Note: Investors should be mindful of the risks of transacting in securities with limited liquidity, such as Adocia (ADOCF) (ADOCY). Adocia SAS trades with more liquidity on the Paris exchange as ADOC.PA.
Adocia (OTCPK:ADOCY) is a leading developer of innovative formulations of already approved drugs. If you do not follow the company and are not familiar with its business model, I recommend reading my previous articles, Adocia: A Genuinely Different Biotech Company With Significant Upside and Adocia: Clinical Research Intensifies, which will give an idea of what the company is developing with its proprietary technology BioChaperone.
Adocia has been focused on diabetes for years, and just three weeks ago announced that it was going to make diabetes its sole focus, and as a result decided to discontinue its early-stage oncology program (DriveIn) and its monoclonal antibodies partnerships. This is an excellent strategic decision for the company, as it will allow it to leverage the expertise it has acquired in that field in the ten years since its inception.
In the same press release, Adocia announced the official launch of the development of a new product based on the BC technology, BioChaperone Glucagon. Just like its other products, BC Glucagon is an improved formulation of an already approved drug (Glucagon, Eli Lilly), which is used to treat severe hypoglycemia in diabetes patients. The problem with Glucagon and its main competitor GlucaGen (NovoNordisk) is that these products require sterile water to be diluted prior to injection, which makes it hard for patients to administer a proper dose. In order to address this critical problem, Adocia is developing a ready-to-use formulation of Lilly's (NYSE:LLY) Glucagon, which could dramatically improve patient's success rate when using Glucagon as well as open other applications for the use of this hormone. The company said it plans to launch the first clinical trial in the first half of 2017.
CLINICAL TRIAL PROGRESS
The development of BC Lispro, the company's leading product subject to the partnership with Eli Lilly, has progressed tremendously over the past months. Since my previous article on October 26, the company published the results of four different trials on BC Lispro:
On December 11, the company announced positive results for a critical bioequivalency trial evaluating the more concentrated U200 version of Lispro to Lispro U100 on 26 healthy subjects. The reason this is so important is because it proves that the U200 formulation is at the same stage of development than the U100 and can therefore be included in the Phase III. As a result, this triggered a $10 million milestone payment from Eli Lilly as part of the partnership agreement.
On March 14, the company published positive results for a Phase Ib study evaluating the effects of repeated administration of BC Lispro compared to Humalog in 36 patients with Type 1 diabetes. The primary endpoint was to establish the superior profile of BC Lispro for post-prandial glycemic control when injected at the time of a meal. The study also compared BC Lispro to Humalog when injected fifteen minutes before or after the start of a meal.
On April 27, Adocia published the results of another Phase Ib trial evaluating the repeated administration of the BC Lispro's concentrated formulation (U200) in 51 patients with Type 2 diabetes. This was the first study performed on Type 2 diabetes patients for BC Lispro, and its success was therefore critical. By reaching the primary and secondary endpoints in this trial, the company demonstrated that BC Lispro's superior profile applies to both types of diabetes.
On May 31, Adocia announced positive results for another important trial, evaluating BC Lispro's ultra-rapid absorption profile on 15 healthy Japanese subjects. This trial is part of the pre-Phase III program and aims to prove BC Lispro's superior profile on various ethnic groups in order to undertake a large, global Phase III study, which is the next step for the development of BC Lispro. As expected, the successful completion of this clinical trial allows for the inclusion of Japanese diabetes patients in the Phase III program.
The company also has another clinical trial currently in progress on BC Lispro, evaluating the difference between BC Lispro and Humalog in type 1 diabetes patients who use an insulin pump. The results are expected during the last quarter of 2016 and will complement the results of the previous studies as part of the Phase III preparation program.
Adocia is also working on a long-lasting pradial/basal insulin combination called BioChaperone Combo. This unique combination of ultra-fast and long-lasting insulin has previously demonstrated a basal action lasting over thirty hours, on top of having the ultra-fast absorption profile of prandial insulin.
On November 4, the company published the results of a Phase Ib trial on 28 Type 1 patients, comparing the effects of BC Combo and Humalog Mix on post-meal glycemic control when injected at the time of a meal. The primary endpoint was to prove the superiority of BC Combo in reducing post-meal glucose in the first two hours, while the secondary endpoint was to prevent blood glucose decrease two to six hours after the meal. Both endpoints were met with statistical significance and support the continued development of this product.
On November 25, Adocia announced the results of a trial comparing BC Combo to Humalog Mix in 24 Type 2 patients. This trial was a critical milestone in the development, since it established proof-of-concept for BC Combo in Type 2 diabetes patients. This expands the market for BC Combo and according to CEO Gérard Soula, "These very promising results in patients with type 2 diabetes strengthen our strategy to position BioChaperone Combo as a simple and optimal option for insulin treatment intensification. We are aiming at a double opportunity: the large and established premix market, as well as a significant part of the basal insulin market." These positive results, along with other ongoing and planned trials, are making the way for BC Combo's Phase III program.
The company is also working on a product called BioChaperone PDGF-BB, which is a spray to treat diabetic foot ulcers (DFUs). The development is currently in Phase III, with an ongoing trial in India (results expected Q3 2016). The company also plans to initiate two more Phase III trials in the United States and Europe in the first semester of next year.
Adocia is also developing an innovative formulation of human insulin, HinsBet. Human insulin is widely used in developing markets because it is much more cost-effective. HinsBet is currently being evaluated in a Phase Ib trial against Humalog and Humulin, two of LLY's human insulin formulations. The company expects results during the third quarter of this year.
On April 14, the company published its financial results for the first quarter. After a tremendous fiscal 2015, in which the company brought in revenues of more than €36M and achieved significant progress in clinical development, Adocia has all the financial resources to tackle the next decade. For the first quarter, revenues rose 15% YoY to €6.8 million, with €2.7M coming from the amortization of the $50M upfront payment. The company also invoiced €4.1M of operating expenses to Eli Lilly as part of the Lispro deal. As of March 31, the company had €64.2M in cash and equivalents, with just €900K in debt. This comfortable cash position is enough to fund the company for years, and will allow them to conduct all the trials needed to bring their products to market.
The company has continued to execute its strategy without meeting any major hurdles, and is paving the way for a new standard in diabetes treatment with easier-to-use, more effective solutions. Adocia achieved many significant milestones during 2015, and reporting a full year net income was one of the most important one. I believe the recent movements on the price offer a tremendous buying opportunity, at least for investors with a long-term investment horizon. Like I said in my previous articles, I am long this stock and will stay long for many years to come. With shares trading below €50, I only wish I could buy more.
Disclosure: I/we have no positions in any stocks mentioned, but may initiate a long position in ADOC.PA over the next 72 hours.
I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.