Seeking Alpha
Growth, momentum, long-term horizon, newsletter provider
Profile| Send Message|
( followers)  

Part of what makes any particular developmental or clinical stage company into a success story is its ability to develop and eventually commercialize a pipeline that brings a unique angle to the table. That angle could be, for example, a breakthrough medical discovery, an answer to an ongoing medical dilemma or unmet medical need, or a new approach that improves on an already-approved product or technology.

It's that last example where Israel-based Prolor Biotech (NYSEMKT:PBTH) may excel.

Prolor possesses world wide rights to the naturally-occurring Carboxyl Terminal Peptide (CTP). When CTP is attached to already-existing therapeutic proteins, it stabilizes the proteins in the bloodstream and, by slowing the process in which the protein is removed from the body, it creates an extended life span for the therapeutic treatment without adding toxicity or sacrificing the desired biological activity.

In short, CTP extends the life of existing protein-based treatments, and therefore has the potential to significantly reduce the amount of injections a patient needs to receive for treatment.

Only two companies currently hold licenses to the CTP technology. Merck (NYSE:MRK) holds a license for four fertility-related proteins while Prolor holds a license for "all other human therapeutics of natural or non-natural sequence," according to a recent company presentation.

Merck has already successfully implemented the technology on the European market. One injection of Merck's fertility treatment Elonva replaces seven daily FSH injections that would otherwise be needed for treatment. Merck's ability to commercialize its CTP product in Europe validates the technology, as does a successful Phase II trial that Prolor conducted for its own lead product candidate, hGH-CTP.

HGH-CTP is being developed as a long-lasting substitute for the once-daily injection of hGH that is currently prescribed for patients with hormone deficiencies. An already-completed Phase II trial in adults demonstrated that one weekly injection of hGH-CTP could replace seven daily injections. No safety concerns were noted in this trial and the positive results justified a quick move into a Phase III, which is planned for 2012 to confirm the positive results from the Phase II.

Another trial, a Phase II to test hGH-CTP in hormone deficient children, is also slated to start next year.

The hormone-deficiency market, combined for both children and adults, targeted by Prolor with hGH-CTP reaches an estimated three billion dollars. That number is growing annually and could signify a very lucrative future for the company, should it even garner a small foothold in the worldwide market.

Additionally, Prolor expects to be the first to bring such an extended-life hGH treatment to market, at its current rate of clinical development, giving it a leg up on any potential competitors in being able to quickly achieve significant market share. The company also has the advantage of already being granted an Orphan Drug Designation for hGH-CTP in both children and adults.

Analysts began taking notice of the company this year as well, given the successful Phase II trial and market potential of hGH-CTP. PBTH was slapped with a tag of 'Buy' earlier this year, with price targets significantly higher than where shares are currently trading. Some high-profile investors also started rolling in, most notably by Dr. Philip Frost of Teva Pharmaceutical Industries (NYSE:TEVA).

Mr. Frost's interest, which establishes an intriguing connection with Teva, also puts Prolor on the watch list as a potential buyout candidate. Generally the big players like to see later-stage results before turning a buyout idea into actuality, but by the time Prolor is on the cusp of bringing its first product to market, any deal would most likely be a lot more expensive than it would be now. The Prolor-Teva-Frost connection will be one to keep an eye on. With a significant interest in Prolor already, and future success of the company will turn into a personal boon for Dr. Frost.

In addition to hGH-CTP, Prolor still has more in the pipeline.

Long-acting versions of two hemophilia drugs (Factor IX and Factor VIIa) enhanced with CTP are in preclinical studies, while a naturally-occurring drug to treat type II diabetes/obesity is also being prepped for Phase I. The markets for each of the indications targeted with these products is estimated to be in excess of a billion dollars, laying the groundwork for significant opportunity for all of this company's products, should they make it to market.

On the financial front, a recent company presentation notes that there is enough cash in the coffers to last through 2012, leaving Prolor on sound footing for the time being. The possibilities also exist that Prolor could land a partner or two through licensing deals that would help fund the remainder of its development phase. Companies may look to utilize the CTP technology to create longer-acting versions of other already existing proteins, peptides or small molecule drugs.

The analysts and big money have already started to notice this growing success story, and with multiple catalysts planned for 2012 - and with a technology that could prove very valuable on the open market - this has quickly become a story to watch.

Stay tuned.

Disclosure: No position.

Source: Prolor Biotech: Set Up For Success