hGH dose these patients would usually inject each day over the course of seven days. The top-line data reflect results from 39 patients, with 13 patients in each cohort comprised of 11 males and two females.

The study data show that patients in all three cohorts achieved average IGF-1 levels that were within the normal range on 100% of the days when they were assessed. In addition, the data show that patients in each of the cohorts achieved average IGF-1 levels within the narrow definition of the normal range on many or most of the days when they were assessed, indicating a favorable variance profile within the normal range.

hGH-CTP demonstrated excellent safety and tolerability in all patients across all trial cohorts, with no apparent issues. In addition, there were no indications that hGH-CTP can induce excessive levels of IGF-1 in patients above the normal range when used in high doses.

The people behind the company are in a class of their own. The company is led by its CEO, Abraham Havron. Dr. Havron is a 30-year veteran of the biotechnology industry and was a member of the founding team and Director of Research and Development of Interpharm Laboratories (a subsidiary of Serono), which developed the MS drug Rebif, with current sales of more than $1 billion annually. Dr. Havron also participated in the development of several therapeutic proteins currently in the market, including recombinant Human Growth Hormone (BioTropin), recombinant Hepatitis B Vaccine (Bio-Hep-B), recombinant Beta Interferon (Rebif) and recombinant human Insulin.

Chairman Phillip Frost, one of the biggest investors in PBTH, is a billionaire who has a strong track record in investing in companies, notably selling Key Pharmaceuticals to Schering-Plough for $600 million and later on selling Ivax to Teva Pharmaceuticals (NASDAQ:TEVA) for $7.4 billion. Dr. Frost is currently the Chairman of the Board of Teva. It has been rumored that PBTH could be an acquisition target of Teva because of the Frost connection.

Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.