2012-10-10 14:28:13 -
By Brian Wilson
Choppy, low-volume, and outright bizarre trading is not unknown to shares of
Lpath (OTC: LPTN) but things are starting to look brighter.
Last week, the company- who many see as the industry leader in bioactive lipid-
targeted therapeutics since only they have demonstrated the ability to generate
therapeutic antibodies against bioactive lipids that cause diseases like wet
AMD, pain, and cancer- announced a 1-for-7 reverse split of the company's issued
and outstanding Class A common stock. There was initially a sell-off as we see
during these reverse-split situations. It's likely that a number of investors
who had been holding the stock woke up and saw that the stock had shot up in
price, only to discover that the seven-fold price increase was a mirage. The
last two sessions
have seen a nice move to the upside, despite messy overall
market conditions, including anemic levels of volume.
Lpath's flagship product, iSONEP, is a new potential wet AMD treatment that
targets Sphingosine 1 Phosphate, which I found to be a radically different
approach relative to the standard blood vessel growth (angiogenic) inhibitors.
Laser surgery is also option for wet AMD patients, but it carries inherent risks
that make it less and less popular with time.
Assuming that iSONEP stops blood vessel growth just as well as the competing AMD
drugs, it looks like a winner when you factor in its potential to fix detachment
of the retinal pigment epithelium (RPE) in wet AMD patients. RPE detachment is a
related symptom of wet AMD, and has a variety of unpleasant symptoms that
interfere with vision (such as blurry vision, micropsia, and scotomas).
iSONEP has become especially important for Lpath's future due to the partnership
program with Pfizer (PFE) that started in 2010, which actually gave Pfizer total
worldwide marketing rights to the drug. Although it already sold away most of
the market potential of its biggest project, Lpath has every incentive to
continue. The company can still get half a billion in cash from milestone
payments, and will receive double-digit royalties on iSONEP sales. This explains
why investors were so dismayed in late January, when the FDA suspended both the
PEDigree trial (in phase I) and Nexus trial (in phase II).
Lpath took longer than expected to get the FDA to remove the clinical hold which
had been placed on the company after a bit of bad luck hit one of its
contractors, but LPTN finally got relieved on August 27th - and saw a subsequent
12% drop in share price. Quite a strange reaction to the good news. On October
3rd, Lpath announced that it had initiated dosing in the Nexus trial back in
September, and saw some amazing results in some of the patients. Again, the
market showed very little enthusiasm.
Those who follow biotech science closely know that biolipids are seen as the
next generation of drug development.
Acting as tiny messengers, bioactive lipids play important roles in cellular
function (e.g. cell division, cell death, cell migration) and their
dysregulation can therefore contribute to disease. Bioactive lipids, for
* Cause pain
* Promote inflammation
* Protect cells from dying (with cancerous cells, this can be a bad thing)
Lipidomics is the study of what roles these lipids play and how they contribute
One can treat disease by neutralizing certain lipids (the ones that become
dysregulated and thereby contribute to disease). The only known method to
neutralize a bioactive lipid is to generate an antibody that binds to it
Antibodies are designed to bind to "foreign" things in the body; these things
are typically fairly large, however, lipids are neither foreign nor large. In
fact, they are quite tiny.
Everyone that tried to generate this type of antibody failed until Lpath
unlocked the code (patent protected). In addition, Lipids do not vary from
species to species. They are small and simple structures and this allows for
preclinical results to translate much better into human clinical trials.
Those focused on fundamentals may have shrugged off Lpath's renewed progress,
but smart money is betting on the future of this firm. One can see that
reflected in the number of instituional investors who own stock and believe in
the science here. Another strong validation of their technology comes from that
Pfizer partnership on iSONEP(TM)-- a deal valued at more than $500M.
We wouldn't ignore strong phase II results and might consider placing bets now
since prices may not stay at these levels for long.
The full report (complete with graphics and charts) on LPTN is available at:
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