Tangible timeline target for set for Ohr Pharmaceuticals Print E-mail
By Rob Goldman   
Monday, 20 December 2010 06:32

Despite its attractive share price and valuation, some investors have been waiting for a catalytic event to occur in Ohr Pharmaceutical’s (OTCBB:OHRP) clinical development.

Last week’s news should not just be viewed as major progress towards one of many catalytic events expected in 2011. Instead, this news provides investors with a tangible, near-term timeline target for a catalytic event for Ohr and its stock price.

Ohr announced the enrollment of the first three patients at a new clinical site in Ottawa, Canada for its ongoing Phase IIb OHR/AVR118 clinical trial. This trial is designed to investigate the efficacy of the drug for the treatment of cancer cachexia in patients with recurrent or advanced cancers.

Ohr Pharmaceutical Enrolls First Three Patients at a New Clinical Site for Ongoing Phase 2b Cachexia Trial

Analyst Report: Ohr Pharmaceuticals

The trial protocol calls for a total of 30 patients to be enrolled, 11 of which have already been completed. That means the Company is well on its way to completing enrollment for this 28-day trial in early Q2, with initial results in mid-2011. This means that in 3-4 months enrollment should be completed which will be a major catalytic event. This event could take the stock to levels more than double the current price and establish a new trading base ahead of the release of interim results in midyear.

This news gives us confidence that between now and the enrollment completion, the stock should return to its previous $0.40 – 0.50 range. We note that it rose to $1.25 upon the release of Phase II interim data alone last year and we believe it could well exceed that in mid-2011. With multiple Phase II candidates, the stock trades at a fraction of its peers.

Cancer cachexia is a “wasting disorder” often seen in late-stage cancer patients. This disorder is led by loss of weight-specifically body mass and muscle loss, and is accompanied by poor appetite, anorexia and a diminished overall quality of life among other symptoms. Cachexia can be triggered by the cellular stress experienced through chemotherapy and the cancer itself.  

Ohr is at the forefront of clinical development for this huge unmet medical need. To date, existing therapies focus on treating the symptoms rather than the root cause. These therapies include steroids and other drugs to increase appetite, reverse weight loss and build muscle. Unfortunately, these are merely stop-gap measures and have serious long term side effects. An estimated 1 million cancer patients are currently suffering from cancer cachexia syndrome, and it accounts for upwards of 20% of all cancer deaths. Thus, we believe that a $1.0  billion untapped opportunity exists for Ohr in this indication.

OHR/AVR118 is a broad spectrum immunomodulator whose main action is to act as an anti-inflammatory through the inhibition and modulation of cellular pro-inflammatory chemokine and cykotine synthesis. OHR/AVR 118 thus tempers the uncontrolled release of multiple cytokines that cause the “cytokine storm” that has been implicated in the disease process. Additionally, clinical data indicates that OHR/AVR118 has powerful chemoprotective effects allowing patients to tolerate higher doses, and more intensive treatment regimens, with toxic chemotherapeutic agents.  Therefore, not only can OHR/AVR118 be used as a palliative treatment increasing their quality of life, it helps patient’s ability to tolerate the chemotherapy regimen needed to treat advanced cancer patients through its chemoprotective properties as well its ability to strengthen the patient.

In addition, investors should focus attention on the fact that OHR/AVR118 is novel in that it addresses the underlying etiology of the cachexia disease process, as opposed to current and investigational therapies being used for cancer cachexia, that address just one or two symptoms of cachexia. OHR/AVR118 offers tremendous opportunity as there is currently no FDA approved treatment for cachexia.

Ohr’s Phase IIb trial in Canada is up and running and will evaluate the patient response to daily treatments of OHR/AVR118. Key responses include the effect of OHR/AVR 118 on patients’ appetite, weight, lean body mass (LBM), strength, depression, and quality of life parameters as well as the safety profile.  The Ottawa Hospital Cancer Centre is a major regional cancer treatment facility, treating over 20,000 cancer patients annually. With the 3 recent enrollees, we expect enrollment in the 28-day trial will accelerate in the coming weeks as these initial patients experience the benefits of OHR/AVR118.

Interim data from this trial was presented at the annual conference of the society for cachexia and wasting disorders conference. Of the 11 patients that completed the treatment period, 8 elected to continue with OHR/AVR118 beyond the treatment period. Statistically significant improvements were seen in appetite, quality of life measurements, and depression. Plus, weight stabilization or gain was observed in 7 of 11 patients. We expect this trend to continue with statistical significance achieved in other parameters as well, as the patient population increases.

We believe that completion of this trial should act as a major catalyst for the stock, as management will likely petition the FDA for a SPA and fast track status for a double-blind, multi-center, randomized Phase III study. This is a huge opportunity and strong results should also gain Big Pharma attention due to the size and nature of the untapped opportunity, as OHR/AVR118 proves to be a novel therapy that directly treats this large unmet medical need.

Progress is occurring on all fronts and it seems unlikely that a Company with two lead compounds in Phase II development would be afforded the valuation of a pre-clinical one-trick pony biotech, for long. For investors, the risk/reward ratio is decidedly in the investors’ favor. In this unique opportunity, risk is reduced not just based on valuation but in the fact that Ohr management has multiple shots on goal with multiple Phase II offerings.

Investors would be wise to use this news as a trigger as we believe the coming catalysts could enable Ohr to exceed the $1.00 level before mid-year.

Disclosure: No Positions

Rob Goldman has 20 years of investment and company research experience as a senior research analyst and as a portfolio and mutual fund manager. During his tenure as a sell-side analyst, Rob was a senior member of Piper Jaffray's Technology and Communications teams. Prior to joining Piper, Rob led Josephthal & Co.'s Washington-based Emerging Growth Research Group. In addition to his sell-side experience Rob served as Chief Investment Officer of a boutique investment management firm and Blue and White Investment Management, where he managed Small Cap Growth portfolios and The Blue and White Fund. Goldman produces research via two formats: Goldman Select Research and Goldman Opportunity Research. The Select product represents the Firm’s internally generated stock ideas while the Opportunity product represents sponsored research reports. This coverage tends to be dominated by early-stage health care, technology and energy sectors. Six month or three month subscriptions can be commissioned by publicly traded company management, investor relations or consulting firms, investment banks, or related parties. Full disclosures and report details are available at goldmanresearch.com

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