The following is a comparison of Apricus Bio (NASDAQ:APRI), which is awaiting FDA approval for a Special Protocol Assessment (SPA) on ProvOnco (liver cancer) during 1st quarter 2011 and Threshold Pharma (NASDAQ:THLD), which received this designation for TH-302 (soft tissue sarcoma) in the pre-market of Wednesday’s trading session.
Few and far between from the investment community had been aware of Threshold, a small company based out of California whose shares rose 80% at one point, before cooling off to 57.14% higher on nearly 16 times average volume. The interest was sparked by their product, TH-302, a novel treatment for soft tissue sarcoma, which received a SPA for their Phase 3 randomized trial. “With this SPA, we have reached agreement with the FDA on the key features of our Phase 3 trial design that will be necessary to support the registration of TH-302,” said Stewart Kroll, Threshold’s vice president, Bio-statistics and Clinical Operations.
So just what makes an SPA designation so important you may ask? This particular declaration from the Food and Drug Administration allows for an uncompleted Phase 3 trial’s design, clinical endpoints and statistical analyses to be acceptable for FDA approval. This then implies that it helps in expediting the process of approval, allowing for faster marketability and thus the opportunity to grab hold of the market prior to any competitors.
This event left many wondering which company might be next to follow in the footsteps of Threshold Pharma, and there seems to be no better suitor than Apricus Bio, which seems to be a bigger twin offering very similar opportunities for large gains.
Comparing the two companies can be as easy as looking at the share price, market cap, financial standing and market potential — essentially the same variables any large potential investors and institutions analyze when making their investment decisions. Right off the bat we see that Apricus Bio has a highly undervalued market cap of $52.32M versus that of $92.68M pertaining to Threshold. Digging deeper we see that Apricus has estimated, warrants and raising of capital, $25 million in total assets, while Threshold lags behind with a mere $220,000 as per their latest 10-Q.
Apricus also wins the battle in total products with 12 (of which are more advanced in Phase 1, 2, 3 and one marketed) rather a mere 3 of Threshold, which are only in Phase 1 and 2 currently.
When analyzing the products up for a SPA, Apricus Bio also has an advantage over Threshold, as quick analysis will immediately show that ProvOnco far outweighs the market potential of Threshold by almost three times.
Another important factor to consider is that Apricus’ product, ProvOnco has an Orphan Drug designation while Threshold’s does not. An orphan drug is a pharmaceutical agent that has been developed specifically to treat a rare medical condition, the condition itself being referred to as an orphan disease. This is highly significant because it would mean that it would enjoy seven years of market exclusivity for the condition it was approved to treat.
Technical Chart Comparison
Perhaps the most ironic aspect of these two companies is how similar their chart patterns are. When looking above at Threshold Pharma, it is clear that it had broken out of an "Ascending Triangle" pattern today, one which had formed over the course of two months. Strong volume came in to lead the breakout, and as expected, the other metrics began to trend up and follow the bullish momentum. The measured move was to $3.2 which was briefly hit Wednesday, Feb. 17, before leveling off at $2.75.
Apricus seems to be one step behind Threshold Pharma in achieving its breakout of the "Ascending Triangle" formation. In an almost identical fashion, the RSI seems to be basing off as money begins flowing back in the stock, with all other metrics awaiting a strong reversal to the upside. Decreasing volume is also similar to that of Threshold’s just prior to the catalyst that sparked the turning point. The chart pattern has a modest target of $6.10, though a push to $9.30 to test its 52-week high the same way Threshold did is not out of the question once institutional investors come in. Further validation of the potential strength of the upwards movement can be seen back in November 22, 2010 when Apricus rose from $2.10 to $3.23 by simply announcing their application for SPA in their phase III trial of ProvOnco.
In summary, it seems Apricus is significantly undervalued at current levels while awaiting for its very own SPA designation from the FDA. Comparing it to Threshold’s price action, we can expect that Apricus sees nearly a double in price should positive developments come its way as expected. The company is led by Dr. Damaj, who since being appointed as CEO in December 2009, led Apricus to approval of its first drug as well as gaining NASDAQ compliance. Thus due to his experience in both the investment and medical field, it is highly likely that an SPA designation is well on its way.
Disclosure: Long APRI. No position in THLD.