Anthera Pharmaceuticals: Buy Low Opportunity On Potential Drug Approval


Anthera's lupus drug, Blisibimod, is in stage 3 clinical trial with results expected in the second half of 2016.

It also has its cystic fibrosis drug, Sollpura, in the clinical trial pipeline.

The stock was hurt late in 2015 following its second additional stock offering in the calendar year.

Zenyaku, its licensing and development partner in Japan, backed out of its deal in September 2015.

Citigroup recently reiterated its buy rating and $15 price target on Anthera's stock.

Anthera Pharmaceuticals (NASDAQ:ANTH) is a tiny biotech that trades primarily on hope at this point. The company's stock price moved significantly in 2015 and looked like it would be a top performer as it shot higher from $2 at the start of the year to a peak of over $11 in July as it announced it would release additional data on patient-reported outcomes of phase 2b PEARL-SC clinical trial of its leading drug candidate Blisibimod. The drug looks to treat the symptoms related to the onset of lupus.

The stock is currently trading back in the $3 range after the momentum of biotechs began cooling and the company needed to complete a second stock issue within the calendar year in order to raise funds for ongoing operations. It's a bit of a typical story for tiny biotech companies but if you begin looking towards what's in store throughout the remainder of 2016 there's a lot to like about Anthera.

Two drugs and five clinical studies underway

Anthera is currently developing two drugs.

Its lupus drug, Blisibimod, is in the midst of its phase 3 CHABLIS-SC1 clinical study after surpassing its 400 patient enrollment target in July of last year. The drug will also enter the phase 3 CHABLIS 7.5 trial shortly to study the effects of Blisibimod in the treatment of severe lupus symptoms not typically controlled with traditional medications. Anthera also has Blisibimod in the middle of a third middle stage clinical trial for treating IgA Nephropathy.

In September, Anthera initiated the phase 3 SOLUTION clinical study for its other drug, Sollpura, in treating cystic fibrosis patients. Another early stage clinical trial for the drug in treating pediatric cases is also being initiated.

CHABLIS-SC1 trial results are expected in the second half of 2016

The release of the trial results for Blisibimod will be a make or break point for Anthera. For a company that generated just $1.2 million in licensing and collaboration revenue for the first nine months of 2015 and has needed two secondary stock issues to raise cash, the CHABLIS-SC1 results will go a long way in determining Anthera's long term viability. Sollpura is still in the pipeline but it could be a while before that drug begins nearing FDA approval.

With an estimated 1.5 million people in the United States alone suffering from lupus, the target market for Blisibimod is fairly large.

Zenyaku backed out of joint licensing agreement

While the potential for Anthera in the next 12 months is high, there are still reasons for caution. Most notable is the fact that its partner in developing and licensing Blisibimod in Japan, Zenyaku, backed out of the deal in September 2015. No breach of contract claims, however, have been made by either side and full rights to the drug will revert back to Anthera without cost. CEO Paul Truex said, "Progress of blisibimod in Japan, particularly for IgA nephropathy, has been disappointing."

Reasons for the termination are unclear but one can certainly speculate. The agreement came with mutually agreed upon timelines for to develop and market the drug and its possible those timelines weren't being met. Zenyaku, as part of the agreement, was to pay up to $26 million for some combination of debt and equity purchases priced at a 33% premium to the market with additional costs built in. It's possible that Zenyaku felt that milestones would not be reached and it would lose money on the deal. Backing out of the deal now instead of later may have been viewed as more cost effective.

Either way, it's not a positive sign that one of your partners backs out as the drug is in late stage trial.

Citigroup reiterates buy rating and $15 target

Citigroup put a buy rating on Anthera in September of last year when the stock was trading around $9. Now at $3, Citi has reiterated its buy rating and $15 price target on the stock citing a strong 2016 outlook and a "highly attractive" entry point.

Analyst ratings need to be taken with a grain of salt but at least one major brokerage likes what it sees in Anthera.


After the stock offerings, Anthera is now sitting on roughly $55 million in cash. The company has averaged about $9 million in total expenses for the last several quarters so, in theory, that cash should last the company a good year and a half from here.

The Blisibimod trial results are what matters in 2016. The fact that the company presented data on the trial results last year is encouraging but Zenyaku terminating its licensing agreement tempers expectations a bit. An investment in Anthera at this point is really a bet on whether or not Blisibimod looks like it will make it through trial and ultimately get approved.

At $3, buy low investors willing to take the risk could find Anthera intriguing at these levels.

Disclosure: I/we have no positions in any stocks mentioned, and no plans to initiate any positions within 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.

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