Advanced Life Sciences Attractive After Recent Sell-Off

Jun.29.07 | About: Advanced Life (ADLS)

The recent sell-off in shares of Advanced Life Sciences (OTCPK:ADLS) represents an attractive entry point for micro-cap biotech investors. The downturn occurred after the company released clinical trial data for its lead antibiotic drug candidate called cethromycin in the treatment of community-acquired pneumonia (CAP). In the first of two pivotal Phase 3 trials for CAP, cethromycin achieved non-inferiority to the related antibiotic Biaxin.

Specifically, after seven days of treatment cethromycin cured 91.5% of patients with CAP, while Biaxin cured 95.9% of patients. Based on the study design, a statistical analysis concluded that cethromycin was not inferior to Biaxin. The company noted that the Biaxin cure rate was the highest ever observed in a clinical trial for CAP. Lazard Capital analyst Matthew Osborne maintained his "Buy" rating on Advanced Life, noting that while the safety of both drugs were similar, cethromycin offered a cleaner safety profile when it came to liver toxicity.

Results from the second pivotal Phase 3 CAP study are expected by early July at the latest, and the Lazard analyst believes the company will also announce a drug partnership with another company before filing a NDA for cethromycin later this year. Shares of Advanced Life had soared in early May when cethromycin was shown to be more effective in a primate study at preventing inhalation anthrax infection as compared to the current standard of care ciprofloxacin.

Given the potential for several positive near-term catalysts, shares of Advanced Life represent an opportunity for micro-cap biotech investors after the recent, unwarranted sell-off to less than $2.50 per share. Pending results from the second Phase 3 CAP trial should support the filing of a NDA and a partnership for cethromycin, providing the company with adequate liquidity and a clear path to FDA approval for its lead drug candidate.

Disclosure: Author is long ADLS