PhaseBio's Latest FDA Designation Moves It One Step Closer To Potential Approval

|
About: PhaseBio Pharmaceuticals, Inc. (PHAS)
by: Terry Chrisomalis
Summary

PhaseBio received Breakthrough Therapy Designation from the FDA based on positive phase 1 results using PB2452 as an anti-platelet agent for Brilinta.

PhaseBio achieved a licensing deal with ImmunoForge for another clinical product known as PB1023, which could be developed for sarcopenia and many other indications.

The biotech maintains rights to develop PB1023 for the ever-growing diabetes and NASH markets, which are estimated to be multi-billion dollar opportunities in the coming years.

The company ended December 31, 2018, with $61 million cash on hand and raised an additional $43 million through a stock offering, which means no near-term risk of dilution.

PhaseBio Pharmaceuticals (NASDAQ:PHAS) has made substantial progress the last few weeks in terms of creating a buzz around its stock. Its phase 1 study showed that its drug PB2452 had made a sharp and quick reversal of antiplatelet effects that are observed when patients take the blood thinner drug Brilinta (Ticagrelor). With such a strong effect, the FDA had given the drug Breakthrough Therapy Designation. The very next day, there was another set of positive news. This time around, PhaseBio had licensed out global rights for its GLP-1 analogue drug PB1023 to ImmunoForge. I believe that PhaseBio is on track to have a profound effect of potentially enhancing many other products, using its elastin-like polypeptide technology platform.

Breakthrough Therapy Designation Excites Investors

The FDA gave the drug PB2452, Breakthrough Designation based on positive phase 1 results that were achieved back in March of 2019. The phase 1 study showed that when patients received intravenous infusion of PB2452, they were able to see an immediate effect and sustained reversal of ticagrelor's antiplatelet effects. Why would the FDA give PhaseBio such a designation based on such an early study? That's because Brilinta is a drug that has an antiplatelet effect. Patients take the drug as a blood thinner to reduce cardiovascular death and heart attack. PB2452 may be able to help reduce the risk of bleeding for those who take Brilinta. For starters, PB2452 treatment has the ability to have a profound effect on effective reversal of the antiplatelet effects of Brilinta. The second reason is because it is an unmet medical need. If it is ultimately approved, it would become the first reversal agent for Brilinta. This is going to be very important for these types of patients. That's because Brilinta has a black-box warning of potentially causing significant sometimes fatal bleeding. The problem is that patients take it to prevent heart attack or stroke. That means this drug can't be stopped on the dime whenever a patient wants to. PB2452 might be able to help with major bleeding events and urgent surgery needed for patients who are taking Brilinta.

Licensing Deal For Alternate Product

Another positive news item, which broke after the Breakthrough Therapy Designation, was the licensing deal that PhaseBio established. It was able to license out its PB1023 to ImmunoForge to treat certain diseases like sarcopenia. In other words, PhaseBio had licensed out global rights of its GLP-1 analogue drug PB1023 to ImmunoForge. I believe that this biotech is on track to have a profound effect of potentially enhancing many other products using its elastin-like polypeptide technology platform. This is a good agreement for PhaseBio. That's because it obtained some non-dilutive capital to advance its pipeline, but at the same time, it limits to what ImmunoForge can use the license for. For example, PhaseBio has given worldwide rights to ImmunoForge for PB1023. It's important to know that PhaseBio has the ability to sublicense this drug for certain diseases. According to the agreement, PhaseBio will be eligible for development milestone payments and royalty payments for net sales on any approved products. In addition, PhaseBio retains the rights for this drug to treat a host of large market opportunities like: Non-alcoholic steatohepatitis (NASH), diabetes, obesity. That's a good thing because these markets noted above are large market opportunities. Some analysts expect the NASH market could range anywhere from $20 billion to $35 billion in the coming years. However, that's a higher estimate. There is a lower estimate that the NASH market could reach $18.3 billion by 2026. That is just one of the large markets noted above. The diabetes market is another one, however, that has a lot more competition at the moment. The global diabetes market was estimated to be worth $67.5 billion in 2017 alone. As people continue to obtain diabetes and the prevalence of obesity continues, both of these numbers will continue to grow.

Financials

According to the 10-K SEC filing, PhaseBio Pharmaceuticals ended December 31, 2018, with $61 million cash on hand. The biotech did obtain some additional cash from several sources soon after. In February of 2018, it obtained $2.8 million from grant from the National Institutes of Health (NIH). In addition, it had to create a $15 million loan facility agreement with Silicon Valley Bank and WestRiver Innovation Lending Fund about one month later. PhaseBio received an upfront payment of $7.5 million. A second tranche will be available for the company to use anytime it wants to before May 31, 2019. However, the last $5 million can't be taken until PB2452 reaches certain clinical development milestones. The problem is that even with these measures that the biotech took, the cash was still low. While it doesn't have that many products in the pipeline at the moment, it is having to get ready to initiate a phase 2b study with PB2452. Having said that, PhaseBio closed a public offering that generated $43 million. The biotech sold 3,586,500 shares of its common stock at a price of $12.00 per share.

Conclusion

The Breakthrough Therapy Designation given for PB2452 by the FDA makes a lot of sense. Especially, when you consider that patients given Brilinta have significant anti-platelet effects. Then, PB2452 can be given before major surgeries to counter heavy bleeding and also be used for many other preventative functions. The most important item of all is that it has the potential to become the first anti-platelet product for Brilinta. The risk is that this is still in a phase 1 study. A phase 2b study for PB2452 as an anti-platelet agent for Brilinta is not expected to begin until the 2nd half of 2019. That means, it still has some way to go before it is ultimately approved by the FDA. Another risk is that the pipeline is still in its infancy. There are many other products like PB1023 which are in early-stage testing only. That means one failure could become a major setback for the biotech. Still, for the FDA to give PB2452 Breakthrough Therapy Designation based only on a phase 1 study is highly encouraging. If the phase 2b study achieves a similar outcome like the phase 1 study, then I could possibly see the FDA allowing the drug to also be designated with accelerated approval later on as well. That could possibly allow for FDA approval after the completion of the phase 2b study.

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.