AzurRx BioPharma Inc (NASDAQ:AZRX)
As a goal, I strive to find emerging companies that are hidden gems in an industry: ones that are in a position to cause a paradigm shift in technology, benefiting not only investors, but also rewards recipients of that technology with a better method of treatment or service.
For AzurRx, the door to opportunity may have just been widened to a point that may place AZRX into the enviable position of being the leading company in a race to effectively treat EPI caused by chronic pancreatitis and cystic fibrosis. EPI caused by CP and CF are seriously debilitating diseases that cause severe pain and emotional distress, and the commercial market is in demand for an approved product that can effectively treat both diseases.
For those who did not follow the clinical trial results published by Anthera in December, the company did not meet expectations. ANTH stated that they "barely missed" their primary endpoint in its SOLUTION phase III trial, but this does not nullify the fact that this setback will likely cause ANTH to have their studies pushed back at least twelve months, perhaps longer based on an inquiring FDA. This leaves AzurRx in a prime position to capitalize on the published weaknesses of Anthera's SOLUTION trial, as we think AZRX has already demonstrated greater levels of patient tolerability in regard to treatment. Additionally, while the disappointment at ANTH may bode in favor to less challenge on the competitive front for AZRX, the differences involved in the technology and approach to treatment is what investors should truly focus upon. Only then can investors truly appreciate and understand the revolutionary development of treatment that AZRX is working diligently to bring to the market.
Anthera Failed - Not A Surprise
While ANTH was aggressively targeting a treatment for EPI caused by CF using bacterial sourced lipases to compete with the currently marketed porcine (pig pancreas) based compounds, many professionals in the space were not entirely convinced that the science being tested would ultimately prove to be a viable candidate to treat the disease. To many, there were glaring holes in the thesis behind using bacterial based compounds, as they lacked a stable lipase activity profile in an acidic environment such as the gut. As ANTH pointed out on their conference call, one of the reasons for the lack of response in patients with CF was likely related to patients’ intestines being more acidic than expected. In other words, as ANTH continues to test their product in humans in phase 3 studies, it was clear that they underestimated the importance of having a drug that could withstand the acids within the human gut. Thus, while ANTH failed to meet its primary endpoints in its phase III SOLUTION trial, the benefit to AZRX is that the scientific community may now readily accept the data that demonstrates the superiority of using a compound stable at low pH (acidic environment) to treat EPI will be the best path forward for drug approval. As a reminder, the AZRX compound is derived from yeast and appears to show its optimum efficacy in a mildly acidic environment.
Here's The AZRX Difference
As CNA Finance had covered just two weeks ago, AZRX is developing a platform to treat EPI caused by CF and CP in a manner that could potentially transform the way that the disease is treated. The market is huge, with an estimated $1.5 billion dollar global market for the company that can deliver the best treatment. If AZRX continues on track to deliver additional positive results from its MS1819-SD trials, physicians will surely shift their new prescriptions towards the superior product from AZRX, especially when the prime competitor has been clinically shown to have potentially severe adverse side effects. Although ANTH has suggested that an increase in their dosing regimen may ultimately prove to deliver better results, it is not unreasonable to believe that increasing a dose may lead to further aggravating, adverse events.
As noted earlier, beating down an already deflated stock is not in anyone’s best interest. What is, however, is informing investors about the differences and opportunity that is now available for the taking at AzurRx.
AZRX is currently progressing through an on-going phase II trial, in partnership with Mayoly Spindler, for MS1819-SD. The question is, what is AZRX doing differently to raise interest and excitement in the field of gastrointestinal disease? It's simple. Although its early, AZRX is on track to prove that their non-porcine approach to treating EPI caused by CF is a far better and safer alternative to any current treatment available to patients.
AZRX MS1819-SD Trial
AZRX has announced the enrollment of the first three human patients in the MS1819-SD trial, with an expected 12-15 total patients being recruited for the trial that is expected to be completed in the first half of 2017. The dose escalation trial will further evaluate safety and tolerability, but will have an additional secondary focus on efficacy in a dose escalating trial. Unlike Anthera, the MS1819-SD compound being developed has shown no serious or adverse events during its pre-clinical animal models or its Phase I trial. Upon successful results, AZRX is looking to grab a huge portion of the available market, with an estimated 100,000 patients being affected in the United States with EPI caused by CP and an additional 30,000 with EPI caused by CF.
The medical and scientific team appear to have been spot on in their assessment that their yeast based lipase product will be be able to stand up to the formidable challenges imposed in the human gut, namely the acids and bile salts and thus will remain stable when treating human patients.
Since pig pancreas extracts were first used in the 1930’s to treat the disease, MS1819-SD cuts clearly away from the now antiquated porcine based technology, using a recombinant enzyme that is entirely vegan in makeup which is derived from the yeast Yarrowia lipolytica, a 100% non-animal compound. Earlier studies performed by AZRX have demonstrated that this yeast based compound can produce a treatment profile that can compensate for the pancreatic lipase deficiency that is common in CP patients.
While the market may have been focused on the potential being offered by ANTH and either their bacterial solution to the current pig pancreas, their lack of robust responses and poor safety profile does position AZRX into the forefront to bringing a meaningful treatment to patients inflicted with the disease. Even when recognizing that the data from AZRX is slightly less mature to call their concept a transformative approach to treating EPI caused by CF or CP, the road to bringing a revolutionary advancement to the market is well within sight.
Expanding On MS1819-SD
Investors understand that AZRX is committed to delivering shareholder value through short-term, a lower risk development pathway. In doing so, AZRX is developing a broad pipeline of non-systemic biologics to treat gastrointestinal (GI) and infectious disease.
The phase I trial for MS1819-SD not only showed safety and tolerability, but it also demonstrated the potential for patients to reduce a staggering daily pill burden of up to 40 pills per day down to 4-6 pills per day. And, in doing so, they may improve efficacy substantially in the process. Now, in the phase II trial, AZRX wants to drill down and investigate the dose response in patients by analyzing the coefficient of fat absorption and its change from the baseline score. This is a prime area where AZRX believes that they can prove an efficacy and convenience advantage over existing pig derived agents.
Early results using MS1819-SD indicated strong efficacy over a placebo group, with a 16% increase in coefficient of fat absorption (CFA). In regard to safety, AZRX treated test animals with 70,000 times the optimal therapeutic dose and punctuated its mark for delivering no severe or adverse side effects or events. Clearly, the path for AZRX is being bolstered on several fronts and patients are in need for a better treatment.
AZRX Beyond MS1819-SD
While AZRX may have been pushed to the forefront for its yeast based MS1819-SD compound, AZRX is also advancing additional biologics to prevent hospital acquired bacterial infections. Once again focused on the gut, AZRX is developing AZX1101 to block the activity of a broad spectrum of antibiotics from acting within the GI tract, intent on preventing toxicity of intravenously delivered antibiotics to the gut and the associated complications that could arise from the "healthy biome" in a patient’s gut from being disrupted.
Similar to the EPI market, the commercial opportunity for treating hospital acquired bacterial infection is substantial, with the CDC estimating that over 1.7 million cases are reported annually, causing or contributing to the cause of death of over 100,000 patients per year with an associated cost to treat patients running in excess of $11 billion dollars per year.
Investors may expect that AZRX will file an IND application for AZX1101 by the end of 2017, with a primary focus on preventing a broad range of antibiotic gastrointestinal adverse events, primarily focused on Clostridium difficile (C. diff) infection.
Investors Focus
Moving forward into the immediate future, investors should be clearly focused on the opportunities at AzurRx and MS1819-SD to treat EPI caused by CP and CF. The science and technology being developed by AZRX should rightfully begin to earn more visibility as the AZRX approach may now be sitting as the best and most viable treatment to combat EPI.
Analyzing the clinical results published by AZRX offers investors clear insight into how the acid and lipase stable compounds are in a position to become the treatment of choice by physicians. Improving administration and producing a clean safety profile is a major milestone in and of itself, however, the efficacy data is also supporting the science that even at modest doses, the response rates are already showing greater efficacy than competitor trials.
Analysts have also weighed in on the value of AZRX, with Wallach Beth Capital initiating coverage with a "BUY" rating and a $7.00 price target. Additionally, AzurRx is well funded for the near and intermediate term, completing an IPO that raised over $5.3 million dollars in cash by issuing 960,000 shares to investors. The strong balance sheet provides the company the ability to aggressively pursue clinical validation for MS1819-SD and to take advantage of a market that is supported by strong patient advocacy groups that can add additionally leverage to nurture drug approval.
With only 9,631,088 shares outstanding, inclusive of shares sold in its IPO, AZRX may provide less liquidity than other emerging biotech stocks. This, though, is not a bad thing, especially with AZRX facing what may be a transformative time for the company.
Investors may also be wise to the potential of partnership opportunities that may come the way of AZRX, compounding the benefits already being recognized through partnerships with Mayoly Spindler is the TransChem deal, where AzurRx licensed proprietary transition state chemistry technology. With this, AZRX may next tackle bacterial biofilms on humans with the first market being H.pylori, the major offender in stomach ulcers. This alliance with TransChem moves AZRX even closer to positioning itself as a major player in non-systemic therapies for gastrointestinal and infectious disease.
With ANTH stumbling, the future for AZRX has brightened tremendously. Backed by strong data and an innovative and proprietary approach to treating EPI, AZRX should soon become a recognized figure in the fight against these debilitating diseases. And, if the market interprets the AZRX advances correctly, they should be considered the leader.
Disclosure: This article reflects my own opinions and unique articulation. This article is not intended to offer investing advice, guarantee 100% accurate predictions or to be interpreted as providing a personal recommendation. What I can guarantee, though, is accurate research, thoughtful analysis and an enthusiasm about any stock that I cover.
While I seek to uncover emerging companies that I feel have true value and potential, it's important that investors assign an appropriate time horizon to each of their investments, understanding that emerging companies need time to mature.
I wrote this article myself and it includes my own research and expresses my own opinions. I am not receiving compensation for it (other than from CNA Finance). I have no business relationship with any company whose stock is mentioned in this article.
Additional Disclosure: I have no position in any stock mentioned and no plans to initiate any positions within the next 72 hours.
This article was originally featured on CNA Finance