In my previous two articles, I discussed Tekmira (NASDAQ:TKMR), a pioneer in the area of RNA interference (RNAi), which is deeply undervalued by the Street. Today, I discuss another small cap biotech company in the space of RNA therapeutics, which is also overlooked by the Street. This company is called Bio-Path Holdings, Inc. (BPTH.OB).
Two Unique Platform Technologies Constitute the Core Competency
Bio-Path currently holds intellectual property of two unique drug delivery platform technologies, which are the keys to the Company's success.
The Company's core technology is neutral lipid drug delivery technology (neutral liposome), which was licensed from the MD Anderson Cancer Center. The liposomal technology enables systemic delivery of antisense, small interfering RNA (siRNA), and hydrophobic small molecules for treatment of various diseases. The systemic delivery of antisense (single stranded) and siRNA (double stranded) drug candidates has great potential for therapeutic drugs having little or no toxicity.
Antisense RNAs are small, chemically modified strands of DNA that interfere with messenger RNA (mRNA). These drugs (oligonucleotides) are engineered in a sequence that is exactly opposite (hence, anti) to the coding (sense) sequence of mRNA. Upon binding with the mRNA, a duplex is formed. This duplex inhibits the production of the intended protein.
Small interfering RNAs (siRNAs) are short double stranded nucleic acid molecules that mediate RNAi and interfere with the process of producing proteins inside cells.
As I discussed in my previous two articles about TKMR, antisense and siRNA are two of the most promising fields of targeted therapy. Development of antisense and siRNA, however, has been limited by the lack of a suitable method to deliver these drugs to the diseased cells with high uptake into the cell and without causing toxicity. Bio-Path's neutral-lipid based liposome technology is designed to accomplish this goal.
The neutral lipid drug delivery technology solves this problem by employing DOPC neutral lipid formulations to incorporate the antisense/siRNA into liposomes. These liposomes are inert in the body, incorporate the antisense/siRNA with high efficiency and form microscopic to nano-sized particles that can migrate inside tumors. Testing of Bio-Path's delivery technology in animals has demonstrated a 10-30 fold increase in tumor cell uptake compared to other delivery methods.
In addition to the neutral lipid drug delivery technology, Bio-Path recently licensed from MD Anderson a new liposome tumor targeting technology, which has the potential to be applied to augment the Company's current delivery technology to further improve the effectiveness of its antisense and siRNA drugs under development as well as other future liposome-based drugs. Tumor targeting will enhance the Company's liposome delivery technology by coating the liposome with ligands targeted to a receptor that is specifically over-expressed on a majority of solid and hematological tumors and on eighty percent (80%) of metastatic epithelial tumors. This liposome tumor-targeting technology could be a highly promising strategy for treating primary and metastatic cancers.
The new liposome tumor targeting technology will be developed as an extension of the Company's current delivery technology, with a goal towards a more potent and focused delivery of the antisense and siRNA cancer treatments to the tumor tissue. Adding a ligand to the liposome that targets a receptor that is highly expressed on the surface of tumor cells is expected to drive uptake of the liposomes into the tumor tissue, enhancing relative deposition in the target tumor tissue. In animal studies conducted at MD Anderson Cancer Center, researchers demonstrated targeted neutral lipid-based liposomes increased siRNA uptake 5 to 8-fold higher into cancer cells compared to those of non-targeted liposomes and controls. These efficiencies are in addition to the delivery efficiencies noted above from the core neutral lipid-based liposome delivery technology.
The core liposome technology is already in a clinical trial while tumor targeting technology is still at the research and development stage. These two platform technologies have the potential to revolutionize the treatment of cancer and other diseases where the targets of disease are well characterized.
Phase I Study of Liposomal Grb-2 Is Progressing Well
Bio-Path's core technology, if successful, will enable it to be at the center of emerging genetic and molecular target-based therapeutics that require systemic delivery of DNA and RNA-like materials. The Company is currently using its neutral lipid drug delivery platform testing two drug candidates for the treatment of various cancers. If successful, these drug candidates could potentially be used in treating many other indications of cancer.
Liposomal Grb-2 (L-Grb-2 or BP-100-1.01) is the Company's lead drug candidate currently in a Phase I clinical trial. L-Grb-2 is a liposomal delivered antisense cancer drug that targets an estimated $1 billion annual market for Chronic Myelogenous Leukemia (CML), Acute Myeloid Leukemia (AML), Acute Lymphoblastic Leukemia (ALL), and Myelodysplastic Syndrome (MDS).
Grb-2 (growth factor-bound protein-2) is an adaptor protein that links tyrosine kinases such as bcr-abl with their downstream signaling molecules, including RAS. RAS is a critical regulator of cellular proliferation. The Company's collaborators have demonstrated that L-Grb-2 is effective in inhibiting the growth of human CML cells in animal models.
BPTH initiated Phase I clinical trial of L-Grb-2 in July 2010. The Phase I clinical trial is a dose-escalating study to determine the safety and tolerance of escalating doses of L-Grb-2. The study will also determine the optimal biologically active dose for further development. The pharmacokinetics of L-Grb-2 in patients will be studied, making it possible to investigate whether the delivery technology performs as expected based on pre-clinical studies in animals. The trial will evaluate six doses of L-Grb-2 (5, 10, 20, 40, 60, and 90 mg/m2) and about 20 patients will be accrued into the study. Dosing stops if a maximum tolerated dose (MTD) is reached. If a MTD will not be reached, the Company will halt testing once an optimally biological dose is achieved. If advantageous, the Company can continue testing at a higher dose of 135 mg/m2 with 33 percent increments thereafter. The clinical trial is being conducted at The University of Texas MD Anderson Cancer Center.
An important outcome for the Phase I clinical trial is the ability to assess for the first time the performance of the Company's neutral lipid delivery technology platform in human patients. Being platform technology, a successful demonstration of the delivery technology in this study will allow the Company to immediately begin expanding its drug candidates by simply applying the delivery technology template to multiple new drug product targets. In this manner, Bio-Path can quickly build an attractive drug product pipeline with multiple drug product candidates for treating cancer as well as treating other important diseases including diabetes, cardiovascular conditions and neuromuscular disorders.
A favorable outcome of the Phase I trial will also provide an opportunity for the Company to monetize this core drug delivery technology. Bio-Path expects opportunities to negotiate non-exclusive license applications involving upfront cash payments with pharmaceutical companies developing antisense drugs that need systemic delivery technology.
So far, BPTH has completed treatment of 4 cohorts of the Phase I trial. L-Grb-2 has been well tolerated and there is no severe safety issues. At the same time, L-Grb-2 has demonstrated encouraging anti-tumor activity with some patients receiving continued treatment with L-Grb-2.
In Cohort 4, a total of three patients were enrolled and dosed. All three patients completed the 28-day treatment cycle and were evaluable. Patients received a dose of 40 mg/m2 twice a week for four weeks, for a total of eight doses. Preliminary results suggest that Liposomal Grb-2, at a dose of 40 mg/m2 is well tolerated. As was the case with the three previous cohorts, there continued to be a suggestion of possible anti-leukemia activity. One patient stabilized and qualified to receive additional treatment. Two other AML patients with more than 90 percent blast count did not receive extended treatment.
Bio-Path (NASDAQ:BPTH) is making significant improvement for each cohort in terms of time for completion of a cohort, number of patients enrolled and the percentage of evaluable patients that received extended treatments as the below table shows. An important measure of benefit from treatment with the drug is stabilization and being placed on extended treatment cycles. This trend is also very positive, with all three patients from cohort 3 being placed on extended treatment plans.
Summary of Grb-2 Phase I Trial Through Cohort 3
Time for completion
Patients on Extended Treatment
% of Eval.
It is clear that the momentum of the trial has significantly changed to the better, with markedly shortened times to complete a cohort and the minimum number of patients needed. The increase in the number of patients needing drugs for extended treatments has caused Bio-Path to accelerate its plans to upgrade the capacity of drug supply chain.
On March 7, 2013, Bio-Path Holdings began enrolling patients into the fifth dosage cohort. In the fifth cohort, patients will receive a dose of 60 mg/m2 twice a week for four weeks, for a total of eight doses. Following the completion of the fifth cohort, Bio-Path expects to enroll patients into a sixth cohort with a dosage of 90 mg/ m2.
The Company remains on track to complete dosing in the Phase I trial by mid-year 2013.
We think the interim results from the first four cohorts are encouraging. The suggestion of possible anti-leukemia activity with the low doses used in the first and second cohorts is especially impressive. We continue to look forward to seeing more positive data from cohort 5 and 6 in the coming months.
Phase II Trial for L-Grb-2 to Be Initiated in 2013
BPTH recently announced its development plans for Liposomal Grb-2 and expects to conduct three Phase II clinical trials of Liposomal Grb-2 salvage therapy in combination with the frontline therapy in three of the types of leukemia that are currently being evaluated in the Company's Phase I clinical trial. These indications include AML, CML and MDS. These clinical trials are expected to take place at four of the leading cancer centers in the U.S. in 2013.
While not yet finalized, the outline of the proposed clinical program for Liposomal Grb-2 is to evaluate the compound in a Phase I/II clinical trial in combination with the frontline therapy for each of the leukemia types: AML, CML and MDS. The Phase I portion of the trial will be a single cohort in three patients to test for any potential negative synergies of using the two drugs together. After successfully passing that test, the clinical trial would immediately proceed into a Phase II trial.
The Phase II trial in each of the diseases: AML, CML and MDS, is planned to have 25 to 30 patients per indication. The trials will be conducted at four of the leading cancer centers in the nation, including the MD Anderson Cancer Center. Dr. Jorge Cortes will continue in his role as Principal Investigator for the Phase II clinical trials. The primary endpoint for the study is contemplated to be duration of response. It is expected that there will be only one combination dose administered to each patient in their respective Phase II trial, and consequently, there will not be any time-consuming dose escalation steps. Each patient will receive a full treatment cycle, consisting of two doses per week for four weeks. Utilizing the expertise of four leading cancer centers in the Phase II program should allow the trial to proceed at a good pace. Ideally, once the Phase II portion of the trial is opened it should be possible for dosing to be completed within six months. The Company anticipates starting and completing this phase of development in 2013.
We think that 2013 will be an important year for Bio-Path. The Company will become a mid-stage (Phase II) company after the initiation of the Phase II trial.
Pipeline Expanded by New Indications of Liposomal Grb-2
Recently, BPTH also announced that it is initiating development of its lead cancer drug Liposomal Grb-2 to treat triple negative breast cancer (TNBC) and inflammatory breast cancer (IBC), two cancers characterized by formation of aggressive tumors and relatively high mortality rates.
Liposomal Grb-2 (L-Grb-2) is the Company's lead drug candidate currently in a Phase I clinical trial. L-Grb-2 is a liposomal delivered antisense cancer drug that targets a multi-billion dollar annual market for Chronic Myelogenous Leukemia , Acute Myeloid Leukemia (AML), Acute Lymphoblastic Leukemia , and Myelodysplastic Syndrome .
Grb-2 (growth factor-bound protein-2) is an adaptor protein, which is essential to cancer cell signaling because it is utilized by oncogenic tyrosine kinases to induce cancer progression. Suppressing the function or expression of Grb-2 should interrupt its vital signaling function and have a therapeutic application in cancer. L-Grb-2 is a neutral-charge, liposome-incorporated antisense drug substance designed to inhibit Grb-2 expression.
BPTH already had a discussion with senior breast cancer researchers at the MD Anderson Cancer Center, which indicated strong scientific case that blocking Grb-2 protein using L-Grb-2 has the potential to be an effective treatment for TNBC and IBC
BPTH's plan is to develop Liposomal Grb-2 as a targeted therapy against TNBC and IBC. Treatment goals are two-pronged:
- The first is to develop Liposomal Grb-2 as a tumor reduction agent in combination with other approved drugs in pre-operative settings
- The second is to develop Liposomal Grb-2 as a drug to treat and control or eliminate cancer metastasis in TNBC and IBC patients
- Both of these treatment goals address high need situations for patients
BPTH plans to conduct pre-clinical development followed immediately by Phase I clinical trial.
- The preclinical programs are expected to start in 2013 and last one year, after which time the Phase I clinical trial could begin after FDA approval to proceed
- Safety of L-Grb-2 established in leukemia trial can speed dosing in the TNBC/IBC trial
We think the development of Liposomal Grb-2 for the treatment of TNBC and IBC is a major milestone for Bio-Path that has the opportunity to produce substantial value for the Company. Successful development of these applications will be of great benefit to TNBC and IBC patients. Further, the treatment goal for tumor inhibition and reduction in a pre-operative setting provides a potential pathway for rapid approval by the FDA of Liposomal Grb-2, while the longer term effects of controlling or eliminating metastasis will build long-term use of our drug.
The new development of L-Grb-2 also expands Bio-Path's pipeline.
Market for TNBC and IBC is Rather Large
Triple negative breast cancer (TNBC) tumors do not express estrogen receptors, progesterone receptors, and low HER2. These negative results mean that the growth of the cancer is not supported by the hormones estrogen and progesterone, or by the presence of too many HER2 receptors. Therefore, TNBC does not respond to hormonal therapy or therapies that target HER2 receptors. In addition, TNBC tumors are very aggressive. Approximately 15 to 20 percent of breast cancers are triple-negative.
Inflammatory breast cancer (IBC) is a rare and very aggressive disease in which cancer cells block lymph vessels in the skin of the breast. This type of breast cancer is called "inflammatory" because the breast often looks swollen and red, or "inflamed." IBC accounts for two to five percent of all breast cancers. IBC tumors are very aggressive and are frequently hormone receptor negative, which means hormone therapies may not be effective. Five-year survival rate for IBC is 40 percent versus 87 percent for all breast cancers combined, making IBC a priority area for development of new treatments.
The combined market for TNBC and IBC is very large in our view due to the huge market for breast cancer in our view. Together with the CML, AML and MDS, L-Grb-2 is targeting a multi-billion dollar market.
Novartis's Gleevec gives a vivid example. Gleevec generated $4.7 billion in sales in 2011. The initial clinical target for L-Grb-2 is Gleevec-resistant CML. There are approximately 40,000 patients in the U.S. with CML. Currently most patients are treated with Gleevec, an inhibitor of the tyrosine kinase bcr-abl, the causative agent of CML. Gleevec is quite effective at treating CML but many patients develop resistance to Gleevec and, consequently, recurrence of their disease.
In addition to CML, L-Grb-2 also targets AML and MDS as well as the TNBC and IBC, each has a significant market.
Balance Sheet Boosted By New Financing
BPTH reported full year of 2012 financials on March 2, 2012 ended December 31, 2012.
There is no revenue for the year of 2012.
Operating expenses were $2.6 million for the year 2012, an increase of $0.2 million compared to the year 2011, which was primarily due to increased drug material expense.
Net loss for the year 2012 was $2.6 million, (2,582,537), compared to a net loss of $(2,363,344) for the year 2011. The increase in net loss was due to an increase of $0.5 million in research and development expense, primarily due to an approximate $0.5 million increase in expense for drug product material used in the Company's clinical trial, in addition to increased expense for clinical trial operations and advisory services.
For the full year 2012, the Company reported a net loss per share of $(0.04) based on 59,317,779 weighted average shares outstanding, compared to $(0.04) per share for the year 2011.
As of December 31, 2012, the Company had cash of $534,046. Net cash used in operating activities for the year 2012 was $2.0 million.
During the first quarter of 2013, BPTH raised an additional $2 million, which boosted the Company's balance sheet. Current cash should last into fourth quarter of 2013 according to our model.
We appreciate management's commitment to minimize dilution of existing shareholders. We are reminded that management intentionally keeps only enough cash (plus a reasonable buffer) to fund operations through the next set of milestones. This strategy helps to minimize dilution of early-stage investors.
Valuation is Attractive
We are bullish on BPTH shares at this time. Our call is based on recent progress the Company has made and current valuation of the Company.
We believe Bio-Path's neutral lipid drug delivery platform technology has great potential to systemically deliver antisense drug candidates in human bodies. Its pipeline has been expanded by new indications and can be easily expanded into other therapeutic areas if the delivery platform technology proves successful for current cancer indications.
Obviously, Bio-Path's success will be dependent on the neutral lipid drug delivery technology. Antisense and siRNA currently are two most promising targeted therapies. However, the biggest challenge for antisense and siRNA therapeutics is their systemic delivery into targeted disease areas. Most conventional delivery methods have failed to do so. Bio-Path's unique neutral lipid delivery technology may have potential to be successful. Testing of this delivery technology in animals has demonstrated a 10-30 fold increase in tumor cell uptake with this technology compared to other delivery methods without any evidence of toxicity.
We are encouraged by the progress BPTH has made with its lead drug candidate Liposomal Grb-2. We are impressed by the interim results, which have demonstrated the safety and potential efficacy of the candidate. We are especially impressed by the suggestion of possible anti-leukemia activity at the very low dosage, which was an unexpected and very positive result. We are also pleased to see the Company is expanding its pipeline by developing new indications of its lead compound L-Grb-2.
In terms of valuation, we think Bio-Path shares are undervalued at this point. By comparing to its peers in the biotech industry and considering the potential of its drug delivery technology and progresses the Company has made in the past few months, we think Bio-Path's stock should be trading around $1.00 per share, which value the Company at about $65 million in market cap.