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Can MediciNova's Clinical Pipeline Trigger An Uptrend?

|Includes: MediciNova, Inc. (MNOV)

MediciNova, Inc. (NASDAQ: MNOV) is a Delaware based biopharmaceutical company focused on development of small molecule therapeutics for meeting unmet needs in treatment of serious diseases. The company's strategic direction is to perform research, develop drugs to support them and through clinical trials to obtain licenses, and then partner with big pharmaceutical players to commercialize the drugs in the U.S. market.

MediciNova was incorporated in 2000 and subsequently acquired a portfolio of drugs from bio-pharma companies in Japan and the UK.

Clinical Pipeline

MediciNova is currently developing MN-166 for neurological disorders, MN-221 for acute problems of asthma and MN-001 for non-alcoholic steatohepatitis. MN-001 has undergone pre-clinical trials and obtained positive results in STAM mouse models and will be continued for Phase 2 trials further.

In the MN-166 portfolio, the drug for relapsing multiple sclerosis has completed Phase 2 trials, while the drug for progressive multiple sclerosis is currently in the Phase 2b stage. The drug for methamphetamine addiction has obtained fast track status from FDA and is presently in Phase 2 trial stage.

Industry Outlook

In terms of commercial opportunity, a report by Research and Markets estimates the total asthma pharmaceutical market to be $12.5 billion by 2019.

The U.S. Federal drug control budget towards treatment of meth addiction in 2014 is $8.8 billion and an estimated $9.5 billion in 2015. In 2012, there were 22.2 million people in the U.S. classified as substance abusers.

Recent Results

The company released its Q1 2014 results on May 8, 2014 where the operating loss reduced to $2.3 million from $2.4 million in Q1 2013. No revenue was booked in the current quarter, as drugs are yet to complete clinical trials.

In 2011, the company received $2.5 million payment from Kissei Pharmaceutical for performing R&D related to MN-221, which was booked as deferred revenue till 2013. The EPS posted was $0.10 in Q1 2014 as against $0.14 in Q1 2013. The net cash in hand was $14.8 million as on March 31, 2014 as against $3 million a year ago.

Equity worth of $2.9 million was raised in Q1 2014. The company has shown a history of raising capital from the public to fund its research and development plans. Previous equity offerings were completed in January 2007, March 2011 and October 2011 at rates per share of $12, $3 and $2.5 respectively. The declining offer price could reflect the market sentiment on the company's future prospects.

Conclusion

MediciNova closed on May 30, 2014 at $1.98 down 1 percent over the previous close. The 52-week high and low for the stock was $5.25 and $1.66 respectively.

The trading range has been between $1.5 and $2, with spikes in prices seen during announcements of news items like fast track status for MN-166 in March 2013 and success of NASH mouse model for MN-001 in January 2014.

Therefore, any further triggers for temporary uptrend will be due to positive press releases of advancement in stage pipeline.