Im back in blog form for Motif Bio. It strikes me as a lot will have heard of Motif and know its meant to have a high "chance of success" but get put off by the science and numbers. Not understanding it how can you invest in it? So here is the layman's blog to MTFB and why i think it represents incredible value.
A new drugs journey
Generally a new drug undergoes an increasingly complex set of trials. Phase 1-3. Phase 3 is in humans and usually against the current best drug for the condition. Once Phase 3 is passed then you can submit your drug for a license to say the US FDA (Food and Drug Administration) for them to give all your evidence the once over and pass it.
Iclaprim is the drug in question here. It is a new antibiotic for ASSSI = basically nasty skin infections caused by MRSA etc.
It went through Phase 1 and 2 well then onto the final phase around 10 years ago. The company who owned Iclaprim at the time set out to show it had cure rates at day 14 similar to that of one of the 2 "Standard of care" antibiotics for this condition, Linezolid. They wanted to show it was non-inferior, within 12.5% cure rates at 14 days. So if Linezolid cured 80%, Iclaprim could cure 67.5% or better. They did this. They got within 3-4% of Linezolid! Happy days then. They submitted this to the FDA. The FDA weren't impressed however. They had decided that cure rates at day 14 wasn't the best measure for the infections. They were more interested in how much the redness and fever had been reduced within 48-72 hours. The company looked over the data and pulled out this info the FDA wanted and even better! Iclaprim was 1-2% better than Linezolid at this new end point. But...
As this wasn't the reason the trial was set up, they didn't have enough patients in the study to prove this with a tight enough confidence, they needed more patients. The FDA suggested a new phase 3 trial to prove it up but the company was now skint.
The FDA did this to 4 antibiotics over a couple of years. 3 are now drugs. Iclaprim is the last one to go thought the additional tests.
Motif Bio's journey
Motif acquired Iclaprim and worked closely with the FDA to design a Phase 3 study they wanted and would prove any end point they were interested in. The FDA invited Motif to please complete the studies! They want this antibiotic developed as much as anyone.
In July 2015, the U.S. Food and Drug Administration, or FDA, designated the IV formulation of iclaprim as a Qualified Infectious Disease Product (QIDP) for ABSSSI and HABP. QIDP status grants iclaprim regulatory Fast Track designation, Priority Review and, if approved, a five-year extension to the statutory market exclusivity period in the United States, resulting in 10 years of market exclusivity from the date of approval
MTFB decided to compare Iclaprim to the second "Standard of Care" antibiotic called Vancomycin. Their primary goal is to see how much the redness reduces in 48-72hrs vs Vanc. They need to be within 10% to show its non-inferior. So if Vanc makes 84% reduce in size then for the trial to be successful, Iclaprim needs 74%+ to reduce in size.
So why is this such a good bet on the science side of things.
1) Iclaprim has already shown it is superior to Linezolid at this test, in Phase 3.
2) Linezolid is better at fighting these type of infections than Vanc, in all comparisons it is better
3) In the last 10 years Vanc is having increasing resistance worries so its not as effective as it was 10 years ago
4) Iclaprim kills these bugs twice as fast as Vanc in the lab
5) Safety is important. There have been no Serious Adverse Events that could make it too dangerous. Vanc dosing is difficult in sick people with kidney disease whereas Iclaprim is safe.
6) Here is the kicker folks...
Since the Phase 3 trial vs Linezolid, Motif have gone over all the data and adjusted the dose of Iclaprim given. This has resulted in a 30% increase in efficacy (potency)!
7) All this means you can be 85-90%+ happy that the results will be good. I rate it 90%+
Why is it such a good bet vs Peers
Motif is listen on the Nasdaq. The closest peers to Motif, who have antibiotics in late phase 3, are x5 or more the Mcap. Companies who have just had good Phase 3 readouts are over x10 the mcap. There is a massive value disconnect anyway just at the current SP pre results. FINNCAP target is 125p
If this was a purely Nasdaq listed stock it would be over 100p right now and go to 200p+ on results. Alas they cocked up the Nasdaq IPO slightly so i'll settle for 50p pre results and 150p after.
When is it all happening?
The usual timescale for results is 2-3 months from "Last person out". This happened in late Jan 2017 so we are right in the window now. Motif have officially said Q2 2017 but it will be in the first half of Q2 so within the next 4 weeks and any time from tuesday onwards!
Clearly if something has happened in the trial, if somehow it fails the trail then you are looking at loosing 50% or more. I think there is a 10% chance of this.