Shares of Lpath Inc (LPTN) were moving on Monday as a key catalyst that had been expected to unfold for months finally did. The LPTN share price dropped to below the dollar mark earlier this year after the company announced that iSONEP trials would be halted due to a non-compliance issue with the FDA by the company's fill/finish contractor. There were no safety or other concerns regarding iSONEP itself, but the potential months-long trial halt created enough uncertainty in the minds of traders to spark enough of an exodus for shares to dip to below seventy cents from January's highs of well over a buck. It also didn't help, however, that a stock offering was announced right around the time of the trail halt.
The past is the past, though, and a Monday news release demonstrated that enrollment is back on track. According to the release, Lpath will continue recruiting patients for its Nexus trial, measuring the effectiveness of iSONEP as a potential treatment for wet AMD. The first patient in the re-started trial is expected to be treated in mid-September and the news brought in volume of over double the daily norm.
With Lpath back in the clinical trial game for iSONEP, investors could again start making note of the company's potential as a leader in the field of lipid-based therapeutics. With the ImmuneY2 platform, Lpath's actual and potential pipeline products contain the ability to generate therapeutic antibodies that bind to and inhibit bioactive lipids that contribute to the spreading and growth of various diseases and inflammatory/auto-immune disorders. The market potential for this technology in treating a plethora of modern day illnesses and diseases, should it advance past the clinical stages, is huge, and Lpath with iSONEP and ASONEP - is first applying its technology to the treatment of Wet AMD and cancer, respectively. Both of these target markets alone hold multi-billion dollar potential.
Pfizer (PFE), a company already flush with cash and always on the prowl for 'pipelines of the future' as many big money makers come off patent, has already made a relatively significant investment in the future of the ImmuneY2 platform with an up-front payment of $14 million in a deal that could be worth nearly half a billion dollars in development, regulatory and commercial milestone payments, should the specified milestones be met. Along with the deal Pfizer also retains a 'first right of refusal' for ASONEP development, as well.
"We have been impressed by Lpath's innovative approach in targeting bioactive lipids with iSONEP and the potential opportunity to significantly add to current standards of treatment in retinal disease," noted Mikael Dolsten, president of Pfizer Worldwide Research and Development, at the time the deal was announced.
Such words from an official of a huge pharmaceutical player is validation enough of the potential of a developmental company's pipeline - as most big players do not jump into these partnership deals until a potential FDA approval is within sight - but the financial commitment validates the technology even further.
Investing in companies whose pipelines are still in the Phase II or earlier status generally comes with more of an inherent risk than investments in companies whose potential products may have already proven safety and efficacy in completed Phase II or Phase III trials, but the potential rewards could also be greater, due to the fact that investors these days often stray from investment opportunities that could still take years to play out in full. Such impatience - if you want to call it that, as trading is the name of the game today, not 'buy and hold' - often leaves share prices of developmental companies trading at relatively modest levels, when considering pipeline and full market potential.
With a market cap of well under one hundred million, a share price still depressed after the early-year trial halt news and the backing of a pharmaceutical giant, Lpath could present a 'ground floor' opportunity to a technology that have major implications in the future of treating diseases with bioactive lipids.
It's also worth noting, however, that Pfizer is not footing the entire developmental bill - as evidenced by the stock offering earlier this year. The risk is shared between the two companies, but while Pfizer can absorb setbacks, Lpath will have a harder time doing so - and hence the inherent risk of investing in small-cap, speculative developmental companies.
With the iSONEP trials again picking up steam, it's time to put Lpath back on the map. A move back towards to the 52-week highs - and beyond - could quickly materialize as these trials mature.
Disclosure: No position.
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