Spring Bank: An Interesting $5 Biotech Concern

Summary

  • Today, we take an in-depth look at Spring Bank Pharmaceuticals.
  • The company has an evolving pipeline with multiple 'shots on goal', recent positive analyst commentary and some small insider buying.
  • A full investment analysis on this 'watch item' name is provided in the paragraphs below.
  • Looking for a community to discuss ideas with? The Biotech Forum features a chat room of like-minded investors sharing investing ideas and strategies. Get started today »

"Leaders bring things to conclusion, not necessarily consensus.” ― Miles Anthony Smith

Today, we take a deeper look at an interesting developmental firm that just came public a few years ago.

Company Overview:

Spring Bank Pharmaceuticals (NASDAQ:SBPH) IPO’d in 2016 and is a Massachusetts based clinical stage biopharmaceutical company. The company is focused on developing a novel class of therapeutics using their proprietary small molecule nucleic acid hybrid chemistry platform. The therapeutics are comprised of small segments of nucleic acids that are designed to target and modulate the activity of particular proteins involved in the various disease states. The company’s lead product candidate is Inarigivir, which is being developed to treat HBV. Also, the company is developing second generation STING agonists, SB 11285 being the most advanced candidate. Spring Bank Pharmaceuticals has a market capitalization around $85 million and trades for just over $5.00 a share.

Pipeline:

Source: Company Presentation

Inarigivir:

Inarigivir is an orally available drug that is being developed to treat chronic hepatitis B virus. The therapeutic works by selectively activating within cells infected with HBV and binds the cellular proteins retinoic acid-inducible gene 1 to inhibit viral replication and to cause the induction of intracellular interferon signaling pathways for antiviral defense.

Source: Company Presentation

The company recently completed their Phase 2 ACHIEVE clinical trial of Inarigivir. The ACHIEVE trial was a multiple ascending dose trial in up to 80 non-cirrhotic patients infected with chronic HBV using doses of 25 mg, 50 mg, 100 mg and 200 mg of Inarigivir as an oral monotherapy administered daily for 12 weeks. Across all four dosing cohorts, 26% of patients had a clinically significant reduction in HBsAg at week 12 or following the switch to tenofovir disoproxil fumarate 300mg at week 24. Notably, the drug achieved HBsAg reduction comparable to interferon but with a superior tolerability portfolio. Also, the trial helped the company determine the predictors of response to Inarigivir.

Source: Company Presentation

Moving forward, the company has launched two Phase 2 global trials called CATALYST 1 and CATALYST 2. The trials are exploring the administration of Inarigivir 400mg as monotherapy and co-administered with a NUC in naïve and NUC-suppressed chronic HBV patients. CATALYST 1 is designed to evaluate the likelihood of a functional cure in treatment-naïve patients and will inform the design of a pivotal trial expected to commence in 2020. CATALYST 2 will evaluate NUC-suppressed patients in both an add-on strategy and a “STOP and SHOCK” strategy, which will allow the company to design Phase 3 programs. Also, the Phase 2 co-administered 12-week trial of Inarigivir and a NUC is now fully enrolled. Initial results from cohorts of the study are expected to make an appearance at a scientific conference in the second half of 2019. Lastly, the drug is currently being studied by Gilead (GILD) in combination studies. More specifically, Gilead is conducting a Phase 2 trial that is having multiple doses of Inarigivir being co-administered with Vemlidy and compared to Vemlidy as a monotherapy.

Source: Company Presentation

SB 11285:

SB 11285, the most advanced candidate from the STING platform, is an immunotherapeutic agent that activates the STING pathway. STING is a protein that can activate the body’s innate immune system. The idea is that targeting STING has the potential to stimulate the body’s immune response in the presence of diseases such as cancer. SB 11285 is currently being developed to treat liver cancer.

Source: Company Presentation

The company will be filing an IND for intravenous SB 11285 in the near future. If approved, the company intends on initiating a Phase 1b clinical trial in solid tumors.

Source: Company Presentation

Analyst Commentary and Balance Sheet:

As of year-end 2018, the company had cash and cash equivalents and marketable securities of $64.4 million. The firm's CEO has stated that he expects the company to burn between $6 and $8 million a quarter going forward and stated that their current capitalization is sufficient to fund operating expenses and capital expenditures into the second quarter of 2021.

The company has been picking up positive analyst commentary over the past month or two. At the start of May, B Riley FBR reiterated their Buy rating and $24 price target on SBPH. Two days before Chardan Capital did the same with a $25 price target. On April 12th, Cantor Fitzgerald maintained their buy rating on the name and set a price target of $29 a share. The analyst shared the reasoning behind reaffirming his overweight rating: “We are reiterating our Overweight rating and $29 PT on a late-breaking presentation at the Diseases (EASL) Congress. Importantly, the data included results from the 200mg dosing cohort in ACHIEVE, demonstrating a mean decrease of 1.54log in HBV DNA and a mean decrease of 1.14log in HBV RNA. Overall, we believe the full data set of ACHIEVE supports moving Inarigivir into further stage trials.”

Verdict:

The company is years away from potential commercialization, so it is too soon to make this a large holding. If Spring Bank's pipeline continues to develop and it gets into Phase 3 development, that could change in the future. The company has multiple ‘shots on goal’, cash runway and some recent positive analyst support. Spring Bank seems to merit ‘watch item’ status at this time and I have picked a small stake in the firm in line with that designation. I offer up this analysis for others that may want to do the same for now. It should also be noted the CEO added 10,000 shares to his core holdings on April 30th. He then added another 20,000 shares in three transactions in late May.

"Seeking consensus, is often an obstacle to action.” ― Marcia W. Blenko

Bret Jensen is the Founder and author of articles on The Biotech Forum, The Busted IPO Forum, and The Insiders Forum. To receive these articles as published on Seeking Alpha, just click the appropriate link and hit the orange follow button.

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Disclosure: I am/we are long SBPH. 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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