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Upcoming events: PEDigree phase Ib/2a preliminary data late Q1 2012 or early Q2 2012

LPath, Inc. (NASDAQ:LPTN) – based in San Diego, CA engages in the development and commercialization of lipidomic-based therapeutics. Utilizing its proprietary ImmuneY2 discovery engine, the company aims to leverage its technology platform to provide monoclonal antibodies targeting bioactive lipids in a safe, efficacious, and reliable manner. LPath company is an early stage biotechnology company currently beginning two efficacy trials for its ocular formulation of the humanized monoclonal anti-S1P antibody (Sphingomab™), known as iSONEP™.

Recently, LPath hosted an investor call to update the public on the status of its clinical programs. For an extensive background, including the Pfizer (NYSE:PFE) partnership, see my previous article here. Statistically speaking, phase 2 is the most challenging of the clinical trials, and many compounds will not make it to phase 3 due to lack of efficacy. However, in LPath’s case, significant glimpses of efficacy were evident in the phase 1a trial, with a single dose of iSONEP.

Summary of Phase 1 Results: The set of eyes allocated to this phase 1 trial was poor; many patients had numerous treatments of Lucentis/Avastin (Genentech) with little to no improvement. Notably though, both patients (2 out of 2) with RPE detachment (PED) experienced complete or near-complete resolution of the condition with a single dose of iSONEP (no retreatment for 18+ months for one, and 105 days for the other). Most significant however, was the regression in CNV (choroidal neovascularization), which is the underlying cause of the disease that eventually leads to degeneration of the macula, the area of the retina responsible for central vision (a non-Lucentis benefit).

Of the 7 patients that had a baseline lesion considered “large,” 4 experienced a reduction exceeding 5 mm and 3 experienced a reduction of greater than 75%, with a single dose of iSONEP. 7 out of the 9 patients showed a decrease in retinal thickness (Lucentis-type benefit), and these patients had not been responsive to Lucentis treatment. Notably, of the 5 patients who had the strongest biological response, all had a component of occult-type CNV (as opposed to classical) and represented all patients in the trial with occult-type CNV, showcasing iSONEP’s potential efficacy against this indication, the vast majority of cases.

Phase 1b Trial Design: PEDigree - Based on this promising set of data from a single dose, the first upcoming phase 1b/2a trial, PEDigree, is designed to probe the efficacy of iSONEP for RPE detachment (~15-25% of the broader wet-AMD market) in a group of approximately 32 patients unresponsive to 3+ anti-VEGF treatments (and less than 8). PEDigree will have 2 randomized arms of 0.5 mg and 2.0 mg doses of iSONEP administered initially and on days 30 and 60 if the PED is not collapsed, for a potential total of 3 doses. Results are expected late Q1 or early Q2 2012.

The obvious question is, “What is a good result for this trial?” Management asked the same question of its SAB and experts in the field, to which ranges of 25% to 35% were given. No drug is currently approved for RPE detachment, and Lucentis only appears to resolve~10% of less of RPE detachments with multiple Lucentis doses (and in fact, causes a tear in approximately the same percentage!). In fact, the Lucentis trials excluded these patients. Given the strong results in LPath’s phase 1 (both patients with RPE detachment experienced resolution with a single dose), this is encouraging for the upcoming PEDigree trial. Endpoints include changes in subretinal and intraretinal fluid, changes in retinal thickness and in size and height of PED compared with baseline. In addition, changes in CNV lesion area from baseline and visual acuity will be measured as well.

Phase 2a Trial Design: Nexus - The larger study, Nexus, is a phase 2a study for wet-AMD including 4 randomized arms of 40 patients each for a total 160 patients that have been “sub-responsive” to anti-VEGF treatments (Lucentis/Avastin), and excluding those with PED. The 4 arms represent combination therapy of iSONEP and Lucentis in 2 doses, Lucentis alone, and iSONEP alone. Doses will be administered monthly for 4 months. The primary endpoint for the study will be change in best corrected visual acuity, with secondary endpoints of safety, CNV lesion area, and retinal thickness. Results are expected in the first half of 2013, but this is very tentative.

Pipeline: In addition to the leading iSONEP candidate, ASONEP is slated to begin phase 2 clinical trials in 2012 as of yet undetermined cancer indications. Pfizer (major partner) holds the right of first refusal on ASONEP until December 2013. In addition, LPath currently has an early stage preclinical compound, Lpathomab. Lpathomab targets the bioactive signaling lipid LPA (Lysophosphatidic acid), a compound involved in pain and fibrosis.

This has been a hot area recently, with Bristol-Myers Squibb (NYSE:BMY) purchasing Amira Pharmaceuticals for $375 MM upfront and a $150 MM in potential milestones. While Amira’s compound targeted the LPA1 receptor, they had completed a phase 1 trial (healthy volunteers, no efficacy signal), putting them approximately two and a half years ahead of Lpath in terms of clinical development.

Fundamentals and Financials: Per the recent conference call, LPath’s management stated that they have the resources and balance sheet to fund all the planned clinical trials through mid 2013. The company has 62.8 MM shares outstanding, and from the 10Q, options to purchase 0.3 MM shares of common stock, warrants to purchase 2.1 MM shares of common stock, and 56,698 restricted stock units were outstanding during the quarter ended June 30, 2011, but were not included in the computation of diluted earnings per share because they were anti-dilutive. Insider ownership at 16% is favorable as well. As of writing this article, the entire market cap of LPath is approximately $60 MM. (Most recent 10Q)

Conclusion and Future Directions: While it is challenging to assign a specific value to such an early stage biotechnology firm due to the uncertain timing of future clinical trials and approvals, the market size for wet-AMD is large (just look at Lucentis/Avastin). With the baby boomers aging and living longer than ever, wet-AMD cases will continue to grow, making this a very large, and in many cases (PED), an unmet need. For an early stage biotech such as LPTN, the valuation for LPath will be based on hitting key efficacy and safety endpoints in the upcoming PEDigree trial, and later on, the NEXUS trial.

Overall, I believe the glimpse of excellent efficacy data (with both non-Lucentis and Lucentis-type benefits) for iSONEP in a tough set of eyes warrants a speculative long position in this thinly traded OTC bulletin board stock, despite what is the most difficult clinical trial phase.

Disclosure: I am long LPTN.