One Amazing Pharmaceutical Stock To Watch In 2012

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A relatively untapped field within the pharmaceutical industry lies in lipid-based therapies, particularly with the use of monoclonal antibodies. One of the top leaders in this emerging field is Lpath Inc. (LPTN.OB), a small pharmaceutical company which had its IPO at the end of 2005. Leading the company’s research is Roger Sabbadini, a former professor of biology from the Univesity of California, San Diego. His research was heavily focused on the development of antibodies for use against bioactive lipids.

Currently, the vast majority of drugs both on the market and in development target protein pathways. Proteins, unlike lipids, are more complex and highly evolved structures that are specifically evolved for advanced physiological processes. They are mutated more frequently through alterations in genetic data, which is why it can be so difficult to predict the human outcome in clinical trials after animal studies. Lipids, on the other hand, comprise a more fundamental form of physiology. This generally means that the results from earlier clinical trials could be more promising than usual, since lipid pathways are so much more universal.

Additionally, as stated on the company’s website, recent discoveries have implied that lipids have vital functions in physiological pathways that were previously unknown. With the lipidome (essentially the number of types of lipids) offering over 1,000 molecules to study, there is a significant reservoir of untapped clinical application. Due to this, Lpath’s leading position in this new field is of significant interest to both investors and larger pharmaceutical fields looking to expand innovation between product development. Especially important is the firm’s proprietary ImmuneY2 system, which serves as an efficient and optimal way to identify antibodies for use against particular lipids.

What has brought Lpath to the spotlight in the last year is its high-profile partnership with Pfizer (NYSE:PFE) that started in 2010 for the development of iSONEP, with the possibility of $500 million in cash given that particular milestones for the drug are met. iSONEP, the most developed drug on the Lpath pipeline, is a treatment for wet AMD (wet age-related macular degeneration - an immense drug market with large growth prospects due to an aging population. Wet AMD occurs upon abnormal growth of blood vessels which damage the macula and leak blood into the eye. Vision is greatly impaired during the advanced stages of the disease, which is why treatments are so greatly sought after.

Currently, treatment for wet AMD is limited to laser surgery to attempt destruction of the abnormal blood vessels, photodynamic therapy which can significantly slow the rate of the disease, and VEGF (vascular endothelial growth factor) inhibiting agents which also slow the progression of AMD. VEGF (angiogenesis / blood vessel growth inhibitor) treatments are popular, and they include Lucentis (developed by Genentech and marketed by Novartis (NYSE:NVS)) and Avastin (developed by Genentech and marketed by Roche (OTCQX:RHHBY)). There are few other options for patients that don’t respond to these drugs.

Lpath began phase 2 clinical trials in October 2011 to test the efficacy of iSONEP, its lipidomics-based therapy, of patients who failed to respond to other blood-vessel inhibiting drugs. The results are due in 2012, and will undoubtedly largely influence the stock’s price. Phase 1 trials have been very positive thus far. In addition to strong tolerance of the drugs in the clinical population, reductions in the size of the actual AMD lesions were observed. Some patients have even seen a complete elimination of the lesions and reduced swelling, which is particularly exciting given that current treatments have not been capable of producing such startlingly positive results.

On top of iSONEP, which has shown exceedingly positive results thus far, the company is also developing the drug ASONEP (entering phase 2 trials in 2012), and two others in very early stages of development. ASONEP is being considered for a very broad range of diseases, and has already found a partner with Pfizer (again) who holds the right of first refusal. Since iSONEP is the most developed product, and has strong data and sizable financial resources supporting its eventual position in the wet AMD market, LPTN will definitely be a stock to watch going into 2012.

Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.