Lpath Dip May Be Simply A Buying Opportunity

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VFC's Stock House

Armed with a high profile licensing deal involving Pfizer (PFE), Lpath, Inc. (LPTN.OB) and its share price were gaining momentum late last year and into the early stages of 2012 before a temporary halt in the company's iSONEP trial was announced in January, an event that sent shares back to the sub-one dollar mark.

Lpath has made a name for itself by becoming the recognized leader in the field of lipid-based therapeutics and, with the development of the ImmuneY2 platform, is still the only company that has successffully taken the technology this far in clinical development.

ImmuneY2 contains the ability to generate therapeutic antibodies that bind to and inhibit bioactive lipids that contribute to the spreading and growth of various diseases and inflammatory/auto-immune disorders. The market potential for this technology in treating a plethora of modern day illnesses and diseases, should it advance past the clinical stages, is huge, and Lpath is first applying its technology to the treatment of Wet AMD and cancer, both multi-billion dollar markets.

Pfizer appreciated this breakthrough technology enough to jump on board early with iSONEP, a partnership that came with a significant up-front payment for Lpath and could be worth as much as nearly a half billion dollars, should certain milestones be met and Pfizer decide to stick around following the completion of the Phase II stages of development.

Pfizer also retains a 'first right of refusal' for ASONEP development, which deepens the relationship between the two companies and leaves many to wonder whether Pfizer will just outright purchase Lpath.

Lpath had two ongoing proof-of-concept trials for iSONEP, PEDigree for the treatment of retinal pigment epithelium detachment ("RPE detachment" or "PED") and NEXUS, targeting Wet AMD.

As mentioned above, both trials were halted in January after Lpath received news from the FDA that the company's fill/finish contractor, Formatech, Inc., was not in compliance with FDA's current Good Manufacturing Practice (cGMP) requirements during the period that the iSONEP clinical vials were filled.

According to a company press release regarding the issue, Lpath believes that "it has taken appropriate steps to oversee Formatech's manufacturing in order to ensure product quality, it has suspended dosing as a precaution to ensure the continued safety of all patients in its clinical trials."

Lpath has identified an alternate fill/finish contractor and plans to resume dosing for both trials within four to six months, a notable - but not drastic - delay in the expected time frame for trial progression. Pfizer still remains on board, a show of support that indicates the company believes that this is only a bump in the road and nothing more.

The dip created by the halt news may have opened up another buying opportunity for investors that were drawn to the potential of the ImmuneY2 technology. LPTN shares were approaching the $1.30 mark before the announcement, so given the fact that relatively nothing has changed in terms of pipeline potential relating to the recent news, the new sub-dollar levels offer a significant discount to the previously-traded prices.

Even with the delay, the progression of the iSONEP trials creates multiple potential catalysts for the remainder of this year into early next, and the continued support of Pfizer reduces some of the inherent monetary risk endured by most smaller companies, such as Lpath.

Oncothyreon (ONTY) halted its own trials for Stimuvax a while back, and that company's shares were quick to recover when the trials resumed. Lpath could be in a similar boat, especially given that safety concerns relating to this trial halt are minimal.

Stand by for updates, but it doesn't appear that anything has changed with the potential of Lpath. The recent decline could be nothing more than a nice buying opportunity.

Disclosure: Long LPTN.

This article was written by

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VFC is just a guy with an opinion. VFC's Stock House brings new ideas to the table and opens discussions for a broad spectrum of investors, with a strong focus on - but not limited to - the biotech, pharmaceutical and healthcare sectors. VFC's Stock House provides research, informational and opinion-based coverage of various companies and stocks in multiple sectors. The information contained within the pages of VFC’s Stock House are not intended to be taken as advice, but as a starting point where investors can follow up with their own DD and devise their own entry and exit strategies. Do not Buy/Sell based solely on VFC's ideas or opinions. The goal of VFC's Stock House is to 'call it like I see it' - while bringing new ideas, companies, and discussions to the eyes of investors and readers. This is supposed to be fun and new investors should not invest with the idea that this will 'pay the bills' or with the belief that a stock will just keep going up. DD is paramount, but so is sticking to pre-conceived entry and exit strategies and not letting emotional trading get in the way. Goals must be realistic, if it sounds far fetched, then it probably is. Let the big boys eat the cake - the small investor is just trying to pick up some crumbs, and there's nothing wrong with that!

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