AtheroNova: (OTCQB:AHRO): Finding the Next Big Blockbuster Drug
The pharmaceutical industry is largely centered on blockbuster drugs, with the top 20 drugs in the U.S. accounting for nearly $320 billion in sales in 2011. With five of those 20 drugs losing patent protection since then, there has been a high premium placed on finding the next big blockbuster drug on the part of companies and investors in the pharmaceutical industry. 
Not surprisingly, the most lucrative classes of drugs were those targeting heart disease, which was the leading cause of death in 2011, according to data from the CDC. Some of these blockbusters included Pfizer Inc.'s (NYSE: PFE) Lipitor® that generated $7.7 billion and Bristol-Myers Squibb (NYSE: BMS) and Sanofi SA's (NYSE: SNY) Plavix® that generated $6.8 billion. 
So, how can investors find the next blockbuster drug?
Looking at Pfizer's Lipitor® for Clues
Pfizer's Lipitor® is a statin that works by blocking the enzyme HMG-CoA reductase in the liver in order to lower LDL cholesterol levels. The idea for a statin didn't come from Pfizer - far from it. Dr. Akira Endo discovered statins working for a small Tokyo drug company called Sankyo in 1971 after spending years searching through more than 6,000 microbes for an HMG-CoA inhibitor. 
After Dr. Endo discovered mevastatin, word of the breakthrough quickly spread throughout the medical community. Merck & Co. (NYSE: MRK) began immediately searching in the same class and found lovastatin, another statin that proved to be very effective in lower LDL cholesterol levels, and eventually developed Mevacor® that became the first U.S. statin. 
Warner-Lambert soon discovered its own statin - atorvastatin - that proved more effective than Mevacor® in lowering LDL cholesterol. But with Mevacor® already in its final rounds of clinical trials at the time, the company needed to move quickly and partnered with Pfizer. The two used existing statins as comparisons, while keeping its own secret, giving it a key advantage. 
Eventually, Pfizer and Warner-Lambert launched their drug Lipitor® onto the market and it went on to generate some $7.7 billion in sales and become the best selling drug of all time. The important takeaway is that it wasn't a new concept and many customers still weren't familiar with LDL cholesterol's role initially, but the drug still became enormously successful. 
Atherosclerosis is the Next Big Target
AtheroNova Inc. (OTCQB: AHRO) is taking a new approach in treating atherosclerotic plaque that doesn't involve simply targeting LDL cholesterol levels. The company's lead AHRO-001 compound uses naturally occurring compounds normally found in the digestive tract to dissolve soft or vulnerable plaque via a multi-prong approach that could complement statins. 
Early pre-clinical trials of AHRO-001 at UCLA and Cedars-Sinai were promising, showing a 95% reduction in innominate arterial plaque formation versus the control group with no adverse side effects observed in the study group. Moreover, Ursodiol is based on the same active ingredient and has already been approved by the FDA for the treatment of gallstones and biliary cirrhosis. 
Like Pfizer's Lipitor®, AtheroNova's AHRO-001 isn't based on a new concept, but rather research that has been done for some time. Bile salts are a naturally occurring compound and have been extensively studied for many uses, but it wasn't until recently that they were discovered as important modifiers of lipid and energy metabolism. 
AtheroNova also holds several key patents on the technology, including U.S. Patent 8,304,383 that covers the use of hyodeoxycholic acid for atherosclerotic plaque lesions. These patents support the development of AHRO-001, as its partner CardioNova pursues similar intellectual property, on behalf of AtheroNova, to protect the assets in the Eurasian markets. 
Potential New Class of Drugs
AtheroNova's focus on bile salts represents a new potential class of drugs that could complement the $20 billion per year market for statins. By targeting the root cause of atherosclerosis, the company's approach could add efficacy to the existing approach targeting LDL cholesterol, which may not be effective enough on its own, according to some studies. 
Capturing even 1% of the statin market represents a $2 billion per year opportunity for the $20 million public company, putting AHRO-001 squarely in the blockbuster drug category. Like Warner-Lambert when it stumbled upon atorvastatin, AtheroNova could also partner with a larger drug company like Pfizer or Merck to bring the drug to market.
In the end, there's little question that AtheroNova's AHRO-001 has blockbuster drug potential, if it's able to progress through clinical trials. There are also many positive early signs for AHRO-001, including an established safety profile and strong efficacy results. As a result, this is one speculative biotech play that investors may want to keep a close eye on moving forward.
DISCLAIMER: I am long shares of AHRO and am hoping it goes to $40.00.
Disclosure: I am long OTCQB:AHRO.