Discussion
Update from Reuters (December 7, 2020):
Japan's AnGes begins phase 2/3 clinical trial of DNA-based COVID-19 vaccine. Why is this important? AnGes owns a significant number of BBI shares and has named Brickell Biotech (NASDAQ:BBI) its vaccine partner for the US, Latin America, and other emerging markets.
The news through another news outlet:
Tokyo: Japan's AnGes biopharmaceutical company said on Tuesday that it had started phase 2/3 clinical trials of its DNA vaccine against the coronavirus.
"The trials involve 500 people. A group of 250 people will be vaccinated twice with an interval of two weeks; the second group of 250 people -- twice with an interval of four weeks. In both groups, 50 people will be vaccinated with a placebo. Vaccination will take place before March 2021 at eight medical facilities, the company said in a statement."
"According to the company, the main advantage of the DNA vaccine is its safety, as it does not use pathogens. Instead, the body creates antibodies in response to DNA information about the virus."
"The ability to produce a vaccine quickly and practically in unlimited quantities is an added advantage. Another important feature of the new vaccine is the flexibility of the creation process, as even if the virus mutates, a new vaccine can be developed in two weeks."
This special feature of AnGes' COVID-19 vaccine to be reformulated quickly to tackle new mutations of the virus will be a significant plus in the future. We now know about a new mutation in the UK which is thought to be 70% more transmissible than the variant being tackled by the Pfizer and Moderna vaccines. If it happened in the UK it can happen anywhere in the world and not be necessarily the same variant causing havoc in the UK and other parts of Europe.
Because of the fear of spreading the new UK mutation, over 40 countries are currently banning UK arrivals, and this number is sure to increase fast. Some countries that have already imposed a ban on UK arrivals include Belgium, Canada, Germany, Ireland, Italy, Portugal, Romania, Russia, and Switzerland.
Brickell announced on September 8, 2020 that it has entered a collaboration agreement with Japan's biotech company AnGes under which the Brickell has the right to develop and commercialize AnGes' proprietary investigational adjuvanted plasmid DNA vaccine formulated to prevent COVID-19 in the U.S., South America and certain emerging markets.
The COVID-19 vaccine Anges has developed will inject a genetically engineered circular DNA into the body that produces "spike proteins," which are a characteristic of the coronavirus, according to the company. When such proteins are made, the body's immune system is stimulated to make antibodies against the virus.
Per a November 20, 2020 update in Japan Registry of Clinical Trials (JRCT), AnGes is entering Phase 2/3 clinical studies with its vaccine candidate in Japan. Data readouts expected through 1Q 2021. This is a significant development suggesting that Phases I and II have been successful. Phases 1 and 2 started in Osaka, Japan on August 31 2020 with 30 healthy volunteers aged 20-65. Per the JRTC filing, the company expects to enroll up to 500 volunteers in Phase 3. The Phase 3 clinical development by AnGes in Japan is being sponsored by Japan Agency for Medical Reseearch and Development.Given the expected surge in demand, Japan is seeking to secure a stable supply of COVID-19 vaccines for people in the country. The government is pushing for homegrown vaccines and also negotiating with foreign companies such as AstraZeneca in an attempt to secure enough vaccines.
During the November 12, 2020 3Q 2020 conference call Brickell CEO commented:
"...we entered into a collaboration agreement with AnGes, which provides us with certain rights to develop their proprietary investigational adjuvanted plasmid DNA vaccine intended to prevent COVID-19. Our rights include the U.S., South America and certain other emerging markets."
I expect BBI stock to gain significantly in 1Q 2021 as news from partner AnGes vaccine Phase 3 results are released to the public. On an interesting note, AnGes owns over 2M shares of BBI stock. This obviously suggests that AnGes has a vested interest in seeing its 2016 investment pay off.
Investors are alredy sensing that something big is about to happen for BBI as volume and share price continue to go up as seen in the following chart. Once the stock breaks $1 it could rally to $1.4 - $1.6 ahead of Phase 3 COVID-19 vaccine results from partner/shareholder Anges:
Sofpironium Bromide for Axillary Hyperhidrosis
Brickell Biotech is a clinical stage biotech company focused on the development of innovative and differentiated therapeutics for the treatment of skin diseases. The company's lead drug candidate Sofpironium bromide (SB), a prescription treatment for axillary hyperhidrosis is entering U.S. Phase 3 trials. Axilliary hiperhidrosis is a medical condition that involves heavy sweating under the armpits caused by heat, stress, or occurring without such causes, and interferes with daily life and work. Axilliary hiperhidrosis is an underappreciated and under-treated disease state affecting a population of over 10M in the U.S.
Sofpironium bromide is currently being developed by Brickell in the U.S. for the treatment of primary axillary hyperhidrosis. Brickell recently initiated its pivotal Phase 3 clinical program in the U.S., which is comprised of two pivotal Phase 3 clinical trials (Cardigan I and II) to evaluate the safety and efficacy of sofpironium bromide gel, 15% compared to vehicle (placebo) in approximately 350 subjects (per trial) aged nine years and older with primary axillary hyperhidrosis. The company expects to report topline data from both the Cardigan I and II studies in the fourth quarter of 2021.
Roughly 10 million people in the U.S. suffer from axilliary hyperhidrosis, or AH. This condition interpheres with daily social and professional activities. Currently, only 2M patients receive prescription treatment, and some resort to invasive or permanent interventions like Botox, MiraDry or surgery.
The following slide shows the significant market opportunity for Sofpironium bromide therapy for hiperhidrosis:
Sofpironium bromide is classified as an anticholinergic agent that inhibits the action of acetylcholine, a neurotransmitter. Anticholinergics block the action of acetylcholine, a chemical that transmits signals within the nervous system that are responsible for a range of bodily functions, including activation of the sweat glands. Acetylcholine is thought to induce sweating by binding to muscarinic receptors at the sweat glands. Sofpironium bromide inhibits the binding of acetylcholine by binding to muscarinic receptors in the eccrine sweat glands that cause hyperhidrosis, thereby reducing sweating.
In Phase 2b clinical trials, the highest dose of BBI's SB gel (15%) demonstrated statistically significant 46% greater sweat reduction per gravimetric analysis compared to the placebo on all doses. Based on the trial data, efficacy is over 50% better than Eli Lilly's FDA-approved Qbrexza for AH, per label, despite higher baseline severity. In addition, their safety profiles were relatively similar. Eli Lilly obtained Qbrexza as part of the $8B acquisition of Dermira (NASDAQ:DERM) announced in February, 2020.
The following slide from the this week's December 2020 Corporate Presentation shows the completed Phase 3 long-term safety study states "will release additional details at an upcoming scientific forum"...stay tuned:
Sofpironium Bromide Goes Commercial in Japan
On November 18, 2020, the company announced that its Japanese development partner, Kaken Pharmaceutical Co., Ltd. plans to launch sofpironium bromide gel, 5% under the brand name ECCLOCKin Japan for the once daily treatment of primary axillary (underarm) hyperhidrosis on November 26, 2020. In addition, ECCLOCK has been placed on Japan’s National Health Insurance (NHI) drug reimbursement price list.
ECCLOCK is the first topical product in Japan approved for the treatment of primary axillary hyperhidrosis. Applying it once a day to both the axillae can be effective. An applicator included with the container-closure system of the product allows the drug application without the hands touching the product.
Robert Brown, Chief Executive Officer of Brickell commented:
“We are excited to announce the reimbursement and planned commercial launch of ECCLOCK in Japan. A key step to Kaken’s moving forward with the planned commercial launch of ECCLOCK in Japan was their receipt of the reimbursement price listing by the NHI (National Health Insurance drug reimbursement price list in Japan). Kaken is now well-positioned to launch ECCLOCKin Japan on November 26 as an important novel, first-in-class therapy for the millions of Japanese patients suffering with this debilitating medical condition.”
Under the sublicense agreement with Kaken, Brickell is entitled to receive sales-based milestone payments, as well as tiered royalties based on a percentage of net sales of ECCLOCK in Japan. Furthermore, Kaken has rights to develop and commercialize sofpironium bromide in Korea, China and certain other Asian countries.
On August 31, 2020, the Japanese Patent Office has issued a composition of matter patent to Brickell Biotech covering crystalline forms sofpironium bromide. The patent will be in effect through 2040.
Summary of Sofpironium Bromide Milestones
The company summarized key prior accoumplishment and upcoming milestones for sofpironium bromide as follows:
Financial Strength
In the company's November 12 3Q 2020 conference call CFO Michael Caruthers commented:
"Starting with cash and investments. As of September 30, 2020, we reported $20.2 million in cash and marketable securities having used $4.7 million in cash during the third quarter of 2020. In addition to our cash balance, we prepaid $4.2 million to third-party clinical research organizations for a recently initiated Phase 3 pivotal clinical study of sofpironium bromide."
"Subsequent to the end of the third quarter, we completed a public equity offering resulting in net proceeds of approximately $13.7 million. This financing strengthened our balance sheet, and we believe our current cash position will support our operations beyond the top line results of the U.S. pivotal Phase 3 program."
This means that at the end of 2020 the company will have almost $30M in cash and marketable securities. This also means that with the current $37M market cap the market is assigning a value of less than $10M to a Phase 3 drug with a huge addressable market and a Phase 3 COVID-19 vaccine, which by the way, has had success after success all the way from preclical and animal data earlier in 2020. I believe BBI stock will gain 500% or more in 2021. This is even more conservative than the estimate of the two analysts mentioned above who agree on a potetial 800% appreciation in the next 12 months.
Analysts' Opinion
Analysts currently assign two Buys and no Holds or Sells to BBI stock with an average consensus price target of $5.5/share. This equates to amost 800% upside from current prices. This target could be reached sooner with the expected positive news flow in 1Q 2021 from Japan's Phase 3 COVID-19 clinical trials as discussed above. Just as the analysts mentioned below, the company is currently downplaying the COVID-19 vaccine potential on pps and revenues going forward, but has discussed this important development in the company's November 12, 2020 3Q 2020 conference call and business update.
Lake Street Capital analyst Thomas Flaten, who recently initiated coverage and assigned BBI stock a $6/share price target, believes that the company has rapidly advanced its lead development program to Phase 3 readiness since becoming public via a reverse merger in 2019.
Oppenheimer analyst Leland Gershell initiated coverage of Brickell Biotech with an Outperform rating and $5 price target. The analyst believes SB offers an attractive profile in a market that offers room for improved solutions. He also believes the recent entry of Eli Lilly’s competing product, Qbrexza, represents a significant step forward in bringuing this embarrasing and uncormfortable medical condition into mainstream. The following slide depicts the following landscape of therapeutic options for Hiperhidrosis (extracted from Brickell's December 2020 Corporate Presentation)
According to Gershell’s estimates, sofpironium uptake uptake by an ultra-conservative 110,000 patients per year (just 5% of the currently treated AH population) it would translate to $200 million in gross sales. The analyst adds that Japan's patent issuance mentioned above could extend market exclusivity to 2040.
To sum it all up, Gershell stated,
“By virtue of its efficacy, tolerability, and antiperspirant-like application, we believe SB offers an attractive profile in a market that offers much room for improved solutions. We encourage risk-tolerant investors to build a position ahead of upcoming newsflow.”
Based on the above discussion, Gershell rates BBI an Outperform along with a $5 price target.
Insitutional Ownership
Institutions and hedge funds have collectively purchased over 8M BBI shares since late 2019. On an interesting note, the company's Phase 3 COVID-19 vaccine partner AnGes owns over 2M shares of BBI stock. This obviously suggests that AnGes has a vested interest in seeing its 2016 investment pay off.
Recent Events
Brickell's CEO Robert Brown provided a corporate update at the Piper Sandled 32nd Annual (Virtual) Healthcare Conference this week. The stock reacted positively following his confident and excellent presentation. CEO Brown focused his presentation only on the sofpironium bromide clinical trials and commercial opportunity for Brickell.
Conclusions
- Brickell has the right to develop and commercialize Japanse partner's AnGes proprietary COVID-19 plasmid DNA vaccine currently in the U.S., South America and certain emerging markets.
- AnGes COVID-19 vaccine is undergoing Phase 3 in Japan having successfully cleared the prior hurdles all the way from preclinical and animal tests to the recently concluded Phase 2.
- The company expects publishing COVID-19 vaccine Phase 3 results throughout 1Q 2021. These trials are being sponsored by Japan Agency for Medical Reseearch and Development.
- According to AnGes, the main advantage of its DNA vaccine is its safety, as it does not use pathogens. Instead, the body creates antibodies in response to DNA information about the virus."The ability to produce a vaccine quickly and practically in unlimited quantities is an added advantage. Another important feature of the new vaccine is the flexibility of the creation process, as even if the virus mutates, a new vaccine can be developed in two weeks,"
- This special feature of AnGes' COVID-19 vaccine to be reformulated quickly to tackle new mutations of the virus will be a significant plus in the future. We now know about a new mutation in the UK which is thought to be 70% more transmissible than the variant being tackled by the Pfizer and Moderna vaccines. If it happened in the UK it can happen anywhere in the world and not be necessarily the same variant causing havoc in the UK and other parts of Europe.
- Because of the fear of spreading the new UK mutation, over 40 countries are currently banning UK arrivals, and this number is sure to increase fast. Some countries that have already imposed a ban on UK arrivals include Belgium, Canada, Germany, Ireland, Italy, Portugal, Romania, Russia, and Switzerland.
- Brickell's core lead candidate sofpironium bromide is entering pivotal Phase 3 clinical trials to treat axilliary hiperhidrosis which is an underappreciated and under-treated disease state affecting a population of over 10M in the U.S.
- Japanese development partner, Kaken Pharmaceutical Co., Ltd. plans to launch sofpironium bromide gel, 5% under the brand name ECCLOCKin Japan for the once daily treatment of primary axillary (underarm) hyperhidrosis on November 26, 2020. In addition, ECCLOCK has been placed on Japan’s National Health Insurance drug reimbursement price list.
- Under the sublicense agreement with Kaken, Brickell is entitled to receive sales-based milestone payments, as well as tiered royalties based on a percentage of net sales of ECCLOCK in Japan. Furthermore, Kaken has rights to develop and commercialize sofpironium bromide in Korea, China and certain other Asian countries.
- On August 31, 2020, the Japanese Patent Office has issued a composition of matter patent to Brickell Biotech covering crystalline forms sofpironium bromide. The patent will be in effect through 2040.
- In Phase 2b clinical trials, the highest dose of BBI's SB gel (15%) demonstrated statistically significant 46% greater sweat reduction per gravimetric analysis compared to the placebo on all doses. Based on the trial data, efficacy is over 50% better than Eli Lilly's FDA-approved Qbrexza for AH, per label, despite higher baseline severity. In addition, their safety profiles were relatively similar. Eli Lilly obtained Qbrexza as part of the $8B acquisition of Dermira announced in February, 2020.
- BBI stock is clearly undervalued based on its significant shots on goal and being funded well into 2022, or beyond Phase
- Lake Street Capital analyst Thomas Flaten, who recently initiated coverage and assigned BBI stock a $6/share price target, believes that the company has rapidly advanced its lead development program to Phase 3 readiness since becoming public via a reverse merger in 2019.
- The two analysts covering the stock recently assigned a Buy recommendation with a consensus $5.5/share price target on BBI stock.
- The company currently has over $30M in cash which is sufficient to support operations beyond the top line results of the U.S. pivotal Phase 3 program
- According to Oppenheimer analyst Leland Gershell’s estimates, sofpironium uptake uptake by an ultra-conservative 110,000 patients per year (just 5% of the currently treated AH population) it would translate to $200 million in gross sales. The analyst adds that Japan's patent issuance mentioned above could extend market exclusivity to 2040.
- Institutions and hedge funds have collectively purchased over 8M BBI shares since late 2019. On an interesting note, the company's Phase 3 COVID-19 vaccine partner AnGes owns over 2M shares of BBI stock. This obviously suggests that AnGes has a vested interest in seeing its 2016 investment pay off.
- Investors interested in investing on BBI stock should review all risks and uncertainties as detailed in the company's most recent filings with the SEC. Investing in the stock market always involves a significant risk besides a potential gain short or long-term.