Additional Patients Treated Under Expanded Access Protocol
AmpliPhi Biosciences Corp. (NYSE:APHB) is developing bacteriophage therapeutics for the treatment of bacterial infections. AmpliPhi’s strategy is to use single patient expanded access protocols to derive real-world data using phage therapies in patients suffering from severe, multidrug-resistant (MDR) infections. In addition to offering hope to patients that have exhausted all treatment options, clinical data derived from single patient expanded access cases will help to support the utility of phage therapy when the company engages the U.S. Food and Drug Administration (FDA) in discussions for a regulatory path forward for approval of phage therapies.
• The company is looking for patients in areas of high unmet medical need, for instance in patients with prosthetic joint replacements, bacteremia, endocarditis, complicated urinary tract infections, and lung infections (including patients with cystic fibrosis).
• AmpliPhi is hoping to collect data from approximately 10-30 patients (they are on track to treat 10 patients by the end of 2017), and the hope is that within that group of patients there will be smaller groups of 4-5 patients with similar conditions (e.g., infected joint prosthetic), thus enabling the company to design Phase 2 trials for those conditions, which may or may not end up being pivotal trials. We estimate the company could finish collecting data from a sufficient number of patients during the first half of 2018.
• The initial focus will be on patients with infections caused by Staphylococcus aureus (to be treated with AB-SA01) and Pseudomonas aeruginosa (to be treated with AB-PA01), since those are the most advanced products in the company’s pipeline, and there is already an IND in place for AB-SA01.
• The company is still determining the best way to disseminate data on the single patient expanded access cases as it becomes available, and will be working closely with each institution to be sure the information that is publicly released is accurate and timely. We believe scientific meetings are the most likely venues for presenting data on the various patients that are treated, however we would not be surprised to see a few press releases over the next 6 months detailing a few of the cases, such as the case discussed below.
During the third quarter 2017 conference call, management provided an update on the expanded access protocol program. Thus far, a total of six patients have been dosed at two teaching hospitals, one in the U.S. and one in Australia. Three patients have been dosed with AB-PA01 and three patients with AB-SA01. All of the patients fit into one of the categories discussed in the first bullet point above.
For all of the six cases, patients received multiple doses of therapy and the company is “strongly encouraged” with the results, including good tolerability. The company is very limited in what information can be discussed for each case as the medical teams treating the patients would like to submit the detailed results for presentation at future medical conferences.
The goal is to treat a total of 10 patients by the end of 2017 and then an additional 20 critically ill patients in the first half of 2018. Based on the clinical and microbiological data collected, the company then plans to select lead indications for further clinical development following consultation with the FDA and other regulatory agencies. We anticipate the company providing further updates on lead indications in the first half of 2018.
The FDA has already expressed a willingness to work with AmpliPhi to help design a regulatory path for phage therapies. Thus, we believe at least one Phase 2 trial (which could even be a pivotal trial) could get underway before the end of 2018.
On the call, Chief Operating Officer Igor Bilinsky gave bacteremia caused by S. aureus as an example of an indication with a large unmet medical need that could be helped by phage therapy. There are approximately 150,000 cases each year with approximately 20% of cases being lethal. The increasing incidence of antibiotic resistance is resulting in a rise in difficult to treat bacteremia cases and points to an urgent need for novel therapies that are differentiated from traditional antibiotics.
On November 14, 2017, AmpliPhi announced financial results for the third quarter of 2017. The company reported $38,000 in revenue from the former gene therapy program. We anticipate this revenue to be insignificant in future quarters. The company reported a net loss of $0.8 million, or $0.09 per share. In September 2017, the company received a tax incentive payment of approximately $2.0 million from the Australian tax authority, which was recorded as an offset to R&D expenses in the third quarter of 2017 resulting in a net benefit of $0.8 million. Excluding this benefit, R&D expenses for the third quarter of 2017 were $1.2 million, compared to $1.7 million for the third quarter of 2016. The decrease was primarily due to a decrease in professional and consulting fees as well as decreased clinical expenses. G&A expenses were $1.6 million for the third quarter of 2017 compared to $1.8 million for the third quarter of 2016. The decrease was primarily attributable to a a decrease in legal fees and non-cash stock-based compensation.
The company exited the third quarter of 2017 with approximately $7.7 million in cash and cash equivalents. We estimate that the company has sufficient capital to fund operations through the second quarter of 2018.
As of November 8, 2017, the company had approximately 9.5 million shares outstanding. When factoring in options and reasonably priced warrants (8.0 million at $1.50 and 0.5 million at $0.57), the company has a fully diluted share count of 19.1 million.
AmpliPhi’s new strategic focus appears to be an intriguing way to get phage therapies to patients sooner and we will be very interested to hear updates on the most recent cases disclosed by the company. It is encouraging that the FDA understands the unique situation that phage therapies are in from a regulatory standpoint, and it will be vital for the FDA to be willing to work with the company since the traditional means of product approval are not likely to be applicable to phage therapies.
We have adjusted our discounted cash flow model based on the company’s new strategic focus. The timelines for AB-SA01 and AB-PA01 in the treatment of chronic rhinosinusitis and cystic fibrosis have been extended and we have added the use of AB-SA01 and AB-PA01 to treat resistant hospital acquired infections, which total approximately 72,000 for S. aureus and 7,000 for P. aeruginosa (CDC). Based on the data from the CDC, we estimate there are currently approximately 18,000 infections from those two pathogens that could be targeted for individualized phage therapies in the U.S. (all potential fatal cases and 10% of non-fatal but potentially life-threatening cases). We estimate that AmpliPhi could achieve regulatory approval in 2021, and with an estimated $8,000 cost per treatment, we believe the company could achieve peak sales of $60 million from targeting just S. aureus and P. aeruginosa. Using a 20% discount rate and a 50% probability of approval leads to an NPV of $54 million. Combined with the values assigned for the treatment of chronic rhinosinusits and cystic fibrosis, expected additional capital requirements of $25 million, and dividing by the reasonable fully diluted share count of 19.1 million leads to a valuation of approximately $3.50 per share.
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