Miami, FL–(EmergingGrowth.com Newswire – March 10, 2019) – EmergingGrowth.com, a leading independent small cap media portal with an extensive history of providing unparalleled content for the Emerging Growth markets and companies, reports on the short sided analysis concerning Bio-Path (NASDAQ: BPTH), and CytoDyn (OTCQB: CYDY) .
Last year EmergingGrowth.com published an article about one biotech analyst that was desperately trying to regain his relevance. Over 6 months have passed and with the recent spike in activity we thought a follow up might be warranted. At that time STAT author Adam Feuerstein had 74.0k twitter followers and now has 78.8K followers and has been able to grow at an annual rate of 13% since the article. Not a track record to boast about. If Feuerstein’s twitter following was a stock it’s almost time to short it on a technical basis, but this article will focus on the poor fundamental analysis that starts with fact checking. There are quite a few issues with Feuerstein’s latest article titled “Taking the measure of small-cap biotech: Bio-path Holdings, Cytodyn.”
Bio-Path (NASDAQ: BPTH) has certainly been in the news the past week rocketing to over $73.00 shares from a price of $4.75 /share on Tuesday. The catalyst was a press release about the trial data from their prexigebersen clinical trial. Feuerstein claims that the update was “cleverly worded in a way that, to me was misleading because it falsely inflated the drug’s efficacy.” Efficacy in cancer can be measured in many ways from progression free survival (PFS), objective response rate (ORR), or even stable disease (SD). His claim is that complete remission is the only thing that counts and that “anything else is considered a treatment failure.” The statement itself is callous and devoid of any human compassion. Objectivity can be maintained while recognizing the fragile state of these refractory patients but he chooses to call them failures for reader shock value. The next point that investors need to know that this phase 2 study was a dose escalation to find the highest safe dose. So the objective of the clinical trial was NOT complete remission as Feuerstein claims. That is a complete distortion because the trial results alerted investors to the efficacy and breakdown among different disease states.
Bio-Path has a novel delivery system that incorporates the use of a lipid transports with antisense DNA which is a clipped strand of DNA that serves as a template for the messenger RNA (mRNA). It’s a form of gene therapy that uses lipid nanoparticles instead of a virus as the delivery vehicle to take a short strand of nucleotides, known as oligonucleotides, and delivers it to the cell. Once safely inside the cell what happens is that the oligonucleotide binds to the target mRNA and forms a hybrid. This leads to the proverbial cog in the wheel known as RNA interference (RNAi) when transcription takes place in the nucleus of the cell. The link to the video gives an excellent overview. The leader in this form of gene therapy is Alnylam (NASDAQ: ALNY) which uses a virus as the delivery vehicle. RNA polymerase which attaches to the gene splits the DNA and forms strands of mRNA which eventually migrates to the cytoplasm to the protein factories called ribosomes. If the mRNA is missing an essential piece of the genetic code due to the gene therapy the protein essential for the cells function is not produced and eventually leads to cell death. In the case of prexigebersen (BP1001) it targets the Grb2 protein. A great video of the transcription process demonstrates this.
Bio-Path has strong intellectual property and claims to be the only lipid-based delivery technology that use neutral lipid structures instead of positive charged lipids that encapsulate a functional gene for delivery to the cell. It has a patent for P-ethoxy nucleic acids for liposomal formulation as well as applications pending. Since DNA which is comprised of amino acids can’t survive outside the cell a delivery mechanism is the key to this type of gene therapy. The recent success of Bio-Path in its AML trial may be of keen interest to ALNY which has no exposure in its pipeline to the very lucrative cancer market.
The reason for optimism in the stock stems from the updated trial results. The company was accused by Feuerstein of having no change in the complete remission rate of 29%, that the small numbers had an “exaggerating effect”, and that “nothing relevant has changed about the response to the prexigebersen treatment.” While the remission rate is an accurate statement the update in the trial gave a deeper dive into the durability of the response amongst AML patients. According to Dr James Foram, MD at the 2016 American Society of Hematology (ASH) Meeting, he said “We also now know that the quality of complete response is important. It turns out that a complete response with incomplete platelet recovery is inferior to a complete response. Despite being a recognized response category, morphologic leukemia-free status is not associated with better outcome than treatment failure. Its value as a response criterion is questionable.” Patients in Bio-Path’s trial maintained their response and in the follow up transitioned from progressive disease to stable disease. Clearly things changed in a positive direction.
The rate of response based in comparison to age is also important. The CR rate is only 10% for ALL patients over 65 vs 29% in this study. Another metric that shows promise is that prexigebersen compared to patients taking Venetoclax manufactured by Abbvie (NASDAQ: ABBV) in combination with low dose cytarabine (LDAC) reported a 42% CR but only 46% of people in their trial were secondary AML patients. Doing some quick math and assuming that all the hard to treat patients had progressive disease or stable disease, then 5 out of 5 de novo patients had a CR which is a 100% response rate in a best case scenario. Adjusting ABBV’s drug results to an increase in secondary patients for an apples to apples comparison it would be a 19.6% vs 29% CR in favor of BPTH. These trends of a durable response and potential to be superior to the standard of care and other treatments bode well for the regulator pathway. In addition the drug has a more favorable safety profile than existing treatments.
The company has gone through a massive restructuring with a 20 to 1 reverse stock split and a capital raise of $1.7 mil just a month ago at $2.65/share and 50% warrant coverage. There is truth in Feuerstein’s statement that this was a distressed financing because the stock was off close to 50% since the beginning of the year. With a low float any catalyst was bound to send the stock soaring especially if there was shorting going into the financing. It’s not supposed to happen but one look at the tape tells a different tale not to mention the sudden appearance of the short and distort crew.
CytoDyn (OTCMKTS: CYDY) was also targeted by Feuerstein. Looking at his track record he is a big fan of Gilead (NASDAQ: GILD) and any developing drugs that seem to threaten the franchise are on his radar. He even made an indirect reference to a Seeking Alpha article titled “Gilead’s HIV Franchise Under Assault As It Stares Down Paradigm-Changing Drug” that arguable sparked the social media feud between him and ex Seeking Alpha writer Michael Sheikh. What’s so interesting is that he seems to have forgotten his prior stance on CYDY’s lead drug candidate PRO 140. In the past he said “Scam. Total.” and now he says “CytoDyn might secure FDA approval for its HIV drug.” Investors on social media immediately questioned this call because CYDY FINISHED a phase 3 trial with almost no side effects. CYDY recently had a conference call with the FDA, and they cleared up any remaining issues. Regarding monotherapy, the responders rate needed to be higher and now they are over 90%. Patient failures were explained by different levels of CCR5 expression from patient to patient, and the patients needed to be able to safely return to their prior regimen and they all did. The company is clearly readying for a pivotal phase 3 label expansion for monotherapy very soon without any unresolved FDA issues. The biggest threat to GILD is perhaps even growing larger because the monotherapy label will have the same peak dosage as the combination therapy that will be filed under the BLA. Combination approval would make monotherapy approval a relative certainty since protocol would be nearly identical.
What has changed over the past 9 months since his “Scam. Total” tweet which was just 2 days after they announced 81% of patients that completed the trial had viral loads below the undetectable level of 50 copies/ml?
Since his tweet they increased the dosage to 700 mg and got a 92% responders rate in HIV monotherapy. They also completed the acquisition of Prostagene getting the intellectual property of CCR5 inhibition in cancer and a prostate cancer prognostic that has the potential to bring in $750 million annually. In addition, they were able to attract world renowned oncologist Dr. Richard Pestell. One of the biggest achievements was the FDA agreement to proceed with a phase 2 trial of Triple Negative Breast Cancer (TNBC) effectively bypassing phase 1. They also announced their intentions to proceed with eight phase 2 clinical trials in cancer after they complete their preclinical studies which is a feat that only eight $100 billion dollar drug companies have ever accomplished. They also got the approval from the FDA to use 700 mg monotherapy data in their Biologics License Application (BLA) filing for combination therapy. Finally they announced that in mice xenografts for metastatic breast cancer they had a 98% reduction in cancer metastasis. On the last shareholder conference call Dr. Pestell said that in some mice he was “unable to detect metastasis.” This point needs to resonate, because they might be mice, but 90% of mouse efficacy studies predict human results. These mice represent 6 years of human cancer having little to no growth of the most aggressive form of breast cancer. Perhaps this mountain of evidence changed his view that CYDY “might get FDA approval.”
His commentary leads readers to believe that combination therapy is a “niche therapy” that will only be used on a “tiny number” of patients with HIV resistant disease. Again the distortion is amazing because the FDA denied their application for orphan drug designation (ODD) on the grounds that if this drug were approved it would be greater than the 200,000 patient threshold of an ODD. So “tiny” in the Feuerstein language represents a patient group of 246,842 multiplied by the $120K annual cost (increased pricing) equals a total available market in just Class 2 and Class 3 resistant HIV of $29.6 billion. The total available market is twice the size of GILD’s current $15 billion HIV franchise.
For investors that prefer a more methodological analysis, CYDY commissioned Biovid for $200K, to conduct a research and marketing analysis of PRO 140. Feuerstein completely ignored this report and this “tiny” $3.0 billion market.
His most laughable claim is that a once a week injectable is “less convenient” than the standard HIV pills. Not sure what planet that originated from but it’s time to bust this myth. The Highly Active Antiretroviral Therapy (HAART) is the current standard of care. It is based on 3 classes of drugs working in concert with each other to stop the replication of the HIV virus once it’s inside the T-cell. This means that if the patient doesn’t take the pills on time the viral load goes up. It means that if they forget to take the pill the viral load goes up. Patient compliance on the current HAART regimen is only 35% for daily lifetime dosing with patients with complete viral load suppression. This is why there are 70,000 HAART failures. The bottom line is that if the patient doesn’t comply with the regimen every day for the rest of their life they could develop drug resistance and it could eventually lead to AIDS. Juxtapose this scenario with a once a week injectable (same as a diabetes shot taken 3 times a day for the rest of their life) that has a 72 hour grace period based on the half-life of the drug. He astutely pointed out that it is more expensive but only thought that its potential was “tens of millions of dollars per year.” This means his assumption is less than 1400 patients in a year. The trial was 670 patients so think about how preposterous his estimate is. Biovid also did an analysis of market penetration of monotherapy. There was 60% adoption and 90% trial rate by month nine. By month fifteen 90% would adopt monotherapy but Feuerstein has put on his blinders to think that this doesn’t represent a credible threat to GILD.
His article goes on to thrash the entire entry inhibitor market. His premise for small sales of PRO-140 is entirely based on the 3 entry/fusion inhibitors that have reached the market and have a puny market share in comparison to GILD. He talked about Selzentry (maraviroc) manufactured by GlaxoSmithKline (NYSE: GSK), and Trogarzo manufactured by Theratechnologies. He doesn’t even mention the third Fuzeon manufactured by Genentec, a subsidiary of Roche Holdings Corp (OTCMKTS: RHHBY). He called Trogarzo a good comparable to PRO 140. He failed to mention that 4 people died in that study. Not once in his article does he speak of the favorable safety profile of PRO 140. This a major omission of fact. A review of the side effect and warning for entry / fusion inhibitors shows that PRO 140 is superior to ALL entry inhibitors. Notice the black box warning on Selzentry (maraviroc) which ironically worked extremely well in cancer, NASH, and HIV except the treatment was worse than the disease.
He closes his arguments comparing PRO 140 to GlaxoSmithKline developing a long lasting injectable. It’s a combination of Edurant sold by Johnson & Johnson (NYSE: JNJ) and cabotegravir sold by GSK’s Viiv subsidiary. He fails to mention that it’s an intramuscular injection that requires a visit to the clinic. He fails to mention that it is accompanied by side effects as well as injection site pain. All this injection can be considered is a longer lasting version of the pills that contain the side effects of depression, insomnia, liver problems, depression, skin rashes, and IRIS. At this point in the STAT article the reader has got to be thoroughly confused on how this painful monthly shot is better and more convenient that standard HIV pills. PRO 140 a 1 minute weekly injection 4 times a month seems quite convenient.
The most egregious omission of fact in his article was not mentioning the word cancer once with respect to CytoDyn which has morphed into a platform technology company with three pillars of development in HIV, Graft versus Host Disease (GvHD), and cancer. Cancer represent the biggest part of CytoDyn’s valuation because they were able to raise their price from $70,000 per year to $120,000 per year. All it takes is one picture to see what a toxic CCR5 inhibitor like (maraviroc) can do in 60 days to metastatic disease. Imagine the same target using a non-toxic CCR5 inhibitor like PRO 140. This is a preview at what the future might look like in the TNBC trial.
Most investors lack imagination to visualize what a 98% reduction in metastasis looks like. Below is an example from a melanoma trial with GR-MD-02 manufactured by a company called Galectin Therapeutics (NASDAQ: GALT) which happens to be Feuerstein’s next target. He does a great job of telegraphing his next short and distort job.
The market capitalization of CYDY is $150 million for a company that has the potential to do $500 million in 2020 and has commitments from drug manufacturers for up to $500 million of product in advance. This means they don’t need to do any dilutive financing to bring the drug to market. The company has an imminent licensing deal in the works which could consequently end the cycle of dilution. The rolling BLA will be ready to file this year which means registration is not far off. The company has excellent results in HIV and may apply for Breakthrough Therapy Designation (BTD). It also has clinical trials ready to initiate in GvHD and TNBC which could lead to ODD and a BTD. Feuerstein paints all these developments as “outlandish claims” but fails to go through the company’s track record of achievement. They said they were going to develop cancer and now they have approval for a TNBC trial. They said they were going to buy Prostagene on a non-dilutive basis and it was an all-stock deal. The company has delivered consistently so what is outlandish about their claims?
Feuerstein makes a habit of putting together shoddily crafted articles with very little substance, otherwise known as facts. His analysis has to be vague and shallow otherwise people would see right through his incompetent assessment. He’s the shock jock of biotech but his relevancy is clearly waning. Look closely at his tired twitter following. We hope this fact checking article opens up investors’ eyes so they see what is right in front of them. Feuerstein distorts the truth, makes major omissions of fact, and contradicts himself in his own articles. His articles are no better than the sensationalism of a snake oil salesman. Short sellers need to be wary too, because his reputation is losing its luster and they can no longer blindly short his picks off of a tweet because his analysis has no substance. There is a growing movement of investors that dislike his very poorly crafted articles. His tweets seem to telegraph his next mark so investors would be well versed to do their due diligence on GALT followed by Ampio Pharmaceuticals (AMPE) which is his perennial favorite, after they announce their SPA trial design.
EmergingGrowth.com is a leading independent small cap media portal with an extensive history of providing unparalleled content for the Emerging Growth markets and companies. Through its evolution, EmergingGrowth.com found a niche in identifying companies that can be overlooked by the markets due to, among other reasons, trading price or market capitalization. We look for strong management, innovation, strategy, execution, and the overall potential for long- term growth. Aside from being a trusted resource for the Emerging Growth info-seekers, we are well known for discovering undervalued companies and bringing them to the attention of the investment community. Through our parent Company, we also have the ability to facilitate road shows to present your products and services to the most influential investment banks in the space.