Medical innovation is a constantly advancing frontier with more effective pharmaceuticals being developed, more convenient delivery systems introduced and new medical devices that provide alternative therapies for chronic conditions. Despite the regulatory hurdles and the costs, new technologies come to market. And these advancements do not always come from the well-known healthcare companies like Medtronic Inc. (NYSE:MDT), Stryker Corporation (NYSE:SYK), Boston Scientific (NYSE:BSX) and St. Jude Medical (NYSE:STJ).
There are two small companies pioneering such medical advancements that are trading near their 52 week lows that look to be worth the risk for those investors that have experienced the euphoria of being in an apparently struggling company, like Dendreon (NASDAQ:DNDN) was before obtaining approval for Provenge, and profiting handsomely as the stock reacts to the long awaited news.
The two companies? Competitive Technologies, Inc. (OTCQX:CTTC) trading at $0.99 with a 52 week range of $0.70-$2.00 and MannKind Corp. (NASDAQ:MNKD), trading at $1.73 with a 52 week trading range $1.57-$4.30.
Competitive Technologies is the licensed worldwide distributor of the FDA-cleared non-invasive Calmare medical device, which incorporates the biophysical "Scrambler Therapy" technology for the treatment of chronic neuropathic pain. With a modest market capitalization of only $14.5 million, CTTC's Calmare offers a non-narcotic alternative therapy for patients who have tried epidurals, back surgery and painkiller prescriptions (with their attendant risk of addiction and overdosing). A CPT III code most likely has been assigned to the Calmare procedure as a prelude to insurance reimbursement as more data is collected and clinical studies are conducted.
Clinical Study Abstracts on Calmare at American Society of Clinical Oncologists (OTC:ASCO) Annual Meeting June 1
Next week, two clinical trial abstracts will be presented at the American Society of Clinical Oncology Annual Meeting on Calmare which utilizes Scrambler Therapy. The first abstract, authored by clinicians at Mayo Clinic and Johns Hopkins University presented results from a pilot study of tan initial 11 CIPN patients with more patients being entered into the trial. The study reported a reduction in mean pain score of 48% and a reduction in worst pain scores of 36%. Tingling scores declined 41% to 43% and numbness declined 21% to 28% on mean-worst pain (the complete abstract is accessible here). The study's authors noted "Chemotherapy-induced peripheral neuropathy (CIPN), a common dose-limiting side effect of chemotherapy, remains without known effective interventions. Preliminary data support that Scrambler Therapy, a device which treats pain via non-invasive cutaneous electrostimulation, is beneficial for the treatment of CIPN.
The second abstract reported results from a study of ten Post-herpetic neuropathy patients. The study reported that the average pain score rapidly diminished from 7.64 at baseline to 0.42 after one month (a 95% reduction) and continued relief after two and three months. Patients achieved maximum pain relief with less than 5 treatments (abstract accessible here). From the abstract: "Post-herpetic neuropathy (PHN) is common in cancer and hematologic malignancy patients. It can be debilitating and difficult to treat effectively. Scrambler therapy, a patient-specific neurocutaneous stimulation device, can be effective in treating chemotherapy-induced neuropathy and other neuropathic pain."
Sales of Calmare to U.S. Government Agencies
The company has met with success, aside from pain management clinics, with the U.S. Navy, Veterans Administration and U.S. Army. CTTC sold two units to Brooke Army Medical Center in Texas, twelve units to the U.S. Navy at nine locations and one to the Veterans Affairs Medical Center in Jamaica Plain, MA.
Success of Calmare Treatments Attracting Media Attention
New Experienced Board Members
The company has added two members to the Board of Directors since the beginning of the year that have a professional background to contribute to the company's future. Stan Yarbro, Ph.D., has extensive experience in market development of high technology solutions. Recently retired as Executive Vice President, Worldwide Field Operations, for Varian Semiconductor Equipment Associates, Dr. Yarbro served in a number of executive positions at KLA-Tencor Corporation, in the semi-conductor industry.
Robert Moussa has launched new products in the diagnostic, nuclear medicine and medical device markets. Mr. Moussa currently serves as Chairman and Chief Executive Officer of Dilon Diagnostics with more than 30 years in the healthcare sector. Mr. Moussa is the Chairman, President and Chief Executive Officer of Dilon Technologies, Inc., makers of a gamma imaging system for early breast cancer detection, a position he has held since February, 2008. Mr. Moussa served as President and Chief Executive Officer of Robert Moussa & Associates, a consulting firm serving the pharmaceutical, biotechnology and healthcare industries prior to joining Dilon Technologies, Inc. He served in a number of executive positions with Mallinckrodt, Inc., St. Louis, Missouri, a $2.4 billion healthcare and chemical company including President and Chief Executive Officer of Mallinckrodt Medical, Inc., Mallinckrodt's largest business unit with over $1 billion dollars in revenues.
And the second company, MannKind Corporation with a market capitalization of $357 Million, has an interesting story behind its business. CEO Alfred is a self-made billionaire from building successful medical companies. Ranked 393 on the Forbes List of US Billionaires, Mr. Mann has made it clear that he is driven and confident that he will bring the company's lead product candidate, AFREZZA to the marketplace. His personal investment in MNKD is significant and continues to grow. Can a billionaire who has been successful in other medical ventures finally fail? OF course. But his passion and confidence is impressive and should not be ignored when conducting due diligence.
MNKD's drug is in late stage clinical investigation for the treatment of adults with type 1 or type 2 diabetes for the control of hyperglycemia, but the company recently announced news that there will be a delay of three months in completing one of the two trials that the FDA wants MNKD to complete. Each trial will last 12 weeks. One will be 360 patients with Type 2 Diabetes using only the new "Dreamboat" inhaler device. The second will be 360 patients using the new "Dreamboat" device and 360 patients using the original device which was not made for commercial use.
According to researchers, the new drug works faster, maintain blood sugar levels closer to normal level and has less risk of causing low blood sugar levels (hypoglycemia) than traditional injectable insulins. Andrea Leone-Bay, vice president of pharmaceutical development for MannKind Corp., has said, "Afrezza is an ultra-rapid-acting insulin, and clinical studies have shown us that it has the potential to change diabetes therapy, because in the body, Afrezza looks like the insulin that's normally in a person's body."
Using an innovative technology called Technosphere, the drug is inhaled as a dry powder that dissolves in the lungs. The powder particles pass through the lungs into the bloodstream and rapidly begins having its effects . Instead of the 45 to 60 minutes it takes for Exubera ( another inhaled insulin) to be effective, Afrezza takes only 12 to 15 minutes after inhalation. For those diabetics that must use insulin after each meal, inhaled insulin is a very attractive alternative from insulin injections or using an insulin pump.
Recent Global License Agreement May Bring in Up To $130 Million
Earlier this month (May,2012), MNKD and Tolero Pharmaceuticals signed an exclusive global license agreement, which will enable Tolero to develop and market compounds from MannKind's novel BTK (Bruton's tyrosine kinase) program which is focused on the development of treatments for hematological malignancies and inflammatory diseases. MNKD could receive up to $130 million in the form of upfront payment and milestone payments for the development, approval and commercialization of the products in addition to tiered royalties on product sales and a share of sub-licensing revenue. The company can re-acquire the rights to the program on until 60 days after the end of the first Phase I study under certain specified terms.
The earliest that MNKD can hope for a FDA approval is in the latter half of 2013, but there are a number of catalysts that can be expected. Al Mann, MNKD's CEO, has made no secret that the company is working towards getting a joint venture partners to alleviate financing concerns moving forward. As the clinical trials progress, the company will most likely be proactive in communicating to the markets.
The short interest in MNKD (as of 4/3/12) is 17.4 Million shares, providing a potential catalyst should MNKD surprise short sellers with better than expected news. Analysts expect the company has the cash on hand to operate through the end of 2012, so any positive change in this scenario will generate a reaction among the short sellers.
The old adage "High risk, High Return" applies with both Competitive Technologies and MannKind , but these risks are calculated and not just a mere roll of the dice. CTTC's Calmare technology is undergoing clinical studies by Mayo Clinic, University of Wisconsin and Virginia Commonwealth University. And abstracts have been accepted by ASCO next week. Calmare is a non-invasive and non-narcotic alternative treatment for chronic neuropathic pain and the market is ready and waiting for expected insurance reimbursement and more expected clinical study results. Trading just off its 52 week low of $0.70, CTTC has been suffering from a lack of news that appears to be changing in the near future. Medical device investors should be watching this company for news or a high volume turn up in the technical charts.
MannKind is followed by a number of research analysts, including Zacks with a neutral rating. The concerns with the FDA's seemingly intransigence with Alfreeza has finally been narrowed down to specific trial requirements that will be completed by the company. The stock has clearly discounted what the known challenges the company is facing and seems to be betting that more negative news is coming. But that is what a market is all about--differing opinions of the future. For risk tolerant medical technology investors, MNKD should be a name to watch for future developments. Any news will precipitate an immediate and volatile reaction.