Heat Biologics boosts patents portfolio with gp96 combination award

Heat Biologics Inc. (HTBX) reported the award of a new US patent covering compositions of matter that are part of the company’s gp96 platform in combination with Inducible T cell Co-stimulator ligand in a single therapy. The new patent is expected to help the company in designing therapies for boosting immunity and develop tumor treatments where current therapies fail.

Heat Biologics stated that the new patent may be pivotal in introducing immunogenic viral antigens through gp96. It also has the ability to induce innate immunity in conjunction with enhancing cellular immunity through killer CD8+ T. This mechanism may prove to be pivotal in treating both SARS-CoV-2 infected cells or tumor cells.

The data collated from preclinical studies shows that Heat’s potential COVID-19 vaccine may have the capacity to produce lung tissue-resident memory CD8+ T cells. These cells have been found to be instrumental in killing SARS-CoV-2 infected cells. This alternative mechanism of treating COVID-19 is particularly important for developing treatment for immunocompromised patient populations.

The combination of gp96 with a T cell co-stimulator is likely to have significant impact in the fields of oncology as well as in viral infections. Jeff Wolf, Chief Executive Officer of Heat said, “We believe our novel single therapy combination approach that initiates local and specific T cell activation provides competitive advantages over conventional antibody therapies by limiting systemic toxicity and lowering the significant cost required when combining multiple biological therapies.”

Heat Biologics is currently testing the combination of gp96 with local OX40L, a T cell costimulatory agonist, in a Phase 1 trial. Preclinical studies have shown that the local administration of the combination may produce superior activity in comparison to the IV infusion of gp96 with conventional OX40 antibody. The company is also testing a gp96-based COVID-19 vaccine.

Heat Biologics has robust development portfolio with various product candidates based off its gp96 platform. Some of the most prominent drug candidates are HS-110, HS-130 and PTX-35. HS-110 is currently undergoing a Phase 2 trial and the company has completed recruitment for the study. HS-130 is in Phase 1 and is designed to deliver localized OX40-mediated co-stimulation for boosting T-cell activation.

Its PTX-35 has the potential to become first of its kind T cell co-stimulator aiming TNFRSF25. It mainly focuses on developing immunotherapy for cancers. It has shown favorable safety profile in non-human primates and mice.

Analysis: Heat Biologics’ gp96 platform aims to address the allogeneic, “off-the-shelf” immunotherapies. Lead candidate is targeting the global NSCLC market worth over $16 billion in 2018 that is expected to be nearly $44 billion by 2026. The stock saw a low of $0.20 and touched a high of $4.30 in the past 52 weeks. Presently it is trading at $1.20 putting the market capitalization at $178.27 million. The public with nearly 85% shares are the major investors, while institutions and insiders hold 12.09% and 3.25% shares respectively. Wall Street analysts are very bullish on the company with an average rating of 4.75/5 and a price target of $4.30. In the TTM, the company’s cash burn was $12 million towards revenue costs and $9.3 million towards operating expenses. Revenue estimates for 2020 and 2021 are $2.35 million and $2.34 million respectively. The company has a cash balance of $46.98 million and a small debt of $1.95 million.

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Investment Thesis: While the company has strong development portfolio, its upcoming catalysts will likely stem from its COVID-19 program. Heat’s unique approach to treat COVID-19 sets it apart from its peers.

Teleflex announces acquisition of hemostatic company Z-Medica

Teleflex Inc. (TFX) announced its acquisition of privately held hemostatic company Z-Medica. The transaction has been duly approved by the Boards of Directors of both the companies. Z-Medica holds a niche position in hemostatic technologies market with its emphasis on developing hemorrhage control solutions.

The terms of the agreement provide for the upfront cash payment of $500 million to Z-Medica. There is also a provision for the payment of additional $25 million upon the accomplishment of certain milestones. Teleflex plans to fund the acquisition through borrowings under its revolving credit facility. It is expected that the acquisition will contribute between $60 to $70 million in revenue in fiscal year 2021. It is also expected to be accretive to adjusted EPS by $0.07 to $0.15 during the same time period.

Z-Medica is a leading medical device manufacturer. The company mainly supplies its products to hospitals, law enforcement agencies, militaries and consumers. Its main product lines are QuikClot®, Combat Gauze® and QuikClot Control+®. The company uses its proprietary technology consisting of gauze impregnated with kaolin for developing these products. This technology boosts the body’s natural clotting abilities.

Teleflex stated that the acquisition is in line with its strategy of investing in assets which may help in improving clinical efficacy and patient safety. Liam Kelly, Chairman, President and Chief Executive Officer said, “The acquisition of Z-Medica, an industry leading provider of hemostatic devices, enables Teleflex to leverage strength in the hospital, EMS, and military call points, with differentiated products that complement the EZ-IO and EZPLAZ 1 product portfolio.”

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Both the companies expect the transaction to be completed in the fourth quarter of 2020.

Analysis: Teleflex is a revenue generating, $14.82 billion company paying a constant annual dividend of $1.36 per share over the last 10 fiscals. At a high price of $318.23, the stock is still midway of its 52 week range of $221.27 to $409.27. Wall Street analysts target a price of $391 on a bullish sentiment with an average score of 4.16/5. Institutions hold 93.77% of the stock while the public holds 5.92%. The company earned revenue of $2.6 billion in fiscal 2019, while estimates for 2020 and 2021 are $2.51 billion and $2.85 billion respectively. Teleflex spent $1.097 billion towards revenue cost and $968.3 million towards operating expenses in the TTM. The company has a debt burden of $2.5 billion, and a cash balance of 575.19 million. The acquisition of Z-Medica is expected to contribute between $60 million to $70 million revenue in 2021, and a high single digit revenue growth beyond 2021.

Investment Thesis: The company stock has remained leveled during the past one year. Its latest earnings announcement also turned out to be mixed. However, the new acquisition may provide some fuel to the stock price movement.

Aerie Pharmaceuticals begins Phase 2b dry eye diseases clinical trial

Aerie Pharmaceuticals Inc. (AERI) announced the commencement of a Phase 2b clinical trial of AR-15512 ophthalmic solution for the treatment of patients with dry eye disease. The study is expected to enroll nearly 360 patients. The company expects the topline data from the trial to be available in the third quarter of 2021.

The COMET-1 trial is a randomized, double-masked, vehicle-controlled trial. It is designed to assess the efficacy and safety of AR-15512 in patients with dry eye disease. Vicente Anido, Jr., Ph.D. of Aerie said, “By activating the TRPM8 receptor, AR-15512 may stimulate tear production as well as reduce ocular discomfort through a mild cooling sensation.”

The patients in the trial will be randomized to be given AR-15512 0.0014%, AR-15512 0.003% or AR-15512 vehicle. These will be administered as one drop twice daily in each eye over three months. The primary efficacy endpoints of the study are ocular discomfort (symptom) and tear production (sign). The participants are to be assessed at days 14, 28 and 84.

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AR-15512 was formerly known as AVX-012. The asset was acquired by Aerie through its acquisition of Avizorex Pharma in November 2019. Aerie is an ophthalmic pharmaceutical company and mainly invests in developing therapies for open-angle glaucoma, ocular surface diseases and retinal diseases. The company has robust marketing as well as development portfolio. Some of its most prominent products are Rhopressa and Rocklatan.

Analysis: Aerie’s candidate will look for a share in the global dry eye disease market that’s set to cross $6.17 billion by 2024, growing at a CAGR of 5.23%, from over $4.5 billion in 2018. The company has a market capitalization of $493.52 million on a stock price of $10.61, which is near low in a 52 week range of $9.01 to $26.26. Wall Street analysts put a price target of $27.67 with a bullish average score of 4.38/5. Institutions hold 98.16% of the 55.36 million shares, with the rest held by insiders. Aerie has a cash balance of $241.92 million, and a debt burden of $214.97 million. In the TTM, cash burn was $229.5 million on operating expenses and revenue costs of $31.9 million. The company’s revenue in fiscal 2019 was $69.89 million, while estimates for 2020 and 2021 are $80.41 million and $125.46 million respectively.

Investment Thesis: The stock price has been on downward trajectory but may be taken up by long investors at the current price point. Aerie has recently entered into new collaborations with prominent pharmaceutical companies.

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