At the start of this month, development stage biotechnology company Citius Pharmaceuticals Inc. (CTXR, Financial) provided markets with an update on its lead clinical development product – what's called Mino-Lok. A few weeks prior to the update, Citius executives took center stage at the Nasdaq MarketSite in Times Square, where Chairman Leonard Mazur rang the opening bell to celebrate a successful uplisting to the major exchange.
Given both the uplisting and the lead trial update (which we will look at in a little more detail shortly), market sentiment should be relatively positive toward this company right now. This seemingly isn’t the case. Citius currently trades for a more than 27% discount to its early September peak of $4.05 per share.
With this in mind, there may be an opportunity to pick up shares at a discount ahead of a rebalancing of valuation as and when market sentiment shifts in line with operational advance.
It's going to take a catalyst to bring about the shift so what does the company have in its pipeline that might provide said catalyst?
The answer is the above-mentioned Mino-Lok system.
When physicians want to deliver medicines, fluids, nutrients or blood products to patients over a long period of time, usually several weeks or more, they use what's called a central venous catheter (CVC). It's a long tube that's usually inserted through the skin (by way of the arm or the chest, generally) and into a large vein. The catheter can then be hooked up to a delivery method, and the patient can receive the drug, then disconnect from the delivery system but keep the CVC in place for the next time he or she needs to undergo administration of the same or a different drug.
It's less invasive than repeatedly introducing a fresh catheter into a large vein, and it saves both time and money from a health care facility perspective.
Statistics suggest that around 7 million CVCs are used annually in the U.S. in a variety of indications, including in oncology, as a pain medication administration method, as a long-term intravenous antibacterial dosing system and more.
There are a number of complications associated with CVC use, though, with perhaps the most serious being contamination and resulting infection. When patients become infected as a result of their CVC it's called a catheter-related bloodstream infection (CRBSI) and, if left untreated, it can be deadly. CRBSIs happen in around 7% of CVC patients, meaning around 500,000 patients in the U.S. alone suffer from these infections annually.
To date, the current standard of care (SOC) response to a CRBSI is to remove the catheter altogether, flush the patient with antibiotics (in the hope that the antibiotics will kill off the infection) and reintroduce a new CVC for future use. There is a problem with this, though. As many as 20% of these sorts of CRBSI-related removals cause complications, and there is an attributable cost of each complication of around $50,000.
This is where Mino-Lok comes into play.
The company has developed Mino-Lok as an alternative to CVC removal.
It's what's called an antibiotic lock solution, and it is designed to overcome the infection associated with the catheter and, in turn, negate the necessity to remove and replace the CVC in question.
If the company is successful in getting this product to market, the potential opportunity is very large – estimates put worldwide peak sales at between $500 million and $1 billion based on the risk (and cost) reduction characteristics of the asset alone.
Which brings us to the upcoming catalyst.
As mentioned, Citius gave markets an update as to where things stand with the Mino-Lok asset at the start of September. Specifically, we learned that the company had revised a Phase 3 trial design based on some recent communication with the FDA and, specifically, had decided to remove the saline and heparin placebo control arm (that was initially intended to serve as a control for the pivotal study). Instead, the Phase 3 study is now set up to use an active control arm that conforms with today's SOC, which basically means a cocktail of antibiotics.
What's the importance of this change?
The goal of the trial is to demonstrate that Mino-Lok can lead to a reduction in the necessity for CVC removal as compared to current SOC. As such, the protocol alteration (assuming the trial is successful) should serve to strengthen the data and the subsequent application for approval, as compared to any data that might have been collected based on a placebo-controlled trial.
The catalyst for this asset, then, is rooted in study completion.
Estimated primary completion is slated for June 2018, with study completion a few months later during September 2018. Top-line data should hit press before the end of the third quarter next year.
As a quick note on management, the team that's pushing these assets to market looks very strong.
The above-mentioned Mazur is a founder of numerous biotechnology companies and has served in executive management positions at Medicis Pharmaceuticals, ICN Pharmaceuticals, Knoll Pharma and Cooper Laboratories. President, CEO and Director Myron Holubiak previously served as president of Roche Laboratories Inc. Mazur has circa $10 million personally invested with his current holdings totaling 3.33 million shares.
Bottom line here is that this is a company that has a number of near-term catalysts associated with a late-stage development program in a potential billion-dollar market. With these factors taken into consideration and against a backdrop of its current market capitalization, there could be a real opportunity to benefit from a longer-term revaluation on an entry at current prices.
Here's the trial protocol for the ongoing Phase 3.
Disclosure: The author has no positions in any of the stocks mentioned in this article.
