Adventrx Poised for Run-Up Before FDA Decision

| About: Mast Therapeutics, (MSTX)

Adventrx Pharmaceuticals (ANX) is a specialty pharma company developing two novel formulations of anti-cancer drugs that are designed to result in less side effects in addition to a compound in late-stage clinical development for the treatment of a blood disorder known as sickle cell anemia.

On 3/10/11, ANX reported its 4Q10 and full-year 2010 financial results, including:

  • As of 3/1/11, had 23.7 million shares of common stock outstanding.
  • Loss from operations = ($8.5M) in 2010 vs. ($11.3M) in 2009; R&D expenses in 2010 = ($3.7M) vs. ($6.5M) in 2009.
  • Expects to reach agreements with the FDA on Phase 3 clinical trials for both ANX-514 and purified poloxamer 188 over the next year.
  • At year-end 2010, cash balance = $28M plus $21M net proceeds from equity financing in JAN 2011 => $49M cash and no debt.
  • In January 2011, sold 8.2M units to RA Capital Management and other institutional investors at $2.75 per unit, which includes one share of common stock plus a Series A & B warrant. Series A warrants are exercisable for up to 2.05M shares of common stock at $2.75 for up to one year of the initial exercise date. Series B warrants are exercisable for up to 2.05M shares of common stock at $2.75 for up to five years of the initial exercise date.

On 4/11/11, ANX announced the completion of its acquisition of SynthRx, Inc. which has a lead product candidate in the development (poloxamer 188) of a treatment of the blood disorder sickle cell crisis in children, which represents on Orphan Drug indication. ANX issued 2.8M shares of common stock to SynthRx shareholders in addition to future milestone-based share issuance or equivalent cash payments based on successful clinical development and regulatory events.

Below is a summary of the pending FDA decision and planned Phase 3 clinical trials for ANX.

1.) EXELBINE (ANX-530) (vinorelbine injectable emulsion) (novel anti-cancer formulation): Formulated to reduce the high incidence of injection site reactions associated with NAVELBINE while achieving similar effects in the body (pharmacokinetic profile – absorption, distribution, metabolism, and excretion characteristics) plus anti-cancer effect. Potential for premium pricing compared to generic, standard formulations of this anti-cancer drug.

FDA Decision - NDA 505(b)(2)

On 1/6/11, the company announced that the FDA accepted NDA for full review with PDUFA decision date of 9/1/11 for expected decision under a standard 10-month review, seeking approval for same indication as NAVELBINE (vinorelbine) including non-small cell lung cancer.

2.) ANX-514 - Docetaxel emulsion for injection (polysorbate 80/detergent-free formulation designed to decrease incidence of potential hypersensitivity and other adverse reactions associated with the use of detergents in standard formulations).

Pending pivotal clinical trial to support NDA 505(b)(2) new filing.

On 2/15/11, the company announced a single additional clinical trial required to support its NDA 505(b)(2) filing as novel formulation of chemo drug TAXOTERE, and provided guidance on 3/10/11 to reach agreement on the Phase 3 trial with the FDA over the next 12 months (1Q12 estimate).

3.) Poloxamer 188

On 3/10/11, the company provided guidance to reach agreement on the Phase 3 trial with the FDA over the next 12 months (1Q12 estimate), and acquired along with SynthRx plans to conduct a trial for sickle cell crisis in pediatric population (an Orphan Drug indication).

Shares of ANX previously reached the $3 level around the time of the company’s NDA resubmission, and I think the stock could trade within the $4-5 range on a run-up basis going into the 9/1/11 FDA decision date, which would value the company at approximately $100M after subtracting for the cash balance.

While questions remain over the market potential, commercialization strategy and ability to obtain premium pricing for EXELBINE; the pending FDA decision and the low share count / price results in a high probability of a stock price run-up going into a strong, reliable catalyst in the form of a FDA decision.

Disclosure: I am long ANX.