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Highlights From The Biotech Showcase 2016: Part One

|Includes: ContraFect Corporation (CFRX), GLMD, IPIX, MTNB, RVXCF

Every year the biotech showcase is an excellent chance to discover investment opportunities and to conduct due diligence. This year's showcase was no exception, even though the near term share price outlook seems bleak for biotech in general. Many of the companies I'm going to mention have already seen 50% share price drops. Some much more than that. As I write this today (January 20), the IBB index is at 276, off from its 52-week high of 400 last July.

In my view, current conditions are an opportunity. "Babies are being thrown out with the bathwater". Here are some examples.

Cellceutix

Celceutix has an anti-infective platform (Brilacidin) ready for a phase 3 ABSSSI trial. The company has funds available but has not yet raised enough for the trial, so some dilution can be expected. The FDA has not yet given final approval for the trial but it is expected. Management seems confident that the trial will start in the first half of this year. Looking at the results of 2 Phase 2 trials, and assuming the comparator arm in phase 3 is Vancomycin, the trial looks like a LOCK as far as non-inferiority, and could result in SUPERIORITY.

On top of this, the company has 2 oncology drugs in phase 1 and phase 2 trials, respectively. There may be results from both in the first half. There is also a phase 2 psoriasis trial that should have topline results in the first half as well. More trials are planned, so there are lots of shots on goal here.

The stock has been hammered to the tune of over 75% from a high last January, and sits near $1 right now.

Contrafect

Another interesting anti-infective company is Contrafect. Their lead product, CF-301, may work better than current treatments against some of the worst infections, including staph bacteremia. In combination with Daptomycin and Vancomycin there appears to be a significant increase in efficacy and limited additional side effects.

Contrafect has a number of other products, including a promising drug cocktail combining 3 monoclonal antibodies for many strains of influenza.

The stock is trading a bit over $4 right now, down from $6.24 last April. The company raised $20 million in a private placement last June, and announced a $30 million ATM offering after the close today. There is plenty of funding here.

Motif

Here is another anti-infective company, Motif, with 2 phase 2 trials near completion for its anti-infective, Iclaprim. Iclaprim is targeted at both ABSSSI and HABP, including MRSA and MDRSP. Motif is close to having approval to proceed with phase 3 in both the US and Europe. The FDA requires either 2 ABSSSI phase 3 trials or one ABSSSI and one HABP trial. Motif raised more than $30 million last July from institutions, and should have funding for phase 3.

The stock is trading (on the London exchange) at about $.55, down about 50% from its high last June.

Matinas

One more anti-infective company is not quite as far along but is interesting nonetheless. Thinly traded Matinas encapsulates existing drugs making them safer, more protective of good bacteria, and able to deliver more drug to the target. While the phrase "self-assembling nanoparticles" may make some investors initially skeptical, they do have QIDP status (as do others mentioned above). A phase 2a trial is expected to produce results this year.

Today the stock is selling for $.73, down exactly 50% from its high last June. The company raised $10 million in a private placement last year.

Galmed

Galmed stood out for a number of reasons, including an interesting clinical program and lots of cash on the balance sheet. Clinical results for Aramchol thus far suggest an ability to reverse excess fat buildup in the liver among those whose disease has not progressed to the point of cirrhosis. This is a huge market...about 45 million people in the USA/Europe combined. Phase 2a results show a significant reduction in fat content with a simple, once-daily pill. Importantly, no SAE's ocurred and all doses were declared safe and well tolerated. The larger "ARREST" study is ongoing, with an interim analysis expected in the first half of this year.

Galmed is down a little over 50% from its $13.50 high last March. It is trading today at $6.50. The company raised $44 million in an IPO almost 2 years ago, and still has around $27 million in cash.

Resverlogix

In my view, this was one of the stars of last year's showcase. The story continues to stand out this year. Their lead drug, RVX-208, appears to significantly reduce major adverse cardiac events, "MACE", in diabetics and high risk cardiovascular patients. Currently in phase 3, the critical endpoint is a 30% reduction in MACE. Based on earlier research this seems a low hurdle, since earlier results showed MACE reductions of 55%-75%.

In early 2015, RVX stock rose dramatically. This year it is off 60% from its $2.48 high last April, trading around $1 today. It has partnered with Hepalink Pharmaceutical in China, and appears well funded.

Summary

These are about half of the stocks that looked interesting to me at this year's showcase. The plan is to post a quick review of the rest of the companies soon. Information for this article was taken from presentations made at the showcase, and from company websites. Any commentary is strictly my opinion.

Disclosure: I am/we are long GLMD, RVXCF, AND CTIX.

Additional disclosure: I have no position in the other stocks mentioned, but may initiate long positions at any time. I do not short small biotechnology stocks. Note that MTFB trades on the London Stock Exchange and will not show up on many on-line platforms.