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Just under a month has elapsed since 2014 began, and in this short period of time, Advaxis (NASDAQ:ADXS) has taken great strides in positioning itself in what is almost sure to be a breakout year. Earlier this month, Advaxis presented at the Biotech Showcase, a sister conference of sorts to the JP Morgan Healthcare conference, providing updates and hinting at things to follow for the rest of this year.
Their presentation can be found at the following link.
I plan on discussing key points that have yet to be raised from the company's presentation, in addition to highlighting recent developments that have yet to catalyze further share price appreciation for the burgeoning immunotherapy company.
For a more in-depth overview of Advaxis, please view my other previously published articles:
Biotech Showcase Presentation Highlights
In my first article, I mentioned that the company's platform technology lent itself quite nicely towards the rapid development of new immunotherapies capable of targeting various different cancers. Despite this, I was shocked by the company's presentation of its, quite frankly, massive pipeline of assets in both the clinical and pre-clinical stage. Advaxis' unassuming $53 million valuation belies the massive number of assets currently available for the company to explore heading forward.
Source: Company Biotech Showcase Presentation
As shown by the slide above, Advaxis has done well in developing a wide array of candidates. This bodes favorably for the future business development of the company, allowing the company to easily partner on these multiple assets, resulting in parallel development while simultaneously reducing the all-important cash burn that an early-stage biotech must deal with.
This is highlighted by the recent partnerships secured by the company for its Phase 2-heading into Phase 3 candidate for HPV-associated cancers.
Since my last update on Advaxis, the company has secured two partnership deals- one with Global BioPharma and the other with BioCon. I believe these partnerships will be instrumental towards the continued growth of Advaxis and the demonstration of the viability and efficacy of the company's listeria-based immunotherapies.
1) Global BioPharma Partnership
Late last year, Advaxis entered into an exclusive licensing agreement with Global BioPharma (GBP), one of the top five biotech companies operating in Taiwan. This partnership has been discussed at length by fellow contributor Grant Zeng, so for the sake of clarity and brevity, here are my points on the partnership:
- The terms of the partnership call state that "GBP will be responsible for all clinical development and commercialization costs in the GBP territory [Asia, Africa, former USSR territory, exclusive of India]. GBP will also identify and pay the clinical trial costs for up to 150 patients with cervical cancer for enrollment in Advaxis' U.S. and GBP's Asia registrational programs for cervical cancer." Assuming the low-ball figure of $20,000 per patient for the registrational programs saves Advaxis significant cash on the order of at least $3 million.
- This also establishes a much-needed manufacturing base outside of the U.S., saving additional time and money down the line.
- Provided that the immunotherapy is shown to be effective and subsequently commercialized, this licensing agreement will net Advaxis royalty payments in the high single to double digits territory, in addition to event-based financial milestone payments.
I believe the partnership on some level helps to further validate the company's platform technology especially given that GBP was formed for the sole purpose of developing ADXS-HPV, while providing an upfront payment in the form of purchasing common shares of Advaxis at a 50% premium at the time of the partnership.
2) Biocon Partnership: Revenue May Be Closer Than You Think
What excited me more than the GBP deal, was the much more recent agreement signed recently with Biocon. For those of you unfamiliar with the latter company, shame on you, especially if you actively follow biotech and healthcare. Biocon is the largest biotechnology company in India and Asia. Following quite nicely from the Phase 2 studies conducted in India for HPV-associate cervical cancer, the licensing agreement with the Indian biotech company permits for the usage of Advaxis' data for the submission of regulatory filings in India and key emerging markets.
In other words, Advaxis may soon be able to see tangible income resultant from its ADXS-HPV asset in India, which is the largest market for HPV-associated cervical cancer with over 134,000 women diagnosed with cervical cancer every year. Guidance stated on the press release states that Biocon has agreed to begin commercial distribution of the immunotherapy in its territory no later than 9 months following receipt of regulatory approvals. This may be far faster than what can be expected in the US, given the nature of foreign country regulations. Following commercialization, this also nets the licensing company double-digit royalties on net sales, which should easily fund the company in the commercialization and development efforts of its internal pipeline.
Progress on other fronts
Not to be limited to the current success on its ADXS-HPV front of cervical cancer, Advaxis has stated its progress on other fronts of HPV-associated head & neck cancer and HER2-related cancers.
Recently, the company began dosing patients in its Phase 1-2 "window of opportunity" study being conducted by the Icahn School of Medicine at Mount Sinai for Head and Neck Cancer. The study is currently investigating the "window of opportunity" between diagnosis and minimally invasive surgery for tumor excision. If the company is able to demonstrate similar results shown from earlier trials conducted on cervical cancer patients, this may open yet another door for potential partnerships in another indication.
Another candidate of interest is the HER2 immunotherapy asset currently being investigated for canine osteosarcoma. Although this may seem far less exciting than cancer therapies in human populations, the data from the trial currently taking place at the University of Pennsylvania may have widespread implication on human cancers, namely breast cancer. The role of HER2 in breast cancer is well established, and positive data in canine models may foreshadow potential success in breast cancer patients down the line. Herceptin is the most well-known cancer therapy currently marketed by Genentech/Roche (OTCQX:RHHBY) that targets HER2. Although the therapy is effective, sometimes cancer cells can evade the mAb by failing to express HER2 on the outside of the cancer body, preventing the antibody from binding to the cancer. Listeria-based immunotherapy may hold the key to this problem by being able to penetrate cancer bodies through its bacterial idiosyncrasies.
Meaningfully Derisked In the Past 6 Months
I believe Advaxis has been meaningfully de-risked since my initiation of coverage in September of last year. The company has been de-risked on three fronts consisting of its financing risk, clinical trial risk, and liquidity risk based on the following points. In my first update regarding the immunotherapy company, I commented upon the S-1 filed by Advaxis to raise money through sale of cash and warrants. The public offering was oversubscribed, grossing $26.5 million at $4.00/share and simultaneously allowed the company to uplist to the NASDAQ as I predicted in that article.
The units sold during the offering consisted of a share and half a warrant with an exercise price of $5.00/share will allow Advaxis to raise an additional $4.3 million effortlessly. At current burn rates of roughly $4 million a year; the public offering foreseeably funds the company well into 2016, which should allow Advaxis to reach key critical inflection points without the risk of future dilution. Simultaneously, uplisting to a higher exchange has meaningfully mitigated the liquidity risk that was inherent in the biotech company when it was trading on the OTC markets.
The public raise and uplisting was subsequently followed up by the presentation of its final 18-month survival data from its Phase 2 ADXS-HPV trial conducted in India for the indication of recurrent cervical cancer. Advaxis presented its data at one of the leading conferences for cancer immunotherapy, Society for Immunotherapy of Cancer (SITC), on November 9 of last year. I believe the data presented at the conference continues to reinforce the efficacy of the listeria-based cancer therapy. If the data can continue to be replicated in future studies mentioned earlier within the article, the prognosis looks positive for the approval outcome of the company's lead product.
Looking Towards the Rest of the Year: Catalysts for 2014
The following slides provide a thorough overview of what investors should expect heading into the rest of what is sure to be an exciting year.
With strong headways already being made on the partnership front, the "End-Of-Phase-2" meeting should provide strong guidance into how the early immunotherapy company will perform into the rest of the year. 2014 should hold to be an exciting time for Advaxis, particularly given its expansive preclinical pipeline.
This is just speculation on my end, but I believe the company has the potential for being bid on by large pharma, especially as key patent expiries approach for the year of 2014 and 2015, with $34 billion and $66 billion in total sales being jeopardized respectively. A strategic acquisition would do wonders in revitalizing what is already a weakening portfolio of drugs held by large pharma. Of the companies losing core patents, Novartis (NYSE:NVS) and Merck (NYSE:MRK) come to my mind, both being companies that have been trying to break into the immunotherapy space for cancer therapy.
Disclosure: I have no positions in any stocks mentioned, but may initiate a long position in ADXS 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.