PROLOR shares starting to wake up Print E-mail
By M.E.Garza   
Monday, 16 January 2012 06:41
FDA CalendarShares of PROLOR Biotech, Inc. (AMEX:PBTH) have been on the move and jumped another 4.5% on Friday after we told our premium subscribers that based on much of the chatter we heard at last week's healthcare conferences in San Francisco, we continue to expect some very positive developments from this company. 

Last August, PROLOR reported positive results from a Phase II clinical trial of its long-acting CTP-modified version of human growth hormone (hGH-CTP) in growth hormone deficient adults. The data from the study showed that a single weekly injection of hGH-CTP has the potential to replace seven consecutive daily injections of currently marketed human growth hormone (hGH). These findings from the Phase II trial are very promising for not only adults in need of growth hormone therapy, but also bode well for pediatric applications in the same space-- something healthcare investors should be keen on given the huge market potential in the pediatric space for growth hormone deficiencies.

Clinical results show that hGH-CTP can potentially provide an exceptional therapy for adults with growth hormone deficiency when given once weekly, while demonstrating an excellent safety and tolerability profile across all doses and for all patients in the trial. The implications here are simple: patients might have to take only four injections instead of 30 during any given month (30 day period). Safety and tolerability endpoints were met at all doses in all participants during the previous studies.

During previous investor presentations officials had stated that one of their goals was to sign a distribution partnership for one of their Human Growth Hormone products and that news could be in play here as well since their products are expected to be first long‐acting GH to make it to market.

As you may know, Human Growth Hormone (hGH) is used for the long-term treatment of children and adults with growth failure due to inadequate secretion of endogenous growth hormone. The primary indications it treats in children are growth hormone deficiency, kidney disease, Prader-Willi Syndrome, and Turner's Syndrome. In total, the hGH product presents PROLOR with a $3 billion opportunity and they have planned a Phase III trial in adults with growth hormone deficiency and a Phase II in growth hormone deficient children- both are supposed to launch this year 2012 and both are critical milestones for the company since this is an orphan indication and only one Phase III study will be required prior to submission of an NDA to the FDA.

Prolor's GLP-1 / Glucagon dual receptor agonist is a very valuable asset given that Type 2 Diabetes is the most common form of diabetes, accounting for roughly 90% to 95% of diagnosed diabetes cases worldwide. PROLOR's GLP-1 / Glucagon dual receptor agonist is a long-acting version of a therapeutic peptide that occurs naturally in the human body, and is developed for a once a week injection profile. In their presentation to investors, PROLOR points to two recent high preclinical program valuations/deals in the same space.

As we understand it, the firm is planning to move forward aggressively with the diabetes type II/obesity drug compound during 2012 in order to reach a pre-IND stage. A suitable partnership should follow.

The market for another pipeline molecule in PROLOR’s portfolio, beta-interferon (also known as interferon beta or IFNβ) is vast given that it is one of the most widely-known immunomodulatory protein therapeutics. Products based on beta-interferonhave dominated the market for treatment of multiple sclerosis, in addition to Copaxone,marketed by TEVA Pharmaceuticals (I should note here that PROLOR is controlled by Teva Pharmaceutical Industries chairman Phillip Frost). PROLOR Biotech has indicated that it does not intend to pursue the clinical developmentof its beta-interferon candidate independently, but rather aims to partner this agent with amore established entity in order to optimize its progress. Wonder if that entity could wind up being TEVA itself?

As if that weren't enough, the estimated market for the firm's FVII-CTP candidate (indicated for the treatment of bleeding episodes in hemophilia A or B patients with inhibitors to Factor VIII or Factor IX and in patients with acquired hemophilia and others) is valued as a $1.3 billion opportunity. A human study (likely starting immediately at Phase II) is planned for 2013. This will also be an orphan indication, and should have relatively short clinical path.

What makes this biotech play intriguing from a technical standpoint is the fact that so many traders have been starting to place bets to the short side on this stock. They looked at the stock price movement on the chart, figured that shares should start pulling back, but they might be set up to start covering if more longs continue coming into the stock- particularly if positive news begins to hit in the near term as expected given the chatter.  On Friday, for example, the Daily Short Sale Volume in the stock was an estimated 73%. There are only 28.37M shares in the float and volume has been quitely increasing since late-December. The firm reported $18 million cash balance as of September 30, 2011.

Last summer, Raghuram Selvaraju, Ph.D. of Morgan Joseph Triartisan initiated coverage of PROLOR with a Buy rating and a 12-month price target of $16.00 per share. The more I look into it, the more I start to see just why he perceived so much upside here.

In his report, Selvaraju concluded, "The rapidly increasing appetite of larger pharmaceutical firms for exposure to the biosimilars market and the attractiveness of Prolor's platform from the perspective of being able to provide justification for premium pricing should position Prolor well as a possible acquisition candidate. We believe that several of Prolor's portfolio projects would likely be of significant interest to larger pharmaceutical firms because they target large markets."

Disclosure: None

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