Circling In On Cidara Therapeutics

Summary

• Today, we take an in-depth look at Cidara Therapeutics.
• This San Diego based 'Tier 4' biopharma concern is developing anti-fungal candidates.
• A full analysis is provided in the paragraphs below.
• I do much more than just articles at The Biotech Forum: Members get access to model portfolios, regular updates, a chat room, and more. Get started today »

I accept chaos, I'm not sure whether it accepts me."― Bob Dylan

Today, we take an in-depth look at small 'Tier 4' biopharma concern on the west coast focused on the anti-fungal space. It has come up in conversation a few times on my instablogs over the past few months. A full analysis is provided in the paragraphs below.

Company Overview

Cidara Therapeutics (NASDAQ:CDTX) is a San Diego, California-based clinical-stage biotechnology company that IPO'd in 2015. The company aims to develop drugs for severe fungal or viral infections. The company's lead product candidate is Rezafungin, which is an echinocandin antifungal. The idea is that the drug will gain market share by possessing improved pharmacokinetics relative to existing echinocandins, which possesses the potential for expanded utility across various patient settings.

Additionally, the company seeks to create long-term shareholder value through leveraging their Cloudbreak platform, which is their novel approach to take on life-threatening infectious disease. The Cloudbreak technology is the first immunotherapy discovery platform explicitly designed to create compounds that kill pathogens directly and can direct and mobilize one's immune cells to attack and destroy bacterial, fungal, or viral pathogens. Recently, the company announced that they have selected CD377 to pursue clinical development. The company hopes that the drug will become the first antiviral drug conjugate that acts as a universal, once-per-season, prevention and treatment of influenza. Cidara Therapeutics has a market capitalization of roughly $115 million and trades for around $2.75 a share.

Pipeline

Source: Company Presentation

Rezafungin

Rezafungin is a novel molecule in the echinocandin class of antifungals, which is the safest class of antifungals. It's a broad-spectrum, long-lasting echinocandin. In vivo research has shown robust activity when pitted against a variety of strains: Candida spp, Aspergillus spp, Pneumocystis spp, Trichophyton mentagrophytes, Trichophyton rubrum, Microsporum gypseum. The drug is addressing the unmet needs of being first-line therapy for candidemia and invasive candidiasis and prevention of invasive fungal disease, including disease caused by Candida, Aspergillus and Pneumocystis spp. The current class of approved echinocandins has various, significant limitations such as toxicities, increasing resistance, and low or variable exposure. Rezafungin has a prolonged half-life and front-loaded plasma exposure, which, in contrast to all other echinocandins, allows for once-weekly IV therapy. The pharmacokinetic profile of the drug may allow it to overcome the limitations of the current standard of care. For example, the drug could be the only echinocandin to facilitate shorter and less costly hospital stays. Furthermore, the drug could be the only echinocandin to provide more cost effective and compliant outpatient echinocandin treatment and prophylaxis. The FDA has designated the drug as a Qualified Infectious Disease Product with Fast Track status and Orphan Drug designation. Upon FDA approval, the QIDP designation provides Rezafungin with 12 years of potential marketing exclusivity.

Source: Company Presentation

There's a major opportunity to make a positive impact in treating invasive fungal disease. Millions are affected each year and 1.5 million people die annually from IFD. Estimates for the worldwide sales of prescription systemic antifungals top $4 billion annually.

Source: Company Presentation

Looking ahead, the company is continuing to enroll patients into their pivotal Phase 3 ReSTORE trial and will hopefully soon be initiating their Phase 3 ReSPECT prophylaxis study. The Phase 3 ReSTORE trial is a global, randomized, double-blind, controlled trial designed to evaluate the safety, efficacy and tolerability of Rezafungin compared to caspofungin for the treatment of candidemia and invasive candidiasis. The trial design is similar to the company's Phase 2 STRIVE trial. The primary efficacy endpoint for the FDA is all-cause mortality at day 30, and global cure at day 14 is the primary efficacy endpoint for the EMA.

The Phase 3 ReSPECT trial is global, randomized, double-blind, controlled clinical trial of Rezafungin compared to standard antimicrobial regimen in patients undergoing blood or marrow transplant to prevent infections due to Candida, Aspergillus and Pneumocystis. Fungal-free survival at day 90 is the primary endpoint for both the FDA and the EMA. The ReSPECT trial is currently delayed due to the COVID-19 outbreak.

Source: Company Presentation

Analyst Commentary & Balance Sheet

As of December 31st, 2019, the company had cash, cash equivalents and restricted cash of $60.2 million, compared to $74.5 million on December 31st, 2018. Research and development expenses for the fourth quarter were $11.4 million, compared to $13 million in Q4 of 2018. General and administrative expenses were $4.4 million in the quarter, compared to $3.5 million in the same quarter of 2018. Overall, the company had a net loss of $14 million in the quarter, compared to a net loss of $12.3 million in the same period of 2018. On February 12th, the company announced the closing of their rights offering. Cidara sold and issued 6,639,307 shares of its common stock and an aggregate of 531,288 shares of its Series X convertible preferred stock. As a result, the company raised $30 million in gross proceeds.

The company has garnered four positive analyst ratings so far in 2020. Oppenheimer maintained its Buy rating and $6 price target on Cidara on April 1st. On March 10th, Maxim Group initiated coverage with a buy rating. Five days before, Needham & Company did lower their price target from $10 a share to $6 a share but maintained their buy rating on CDTX.

Finally on January 27th, Cantor Fitzgerald gave the stock an overweight rating and an $8 price target. The analyst thinks that 'the Coronavirus outbreak should bring the Cidara's Cloudbreak Antiviral Fc Conjugates into the "spotlight". The analyst 'believes that the potential for a single-dose drug that provides universal protection and treatment for influenza and other viral disease is not being appropriately priced by the market. The universal flu vaccine has yielded some robust results thus far and deserves a look'.

Verdict

Cidara has several 'shots on goal' and seems to enjoy somewhat sparse but strong analyst support. Sentiment also has improved recently on this subsector of the biotech/biopharma space. That said, antibiotic and anti-fungal concerns have not fared well in the market in recent years. Achaogen (AKAO) and Melinta Therapeutics (MLNT) are two examples of companies who marched into bankruptcy despite having once promising pipelines. The only name in the space I currently own is Paratek Pharmaceuticals (PRTK) which has been de-risked thanks to a recent big BARDA contract.

The company has had a couple of trial failures in its history and even with its recent funding raise, will probably have to raise additional capital to support full commercialization of Rezafungin, provided it gets approved. Therefore, we are passing on making any investment recommendation on Cidara but offer up this analysis for others that may want to do their own due diligence on this name.

I would like to see anyone, prophet, king or God, convince a thousand cats to do the same thing at the same time."― Neil Gaiman

Bret Jensen is the Founder of and authors articles for the Biotech Forum, Busted IPO Forum, and Insiders Forum

Analyst’s Disclosure: I am/we are long PRTK. 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.