Anthera Pharmaceuticals, Inc. (ANTH), the $112 million market cap company, was up nearly 23% on heavy volume to close at $2.74 Friday. This inflammation specializing biopharmaceutical has had a rocky 2012, but is taking aim at Large Pharma heavy hitters in the autoimmune arena. It was initiated June 13th with a market outperform rating and a $4 price target by JMP Securities. The company's key clinical product, Blisibimod, is a Phase IIb antagonist of the BAFF cytokine which reduces B-cells associated with autoimmune diseases such as lupus, rheumatoid arthritis and Graves' disease.
The risk of an Anthera investment
Trading above $6 in early March, this stock suffered a huge loss when it announced it was ceasing its Phase III Vista-16 heart disease trial for its Varespladib agent. Now, all the eggs are in the Blisibimod basket. Making things more difficult is the questionable lupus market, for which its PEARL-SC Phase IIb study is designed. Human Genome Science (HGSI) and GlaxoSmithKline's (GSK) Benlysta, as many know, became the first approved Lupus drug in over 50 years in 2011. Benlysta sales in Q1 2012 were just north of $30 million meeting resistance with high cost and limited insurance coverage. Further, the lupus market, estimated at a potential $1.3 billion a year by 2015, is one rife with competition. Large pharma heavy hitters Bristol-Myers Squibb (BMY), Merck (MRK), and Eli Lilly (LLY) each have late stage lupus drugs in development to serve the estimated 5 million people worldwide with the disease. Unlike Anthera, these companies have the luxury to bleed the cash necessary to sustain development, trials and commercialization of a drug.
The upside of speculation
The stock is up sharply on nearly triple its average volume and seems to have broken resistance. Blisibimod offers options for treatments in a variety of autoimmune diseases, meaning a mixed result study won't kill the drug as was the case with Varespladib. Further, as a peptidbody, the company holds unique IP in the market on this potentially wide reaching agent. Blisibimod offers near-term catalyst in the market with PEARL-SC Phase IIb data coming in Q4 2012. Interest especially lies with future development of trials for additional B-cell related diseases for which its IP offers opportunity.
Speaking of IP, while Anthera is no Human Genome in terms of its pipeline or history, its angle on inflammatory/autoimmune diseases may make it an interesting acquisition for a larger pharmaceutical company. Analysts and markets alike have seen GSK's bid for HGSI as a positive for ANTH.
What's an investor to think?
An investment in ANTH is obviously a speculative risk in a development stage company with a recent black eye for its failed Varespladib. Cash burn is certainly an issue for this company and a share raise is a possibility should the stock continue to see gains. Assuming Anthera hangs on to market interest and continues to produce solid data from its PEARL-SC trial, it should tic up and maintain speculation as a buyout target at best or a potential partner to a large pharma player at least.
Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.