Pieris Pharmaceuticals: 060 Data Looks Great, What Gives?

Summary

• Shares of PIRS have shed 1/3rd of their value over the past five days.
• In the ROTY model account, we took partial profits near the peak and sold the remaining 3/4 position for only a slight gain (disappointing outcome).
• 060 data provided major validation for Pieris' anticalin platform, yet the reaction was a headscratcher.
• Biotech sector as reflected in XBI shed over 7.5% this week, which certainly didn't help.
• AstraZeneca is speeding forward in a phase 2 study and PIRS remains a platform tech play to keep on readers' radar.

Pieris Pharmaceuticals (PIRS) was a name we held in ROTY's model account due to enthusiasm for multi-dose PRS-060 results. Specifically, our thesis for this name was based on potential of the Anticalin drug class with multiple irons in the fire and management's prudent manner of managing risk yet retaining significant economics through carefully crafted partnerships. Near term thesis was predicated on presentation of results for the multiple ascending dose study of PRS-060 (focusing on FeNo reduction versus placebo, taking into account that dupilumab was approved in the EU using that endpoint). An inhaled IL-4Rα program would offer several points of differentiation versus approved therapy (ie. convenience, decreased cost) and positive data would likely reflect well on the potential of Pieris' other novel inhaled programs and allow for choosing the correct dose for phase 2a program. We noted here we didn't need much to move the needle since enterprise value was just $90 million or so. 

On September 19th, we sold 1/4 of our position for a 35% ish profit (trades occur at day's closing price, allowing for members to often get better cost averages as they act earlier in the day). This past Thursday, we sold the remaining position for just a 5% profit (quite the disappointing outcome).

Data by YCharts

Full data came out in the abstract for ERS presentation for PRS-060. It looked quite good with impressive FeNO reductions, proving the program is well on track to progress into phase 2 and beyond.

I liked how ROTY member Josh.Bio described it regarding removing PIRS as his Idea Lab submission (high conviction stock picks from members), stating that slow development timelines are overshadowing validation of the platform. Another member, playing devil's advocate, noted that 060 looks like a $1B + drug as long as there aren't any unexpected side effects such as the respiratory infections that become an issue. PIRS could likely go with the low dose, which again for asthma patients would provide a cost effective alternative to dupilumab (uses 400 mg SC once then 200mg q2weeks I believe).

Conclusion

I think the anticalin platform received major validation with this readout and it's always possible that stock bounces back as management provides further clarification. As this was an early-stage study, perhaps market reaction just reflects on the significant amount of headway that still needs to be made in the clinic. 

AstraZeneca is speeding this one into a phase 2 study and that should be seen as a sign of confidence in the program. For our purposes, I'll be keeping an eye on their progress to revisit at a later date.

Look forward to others' thoughts on initial data, the stock's chance of rebounding and implications going forward. Have a great weekend!

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