Citigroup Upgrades NantKwest, But Finds 6 Reasons To Stay On Sidelines

Nantkwest Inc NK 3.67%‘s enterprise value has fallen to about $120 million, limiting any potential downside, according to Citigroup.

The Analyst

Analyst Wendy Nicholson upgraded NantKwest from Sell to Neutral and maintained a $3 price target.

The Thesis

Apart from the fall in enterprise value, the 10-Q NantKwest filed this week showed that the company is enrolling patients in three clinical trials, bringing its number of ongoing clinical trials to six, Nicholson said in a note. (See the analyst’s track record here.)

Although Citi upped its rating, the firm still remains sidelined due to NanKwest’s history of missing timelines, the analyst said.

Also, Nicholson said the NANT vaccine studies include several proprietary agents not owned by the company.

Many of the company’s trials are run at a single center that has strong ties to the Nant ecosystem of entities, Nicholson said.

Citing the 10-Q, the analyst said the company has seen increases in manufacturing costs and “sporadic decreases in manufacturing yield of both haNK and taNK cells.”

NantKwest’s corporate transparency is “relatively low,” Nicholson said.

https://bit.ly/2vA3hwC

Medical Nutrition Therapy By Registered Dietitian Nutritionists Can Help Slow CKD

According to a new review, approximately 30 million Americans – about 15 percent of adults – have chronic kidney disease, a number that is expected to increase in the next 20 years due to rising obesity rates and longer lifespans, but the majority of chronic kidney disease patients aren’t receiving potentially lifesaving treatment.

“Medical Nutrition Therapy for Patients with Non-Dialysis-Dependent Chronic Kidney Disease: Barriers and Solutions” was compiled by a multidisciplinary team that included registered dietitian nutritionists, patient advocates and physicians from the Academy of Nutrition and Dietetics, the National Kidney Foundation, Loyola University Chicago and the University of New Mexico. It will be published in the October issue of the Journal of the Academy of Nutrition and Dietetics and is available online.

“MNT is the nutritional diagnostic, therapy and counseling service for the purpose of disease management furnished by a RDN or nutritional professional,” said registered dietitian nutritionist Alison Steiber, the Academy’s chief science officer and a co-author of the review.

“MNT by RDNs has been shown to improve health-related outcomes, quality of life and prevent or delay disease-related complications in patients living with CKD,” Steiber said.

Nearly 90 percent of patients with chronic kidney disease never meet with a registered dietitian nutritionist, according to the review. Some physicians may lack confidence in MNT’s effectiveness; others may be unaware that MNT is covered by Medicare Part B for patients who are not on dialysis. Patients may be reluctant to invest the time and money in the therapy if it is not covered by their insurance.

“Most patients don’t understand how big a role their diet plays in the management of their kidney disease,” said co-author Marsha Schofield, a registered dietitian and the Academy’s senior director of governance. “Medical nutrition therapy helps patients with chronic kidney disease improve their blood sugar and blood pressure, which will slow the progression of the disease and even delay or prevent them from needing to have dialysis or a transplant.”

“The Academy and the National Kidney Foundation have a long history of collaborating to advance the science and clinical practice around kidney disease,” Schofield said. “Both of our organizations recommend MNT for all people with CKD.”

The authors say more research is needed to study and remove barriers to obtaining MNT.

The Academy of Nutrition and Dietetics is the world’s largest organization of food and nutrition professionals. The Academy is committed to improving the nation’s health and advancing the profession of dietetics through research, education and advocacy. Visit the Academy of Nutrition and Dietetics at www.eatright.org.

https://bit.ly/2ns646z

Celltrion Begins Global Phase 3 Clinical Trial for Avastin Biosimilar

• Completed Phase 1 clinical trial in June, planning to launch Phase 3 clinical trial across 20 nations beginning with Portugal

Celltrion, Inc. (KRX:068270) is set to launch global Phase 3 clinical trial for its bevacizumab biosimilar ‘CT-P16’ for the treatment of cancer.

Celltrion successfully completed Phase 1 clinical study on the safety and pharmacokinetic assessment of CT-P16 in June 2018. Further, it recently submitted its Clinical Trial Application for Phase 3 clinical study to the National Authority of Medicines and Health Products, I.P. (Infarmed) of Portugal.

Beginning with Portugal, Celltrion is set to conduct Phase 3 clinical trial for CT-P16 in about 150 sites in some 20 nations across Europe, Asia and South America.

Meanwhile, Roche’s Avastin^®, the originator of CT-P16, is a therapeutic anti-cancer drug for the treatment of metastatic colorectal cancer, metastatic breast cancer, non-small cell lung cancer, and glioblastoma. It last year recorded global sales of about USD 6.7 billion¹, making it blockbuster medicine.

“We are successfully conducting the clinical trial for the bevacizumab biosimilar ‘CT-P16’ as planned. We will secure the competitiveness for CT-P16 compared with its competitive biosimilars.” says an official of Celltrion.

¹ Source: Roche Financial Report 2017

https://bit.ly/2Mdi1fq

Aralez Sells Off Assets as it Initiates Bankruptcy Proceedings

Mississauga, Ontario-based Aralez Pharmaceuticals, Inc. has entered into a stalking horse agreement to sell its assets to two separate companies, Nuvo Pharmaceuticals and Deerfield Management Companies. The beleaguered company will secure about $250 million for its assets from the sale as it files for bankruptcy.

Shares of the penny stock plunged more than 63 percent in premarket trading after the company announced its agreements this morning. That was after a significant 13 percent gain on Thursday’s trading. Shares are as low as 19 cents this morning. In a statement, Aralez said it has commenced voluntary bankruptcy proceedings under the Companies’ Creditors Arrangement Act in Canada and has filed Chapter 11 in the United States.

The move comes after an extensive financial and strategic review was conducted by the company. Aralez said during the course of the review, it became apparent that the company’s cash position would continue to deteriorate without the protection of the courts during the bankruptcy proceedings. That review led to the asset sale, which was overwhelmingly supported by the company’s board of directors, Aralez revealed.

“Following a thorough financial and strategic review, we believe that these sales, together with an auction process under court supervision are in the best interests of the company and its stakeholders,” Adrian Adams, chief executive officer of Aralez said in a statement.

As part of the deal, Nuvo Pharmaceuticals will acquire the main operating business of Aralez, as well as its non-steroidal pain drug Vimovo pipeline and Canadian operations. That portion of the sale is valued at $110 million, Aralez said in this morning’s announcement. Other assets in that business include Cambia, Blexten, Suvexx (sold as Treximet in the U.S.) as well as the Canadian distribution rights to Resultz.

Deerfield Management Company will secure Aralez’s Toprol-XL franchise for $140 million. Toprol-XL is a blood pressure medication.

Aralez said it is looking to sell additional assets that were not part of the deals with Nuvo and Deerfield.

As Aralez moves through the bankruptcy proceedings, the company said it intends to obtain permission from the courts to operate the business without interruption during the sale process. Aralez also noted that it has obtained approximately $15 million for “debtor-in-possession” (DIP) financing from its secured lender. With approval from the bankruptcy courts, Aralez said it intends to use the $15 million, as well as other available cash, to “pay for all goods and services from vendors provided after the CCAA and Chapter 11 filing date in accordance with their current terms.” Aralez said it intends to also pay certain pre-petition obligations and support existing business operations through the bankruptcy period.

As the company moves through the legal proceedings, Aralez said its board of directors has been reduced to four members. The current members are Chairman Arthur Kirsch, Kenneth Lee, Martin Thrasher and Adrian Adams. Board members Seth Rudnick, Neal Fowler and Rob Harris resigned.

Aralez is being advised by Moelis & Company LLC and Alvarez & Marsal as its financial advisors, and Willkie Farr & Gallagher LLP and Stikeman Elliott LLP as U.S. and Canadian legal counsel, respectively.

https://bit.ly/2MouR9X

Artios Gets $84M to Advance Cancer Treatment Plans

Artios Pharma Limited, based in Cambridge, U.K., got a significant financial boost from Pfizer, AbbVie and Novartis through an $84 million (£65 million) Series B funding that will help advance its DNA Damage Response (DDR) programs for cancer treatments.

The Series B round comes months after the company in-licensed the first nuclease drug development program under its research collaboration and option agreement with Masaryk University in the Czech Republic. The collaboration was formed in June 2017 to discover and develop novel cancer treatments by targeting DNA nucleases involved in the DDR.

The latest funding round was significantly oversubscribed, Artios said this morning. The financing was led by Andera Partners (formerly EdRIP) and LSP (Life Sciences Partners), with participation by additional new investors Pfizer Ventures and Novartis Venture Fund (NVF). In addition to those participants, Artios’ existing shareholders Arix Bioscience, SV Health Investors, M Ventures, IP Group plc and AbbVie Ventures also participated in the fundraising. The Series B follows a $36 million Series A round from two years ago.

Artios Chief Executive Officer Niall Martin said the new finances will help the company develop and deliver its “exciting DDR targeted therapies to cancer patients.”

“This investor syndicate creates a very strong and committed shareholder base with a track record of supporting successful next-generation companies. The oversubscribed Series B fundraise is a strong endorsement of our world-leading development pipeline and reflects the opportunity for DDR to yield new breakthrough oncology products,” Martin said in a statement.

Inhibiting novel DNA repair targets in tumors where DNA damage response factors have been lost or down-regulated will lead to cancer cells being selectively killed without harming normal cells, Artios said. Such a mechanism creates an opportunity for such products to be used both in monotherapy and in combination with existing and future cancer therapies, the company added.

Raphael Wisniewski, a partner at Andera Partners, said Artios’ DDR programs have the potential to bring “real impact” to cancer patients.

“DDR is an exciting field of biology, which has been clinically validated by the first generation PARP inhibitors currently on the market. The new funds will allow Artios to advance its portfolio of first-in-class, small molecule DDR programs including its lead program targeting DNA polymerase theta (Polθ), through clinical proof of concept trials,” Wisniewski said in a statement.

Rene Kuijten, managing partner of LSP, also noted the promise of DDR therapy. Kuijten pointed to the development of olaparib, the first approved PARP inhibitor for the treatment of ovarian and breast cancer.

Under terms of the financing deal, Wisniewski, Kuijten and Barbara Dalton from Pfizer Ventures, will join the Board of Artios as directors. Florian Muellershausen from NVF will join as an observer.

https://bit.ly/2B1KeAv

H.C. Wainwright Initiates a Buy Rating on Omeros Corp (OMER)

H.C. Wainwright analyst Ram Selvaraju initiated coverage with a Buy rating on Omeros Corp (NASDAQ: OMER) Friday and set a price target of $34. The company’s shares closed Thursday at $21.70.

Selvaraju noted:

“Valuation methodology, risks and uncertainties. We ascribe a total firm value of roughly $2B to Omeros based on OMIDRIA ($806M) and OMS721 ($1.2B). This translates into a target of $34.00 per share, based on 60M fully-diluted shares outstanding as of end-2Q 2019. Risks include: (1) trial delays; (2) adverse clinical results; (3) inability to obtain approval for OMS721 and other candidates; (4) inability to achieve additional market traction with OMIDRIA; and (5) earlier-than-anticipated introduction of OMIDRIA generics in the U.S.”

https://bit.ly/2B1bnn6

Corcept cuts outlook

Shares of Corcept Therapeutics Inc. (NASDAQ:CORT) fell over 17% on Friday after the company announced second-quarter and first-half 2018 earnings results. The business reported significant growth in both revenue and net income thanks to strong market traction for its drug Korlym. Despite the growth, management decided to walk back its original full-year 2018 revenue guidance to a new range of $250 million to $270 million, down from the previous range of $275 million to $300 million.
Management also announced a $100 million share repurchase program, but it wasn't enough for Mr. Market to overlook the reduced sales guidance. As of 11:43 a.m. EDT, the stock had settled to a 10.4% loss.
Is the stock move an overreaction? Well, maybe yes and maybe no.
In the first half of 2018, Corcept Therapeutics reported $120 million in net product sales and $35.6 million in net income, marking increases of 90% and 109%, respectively, from the year-ago period. That's all driven from the company's first and only approved drug, Korlym, which treats hyperglycemia associated with the endocrine disorder known as Cushing syndrome.
The problem is that Wall Street is increasingly concerned that generic competition will encroach on Korlym's turf (and perhaps soon), which makes it easy for analysts to interpret the reduced full-year 2018 revenue guidance as a sign that the sky is falling. While generics could sting (since Korlym is the company's only approved product), shareholders who peek over the horizon could see reasons for optimism.
The strength of Korlym so far (and the profitability of the business) is allowing the company to continue developing its pipeline. One drug, relacorilant, has reported impressive interim results from a phase 2 trial investigating its potential to treat the same condition as the company's lone marketed drug. Early results indicate relacorilant could avoid the two most serious adverse events experienced by patients taking Korlym. Maintaining that success through the duration of clinical development could lead to greatly improved outcomes for both patients and the company.
Corcept Therapeutics stock is down 30% since the beginning of 2018, which seems a bit harsh given the financial performance to date, even with the risk of generic competition hanging overhead. Korlym has single-handedly driven the business to profitability and allowed the company to self-fund pipeline development. That includes relacorilant, which could one day replace Korlym, avoid the risk of generic competition, and improve the lives of patients. If the drug candidate's development continues to impress, then investors may want to give this stock a closer look.
https://bit.ly/2M7FCxL