Synthetic Biologics (NYSEMKT:SYN) is an under the radar biotech, generally speaking, with a potentially billion dollar drug in the second FDA stage. With a market capitalization of just over 200m at the time of writing this, FDA Clarence for this drug will almost certainly create catastrophic movement in share prices.
A little about me as a Seeking Alpha writer: This will be my first article and in it I intend on focusing on the science of the drug and what it aims on treating. In addition I will be discussing clues as to my I have so much optimism for it.
Synthetic Biologics' lead candidate SYN-004 is a preventative oral tablet aimed to help control the damaging effects of antibiotics on the digestive system, as well as stopping the harmful growth of clostridium difficile, commonly referred to as C. Diff. (Which will the articles main focus)
Clostridium Difficile has picked up huge amounts of global concern in the past few years. Mainly because of the truly destructive nature of the disease, without further delay let's jump into it.
It is not unknown that the average human digestive tract is home to as many as 1,000 species of microorganisms - almost all of those being harmless to us - let alone necessary. The inside of your digestive system is a balanced eco system - if a foreign agent upsets the balance there can be serious effects. This is the case of antibiotics, hospitals and nursing homes often supply massive amounts of antibiotics to their patients through an IV. This antibiotic reaches the stomach where it does just that: upsets the delicate balance.
Once this happens the "helpful medicine" kills some the helpful bacteria, creating room for other bacteria. This is where things start to get ugly, C. Diff. grows like a wild weed, multiplying, and reproducing left and right. Toxics are soon released which eat away digestive lining and causes severe diarrhea.
Because the bacteria is almost immune to most common cleaning methods (i.e. alcohol wipes or hand sanitizers) they are spread incredible quickly, as I'm sure you can imagine.
By know I hope you see the reason for the rising concern for the disease. Those infected with the disease yearly has risen to over 500,000. And even scarier is the fact that about 10% of people of 65 years old die from the illness.
The CDC has flagged C. Diff. as a major concern.
We are approaching a cliff. If we don't take steps to slow or stop drug resistance, we will fall back to a time when simple infections killed people. We are asking everyone who uses antibiotics especially healthcare providers… to fully engage with us to stop it." Michael Bell MD, Director CDC, 2013.
Under guidance of the FDA the PII a trial is undergoing, with results due in the seconds half of 2015.
Twenty participants will be tested and will offer chyme samples directly from their small intestines. The samples will show how well the IV antibiotic degraded and to pinpoint where exactly in the intestine did 004 metabolize. Not to mention these samples will be taken from patients with ileostomies (no colons) for the greatest accuracy.
Management has met with the FDA several times and hired Dr. Klaus Gottlieb MD, as Vice President of Regulatory Affairs. Dr. Gottlieb has tons of experience in the FDA as a Director and gastrointestinal specialist. No doubt he was hired to aid in approval of SYN-004. They also go the extra mile to ensure safety and make the trials as efficient as possible.
Bluntly said the company has about $20M in cash with a $9M cash burn rate per quarter. With cost of operations increasing they will likely need to raise money. They have normal raised cash through common stock or debt financing, but I highly doubt that they will announce a dilution unless it is totally necessary to maintain function, at least until announcement of SYN-004 data. Management is also in talks of finding a partner, 3 unidentified firms are being considered.
There is currently no approved vaccine or preventative products for C. Diff. If SYN-004 were to get approved, which is still far away, they would hit the unmet market of $15 billion as estimated by CEO Riley. With a patent on their current technology until 2031 being the first one on a vacant market would provide insanely high sales figures.
In a nutshell
SYN is one of my favorite stocks on the market. They are the only company right now with a product in clinical trials for C. Diff. disease. With concern growing tremendously they could see billion dollar revenues in the long run. But what I am here for in the short term. They have a promising science with several signs that make this stock unavoidable to look at. I think that positive SYN-004 data will send shares soaring 50%+. I highly recommend you use your due diligent in determining if you want to invest in this stock. Please feel free to comment with anything you have to say. Good luck and stay well.
Disclosure: I/we have no positions in any stocks mentioned, but may initiate a short position in SYN over 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.