Top Picks 2016: Anthera Pharmaceuticals

01/15/2016 7:00 am EST


Jay Silverman

Analyst, Medical Technology Stock Letter

With late-stage clinical trials completing for blisibimod (“b-mod”) and Sollpura, I expect that 2016 will be a monumental year for this company—my Top Pick for growth in 2016—suggests Jay Silverman, editor of The Medical Technology Stock Letter.

Anthera Pharmaceuticals (ANTH) is nearing the readout of three clinical trials, possibly one in each quarter beginning in Q2:16. For blisibimod (“b-mod”), the first trial will be look at the Phase II in IgA nephropathy (“IgAN”).

The primary endpoint is a reduction in proteinurea and that leads to kidney failure in many IgAN patients.

Since b-mod’s mechanism of action and clinical data resulted in a significant reduction in proteinurea in the PEARL studies (2012), and global regulators agreed to this single endpoint in registration trials, we expect the data will be positive.

Afterwards, the Company is likely to sign a new partnership in Japan/Asia, where the incidence of IgAN (~300,000) is three times that of the US (100,000).

In my view, interest from new partners is high and the de-risking of the program with the upcoming data should lead to a sizable partnership.

A Phase III study with b-mod to treat lupus—CHABLIS-SC1—is due to be completed by the end of Q3:16.

A positive interim look in January put b-mod back into the spotlight, and since then, enrollment accelerated and the second lupus registration trial CHABLIS-7.5 is underway.

With new data from GSK’s Benlysta (already approved) and AZN’s anifrolumab presented at the ACR in November, lupus as an biotech investment theme is back.

Evidence continues to build that ANTH’s b-mod is the best-in-class compound. Indications are that since the ACR meeting, strategic partner interest in b-mod has risen dramatically.

The Sollpura SOLUTION Phase III trial is enrolling faster than management expected. Initially enrollment rates suggest that a Q4:16 study release is likely.

Sollpura is a novel compound for EPI—enzymatic pancreatic insufficiency in cystic fibrosis patients—and has multiple advantages over current EPI therapy, a $1 billion global market.

The drug emerged in 2015 as a new ANTH compound (licensed from LLY) and has an agreement from the FDA that will approve the non-porcine version with this agreed upon single clinical trial.

The Company should also begin and possibly complete the SIMPLICITY trial in 2016, which is Sollpura in powder/sachet form and will be used for CF kids who cannot take/tolerate current pills burden. In our opinion, Sollpura is an extremely low risk/high reward compound for Anthera.

While the shares have been under pressure due to tax-loss selling and a shying away from small-cap biotechs, 2015 has been an exceptionally positive and productive year.

By the end of 2016, moreover, the metamorphosis of Anthera will continue as those catalysts approach.

With a market cap of less $200 million (and no need for cash), either b-mod or Sollpura—let alone both—can take ANTH to the next tier(s) of biotech valuations. ANTH is a buy under $10 with a target price of $25.

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