The Catalyst Effect - Sophiris Bio, Inc. (NASDAQ: SPHS)

November 1 2015

In search of a cure for BPH: Sophiris Bio (NASDAQ: SPHS)

Sophiris Bio, Inc. (NASDAQ: SPHS) is a clinical-stage bio pharmaceutical company that focuses on the development of products for the treatment of urological diseases. The company is currently developing a designer drug, PRX302, for the treatment of the urological disorder known as benign prostatic hyperplasia (BPH, or enlarged prostate) as well as localized low- to intermediate-risk prostate cancer.

Preliminary clinical results show that PRX302 offers a safe, simple, effective and convenient approach for the treatment of BPH and prostate cancer. Urologists can administer PRX302 in a single office-based procedure that involves ultrasound-guided injection to the affected prostate tissue. This makes PRX302 an alternative to other approaches that target PBH and prostate cancer, such as oral drugs and Minimally Invasive Surgical Techniques (MISTS) or Trans-Urethral Resection of the Prostate (TURP).

PRX302 is currently in Phase 3 clinical trials for its treatment of symptoms of BPH. PRX302 is also in Phase 2a proof-of-concept testing for the treatment of localized low- to intermediate-risk prostate cancer. Sophiris Bio began enrolling patients in this study in the first half of 2015.

Since PRX302 still has not received FDA approval, there is the usual uncertainty about the future direction of the company expected with any clinical-stage biopharmaceutical company. For the three-month period ended June 30, 2015, the company posted a net loss of $3.7 million as a result of $2.6 million in R&D expenses and $1 million in general & administrative expenses.

Throughout the first 10 months of 2015, the company’s stock price has mostly traded at or below the $1 mark. Over a 52-week period, the low was $0.42 and the high was $3.23. In December 2014, the company’s stock lost nearly 80 percent of its value after interim results for PRX302 were not as promising as hoped. As of the close of trading on October 30, 2015 the company’s stock price stood at $0.74, giving the company a total market capitalization of $12.47 million.

Analyst expectations about future stock price performance are based on the ability of PRX302 to successfully complete Phase 3 clinical trials. A key milestone will occur by the end of 2015, when Sophiris Bio will receive 12-month data for its first Phase 3 study.

According to preliminary data, PRX302 offers a potential targeted treatment solution for urologists to treat BPH. In completed Phase 2b clinical trials, Sophiris Bio reported clinically meaningful improvement of symptoms of moderate to severe BPH, as well as efficacy through 12 months after a single treatment. In completed clinical trials, there have been no reported serious drug-related complications, such as sexual dysfunction or cardiovascular side effects.

What makes PRX302 different from other competitors on the market is its localized, targeted solution to addressing urological disorders. Unlike MISTS or TURP, PRX302 can be completed in a simple, short office-based procedure. Moreover, unlike orally administered drugs, PRX302 shows rates of higher efficacy without the risk of patient dropout over the course of treatment or the risk of side effects.

Going forward, PRX302 could help address the needs of a large, growing market with a significant unmet medical need. BPH currently affects 70 percent of men over age 60, with 36 million men estimated to be affected. Of these 36 million, only 3.2 million are being treated, offering a clear market opportunity for Sophiris Bio.

Given this broad market opportunity and the upcoming results of the company’s Phase 3 clinical trial (which we believe will be favorable for the company), there exists significant upside potential for the stock to rise above the $1 mark.

SPHS is currently undervalued and is a BUY at current price levels.

Salman Aziz

The Catalyst Effect - RXi Pharma - Article by Salman Aziz.

RXi Pharmaceuticals Corporation RXII

RXi Pharmaceuticals Corporation (NASDAQ:RXII) is a publically traded pharmaceutical company that focuses on developing and exploring innovative solutions for unmet medical needs, especially in the areas of dermatology and ophthalmology. RXi's robust product line as well as extensive patent portfolio offers business development opportunities across a diverse spectrum.

The company's primary therapeutic product is RXI-109 that helps reduce dermal scarring in planned surgeries. The company was established on September 8, 2011 with headquarter located in Westborough, MA.

Financial Performance

RXI Pharmaceutical stock share prices have been on a continuous decline since March this year. The share prices of the biotechnology company have decreased by 80% this year with a few rallies. The companies Q3 reports showed a net loss of $2.2 million or $0.17 per share. The actual earning of the company, which actually beat investors estimate by $0.05 per share, does not matter much as the company is in the expansionary stage.

RXI's earnings growth last year stayed in the green zone and increased by 72.57%. This year also the earnings of the Pharmaceutical company had increased with a gain of around 72.78%.

The company's price/revenue in fact is a healthy 507.42. Market cap of the company is 32.47 million while the outstanding shares amount to 64.95 million. Considering that the company is in the growth stage with heavy investments, its EPS is not that bad, and at present stands at -0.45.

The company spent $1.5 million dollar this quarter as compared to $1.2 million in research and development. Most of the spending has gone towards pre-clinical ophthalmology studies for research in new drug application. General and administrative expenses of the company have declined this quarter from $0.8 million from $0.9 million a year ago. The average to high cash burn estimate was $2.5 million a quarter, which shows that the company has sufficient cash to last them through Q4 this year. The burn rate of $2.5 million per quarter total $14.8 million in cash at hand and another 27.4 million if all the warrants are exercised.

Upcoming Catalysts

There are several upcoming potential catalysts that could increase the share price of the company. The company is going to be filing an IND for RXI-109, a drug that prevents retinal scarring due to macular degeneration. At the present, there are many biotech companies that are working on the same drug, but none of them are effective in combating scarring that occurs due to the disease.

For instance, the Regeneron Pharmaceuticals' (NASDAQ:REGN)'s Eylea is macular degeneration drug that uses anti-VEGF compound to slow macular degeneration and amount of vision loss. However, anti-VEGF drugs are not effective against scarring of the blood vessels that occurs due to the disease.

Moreover, another catalyst for the company could be partnership CNS (Central Nervous System) partnership mentioned by the CEO of the company. A partnership in this field will boost revenues of the company by validating the sd-rxRNA platform. The potential of the partnership is similar to the Mirimmune deal RXi had made back in March this year.

The final catalyst that would boost revenues of the company include results from the phase 2a scar trials. At the moment two phase 2a scar trials and one phase 2a keloid trial is in the process. The results of the trials have the potential to offer superior scar treatment due to macular degeneration.

Recently the company had announced exclusive global licensing agreement with Hapten 

Pharmaceuticals LLC to acquire its product Samcyprone. Under the license agreement, the company will assign to RXi patent rights relating to the drug that is used as a topical treatment of dermatological diseases. It had also announced completion of the RXI-109-1301 study, as well as positive results of RXI-109 at three months post scar treatment surgery. These moves are expected to greatly boost revenues of the company. 

Final Remarks!

RXI PHARMACEUTICALS CORP (RXII) is an undervalued biotech company that keeps building its pipeline for future growth. Although, the stock prices have generally shown a downward trend since March, this year, we think that this particular stock will rise from the ashes and go beyond (or at least retain) its former price point.

I maintain that the stock price of the company this year could reach $3.5, and that it will remain an attractive option as long as the share price is under $1.5. The conclusion is based on favorable investment measures that will drive up its revenues, profits that will have a positive impact on its stock prices.

Salman Aziz

The Catalyst Effect - RXII should be a big mover in October...

Profile: RXi Pharmaceuticals Corporation (NASDAQ:RXII)

RXi Pharmaceuticals Corporation (NASDAQ: RXII) is a biotechnology based company that has evolved from a platform RNAi company. Core areas of focus are ophthalmology and dermatology in which the company is motivated to expedite development of innovative therapeutics in order to cater high-ummet medical requirements. Revolving to a product based company had been a great challenge for RXi and RXI-109, a novel ‘self-delivering’ RNAi (sd-rxRNA®) compound, has been honored being a first offering of the company as a product.

Great efficacy of the drugs manufactured by RXi has been recorded. For instance in the clinical trials, RXI-109 compound and Samcyprone™ gel have shown great improvement in the patients  who were chronically suffering from warts, surgery marks, hypertrophic scars, keloids, and Alopecia Areata. Upcoming innovations and discoveries are expected to bring a terrific revolution in the field of dermatology. The drugs are intended to bring revolution by offering research contributions for tissue repair and cell generation to cure chronic dermatological damages.

The company has great opportunities of growth even outside the fields of dermatology and ophthalmology by utilizing the scope of RXI-109 compound. Because of tremendous efficacy and flexible portfolio, the company is being expected to grow by leaps and bounds.

On results of second quarter, 2015, Mr. Geert Cauwenbergh (CEO, RXi Pharmaceuticals) signaled upcoming growth and provided positive insights to the shareholders. His speech left a favorable impact on share holders since the share price increased immediately after the CEO delivered the Q2 results speech. He shared seven core initiatives for upcoming year in order to maximize shareholder’s value. He kept emphasizing over shareholder’s value all along. Year to Date (YDT) trading volume as an average of percentage of outstanding shares is 5.17% however the same indicator for one month (on an average) is 4.42%. They remained pretty successful in winning shareholders’ trust by offering dividends for common shareholders at the end of second quarter. The company has a huge potential for buoyant growth.