Liquidia: Is It Worth Getting On Board Early?

Liquidia went for $11 per share at IPO.

Some big players are involved with the company.

Potential will play out with PAH drug.

Liquidia Technologies (LQDA) is a very interesting IPO story in 2018. The pharmaceutical upstart recently completed its IPO, with the stock going public at $11 per share. Over the past couple of weeks, shares have risen some 20% to $13 and change. Playing a stock on IPO can be a dangerous game, but as the dust begins to settle, the true story and true market cap of a company take shape. The question for those that did not get in on the IPO is whether it is still a good stock to buy. The answer to that can be a bit complex, but I recommend investors start by reading an article from fellow Seeking Alpha contributor Bilbao Asset Management titled, “Liquidia IPO: Phase 3 Clinical Stage That Interested The Bill Gates Foundation.” That article gives some great insight into the potential of the company’s pipeline, some key players invested, and a look at the financial picture.

My analysis is going to take a bit of a different track. I first learned of Liquidia some time ago as I was researching potential competitors MannKind (MNKD) and United Therapeutics (UTHR). MannKind is more of a direct competitor because it has a dry powder inhaled drug delivery system of its own, while United Therapeutics is one of the bigger players in the space of treating pulmonary arterial hypertension, also known as PAH.

Liquidia’s front-running drug candidate is a dry powder inhaled version of treprostinil. United Therapeutics utilizes the same drug in various treatments it has on the market. Meanwhile, MannKind is attempting to be a fast follower on a dry powder inhaled treprostinil product and has itself completed phase 1 of clinical trials, and like Liquidia, can proceed directly to phase 3.

It is a bit difficult to separate the MannKind and United Therapeutics dynamic, but I will try to work through this discussion in a way that outlines some of the potential and risk involved. The issue boils down to a statement in the Liquidia prospectus that likely received little attention.

https://bit.ly/2OEpYHh

Xeris Q2 business highlights

Xeris Pharmaceuticals, Inc. (XERS), a specialty pharmaceutical company leveraging its novel technology platforms to develop and commercialize ready-to-use injectable and infusible drug formulations, today announced financial results for the second quarter and corporate highlights.

“We successfully completed our IPO in the second quarter and raised $89 million in net proceeds, which will fund multiple clinical programs, advance pre-clinical programs in other therapeutic areas, as well as build out our commercial organization in preparation for the commercial launch of our lead candidate, Glucagon Rescue Pen, in the United States,” said Paul R. Edick, Chairman and Chief Executive Officer of Xeris Pharmaceuticals. “We are delighted to have submitted the NDA for our Glucagon Rescue Pen since the IPO.  Our NDA submission is a major milestone for Xeris and Glucagon Rescue Pen, which has the potential to be the preferred rescue treatment for severe hypoglycemia in people with diabetes. If our NDA is approved in our expected timeframe, we believe we will have the first ready-to-use, room-temperature stable liquid glucagon formulation that can be administered without any preparation or reconstitution.”

Second Quarter 2018 Highlights and Recent Events

• Submitted NDA to US Food and Drug Administration (FDA) for Glucagon Rescue Pen:  Xeris submitted the NDA for its lead product candidate, Glucagon Rescue Pen, for the treatment of severe hypoglycemia, a potentially life-threatening condition, in people with diabetes.
• Presented positive Phase 3 data at American Diabetes Association’s 78^thScientific Sessions: Xeris presented efficacy and safety data from two of its Phase 3 clinical studies of its ready-to-use Glucagon Rescue Pen in treating severe hypoglycemia in adults and children with type 1 diabetes, as compared to the currently marketed Glucagon Emergency Kit.
• Completed initial public offering (IPO): Xeris successfully completed its IPO of 6,555,000 shares of common stock at a public offering price of $15.00 per share, including the exercise in full by the underwriters of their option to purchase up to an additional 855,000 shares of common stock. Net proceeds to the Company were approximately $89.0 million after deducting underwriting discounts and commissions as well as other offering expenses.

https://yhoo.it/2OCr0mV

Insilico, Juvenescence, Buck Institute in AI venture on metabolic, aging diseases

A triumvirate of aging-focused biotechs and researchers—the AI company Insilico Medicine, the portfolio-based startup Juvenescence and the nonprofit Buck Institute—have formed a new joint venture to develop small molecules for a novel target in a bid to extend life spans.

The combined Napa Therapeutics will focus on developing NAD+ metabolism research from the lab of Eric Verdin, M.D., president and CEO of the Buck Institute, and using Insilico’s drug development engine to discover new compounds.

“This is a unique opportunity to use cutting-edge AI to accelerate drug discovery,” said Verdin in a statement. “The Buck is excited to join forces with Insilico and Juvenescence as we work to eliminate the threat of age-related disease for this and future generations.”

Napa will serve as a privately held British Virgin Islands company, with an office in the Isle of Man, where Juvenescence is based. Juvenescence in-licenses aging-related assets and has previously formed joint ventures with Insilico, as well as with other AI, clinical trial and drug discovery partnerships. Should the Napa program be successful, Insilico could reap $100 million in milestone payments.

Verdin’s lab is studying the role of sirtuins, deacylating enzymes and signaling metabolites from the mitochondria, and their regulation of aging—including hundreds of target proteins revealed through proteomic analyses, with some involved in major metabolic pathways such as fatty acid oxidation, the release of stored energy and the breakdown of glucose.

“We are very happy to partner with the Buck Institute and Juvenescence around a very promising set of targets in a pathway overlooked by the pharmaceutical industry,” said Alex Zhavoronkov, Ph.D., founder and CEO of Insilico Medicine, who also serves as an adjunct professor of artificial intelligence at the Buck Institute.

Napa will employ Insilico’s adversarial neural networks that compete to generate and evaluate drug candidates through a machine learning-based discovery pipeline. Insilico recently linked up with WuXi AppTec to test its AI-generated novel molecules in challenging biological targets.

“Aging research is among the most altruistic causes that will improve and extend the lives of everyone on the planet and reduce the pain and suffering associated with the age-associated diseases,” Zhavoronkov said.

https://bit.ly/2MNq6n0

Bayer AG Teams Up with Evotech, Haplogen Amid Monsanto Litigation Loss

Evotec AG and Haplogen GmbH have been long-term collaboration partners. The companies announced that Haplogen will enter into a multi-year drug discovery and development deal withBayer AG to focus on pulmonary diseases like chronic obstructive pulmonary disease (COPD).

Haplogen and Evotech have been collaborating since 2012, and as a result, developed a deep portfolio of programs for pulmonary indications. Their target-based approach will broaden under the Haplogen collaboration with Bayer.

The companies indicate that one potential approach is disruption of the division of viruses that exacerbate COPD. As such, the companies will work to develop new antiviral compounds.

“Our alliance with Haplogen has proven that both companies and teams are united by the same spirit and objectives under a very efficient ‘virtual’ performance-based biotech business model,” said Werner Lanthaler, Evotech’s chief executive officer, in a statement. “With the addition of Bayer’s excellent expertise, we have high aspirations for this partnership and look forward to bringing new and better treatments to patients living with pulmonary diseases.”

No financial details were disclosed.

The news comes at the same time that a U.S. federal court jury in California delivered a verdict to a former school groundskeeper, Dewayne Johnson, who alleged that exposure to Monsanto’s Roundup and Ranger Pro weed killers caused his non-Hodgkin’s lymphoma. The jury awarded him $289 million. Bayer completed its acquisition of Monsanto on June 7, 2018, and indicates it will no longer use the Monsanto name. Bayer shares dropped 14 percent yesterday at the news.

Monsanto faces more than 5,000 similar lawsuits related to cancer risks and its glyphosate-based weedkiller, which includes Roundup. Bayer acquired Monsanto for $63 billion. Not surprisingly, Bayer indicates it will appeal the jury verdict. In a statement, Bayer said, “The jury’s verdict is at odds with the weight of scientific evidence, decades of real world experience and the conclusions of regulators around the world that all confirm glyphosate is safe and does not cause non-Hodgkin’s lymphoma.”

Analysts with Barclays called the decision a “litigious headache,” and noted, “Whilst an appeal is certain and may indeed likely result in the penalty being moderated at a minimum if not reversed altogether, a large number of similar pending cases will now likely multiply.”

Alistair Campbell, an analyst with Berenberg, believes that resolving these issues will cost Bayer about $5 billion, based on past product liability settlements, including Merck & Co.’s $4.9 billion settlement over Vioxx, a painkiller, and Bayer’s settlement over Baycol, for cholesterol. In that case, Bayer paid $4.2 billion in total settlement costs.

Reuters writes, “Genetically modified (GM) crops that withstand glyphosate are a main source of cash for Monsanto, mainly generated in North and South America, where the technology is widely accepted. The health worries could further darken the outlook for a product category following the emergence of weeds that have grown resistant to the herbicide.”

“We think the risk of withdrawal is extremely low, but if it materialized it would be a major blow to the transaction value paid for the company,” Campbell stated.

https://bit.ly/2nE77AE

HCA Healthcare, Universal Health, Tenet, Community Health initiated at Barclays

Barclays starts Hospital sector with Neutral outlook, top pick HCA. Barclays analyst Steve Valiquette initiated coverage of the Hospital sector with a Neutral rating. Operators continue to face incremental pressures from alternative payment models that are shifting incentives towards lower-cost sites of care, Valiquette tells investors in a research note. He believes, however, that despite industry headwinds, operators levered to markets with high population growth and high relative market share will continue to outperform the industry. The analyst’s only Overweight rated name in space is HCA Healthcare (HCA). The analyst initiated coverage of HCA with an Overweight rating and $150 price target. He sees HCA as well positioned in local markets. Valiquette also started Universal Health Services (UHS) and Tenet Healthcare (THC) with Equal Weight ratings. His lone Underweight rating is put on Community Health Systems (CYH). The company is still burdened with excessive debt and constrained free cash flow from its rural hospital footprint, Valiquette contends.

https://bit.ly/2MIySCJ

Inovio announces first patient dosed with vax aimed to drive remission of HIV

Inovio announced that the first participant has been dosed with Pennvax-GP in a randomized clinical trial that will evaluate its ability to drive remission of HIV infection. This vaccine widely targets all major HIV strains and the potential to enhance the capacity of the immune system to eliminate or provide life-long control of HIV. This trial is part of a previously reported multi-year $6.95M grant from the NIH’s National Institute of Allergy and Infectious Diseases, or NIAID, to develop a single or combination therapy using Inovio’s Pennvax-GP with the goal of attaining long-term HIV remission.

https://bit.ly/2B6FCci

Replimune Group initiated at BMO Capital

Replimune Group initiated with an Outperform at BMO Capital. As reported earlier, BMO Capital analyst Do Kim initiated Replimune with an Outperform rating and a price target of $31, saying its platform has been “significantly de-risked” based on its “structural similarity to T-Vec, the only FDA-approved oncolytic virus.” The analyst contends that Replimune’s RP1 is better than T-Vec, with a ” more potent HSV-1 strain and addition of fusogenic protein GALV”, and can deliver on rising expectations for oncolytic viruses helped by the advent of immunotherapy.

https://bit.ly/2BgNDLI