Aiming to stop cancer before it starts

Atossa Genetics 17 November 2015 QuickView

Atossa Genetics

Aiming to stop cancer before it starts

Pharma & biotech

QuickView

17 November 2015

Price

$0.62

Market cap

$19m

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Share details

Code

ATOS

Listing

NASDAQ

Shares in issue

30.4m

Business description

Seattle-based Atossa develops locally-administered therapeutics, such as afimoxifene gel, to treat precancerous breast diseases (PBD) or hyperplasia. The firm also provides proprietary laboratory tests and medical devices, which are intended to be used as companion products for diagnosing PBD.

Bull

Afimoxifene gel showed comparable site penetration to oral tamoxifen in NCI Phase II study.

Afimoxifene gel can avoid much of the systemic side effects associated with oral tamoxifen.

Certified laboratory division provides cash flows to offset R&D costs for therapeutic programmes.

Bear

Market opportunity for products aimed for cancer prevention in ADH patients less clear than treatment of confirmed malignancies.

Commercial opportunity for ductal microcatheter-delivered fulvestrant may depend on attaining a partnership with AstraZeneca.

Need for continued access to capital and funding to develop therapeutics programmes, with few clinical data milestones expected before 2017.

Analysts

Pooya Hemami

+1 646 653 7026

Christian Glennie

+44 (0)20 3077 5727

Atossa Genetics is a research client of Edison Investment Research Limited

Atossa is developing afimoxifene gel for atypical ductal hyperplasia (ADH), a condition affecting about 100,000 new US patients each year, and which leads to breast cancer within five years in 5-11% of cases (Coopey et al. 2011). A Phase II trial for intraductal fulvestrant should also start by YE15.

Advancing afimoxifene gel for ADH

ADH is the abnormal increase in the number of cells within the ducts of the breast, and is generally treated with surgery. Patients can also take selective estrogen receptor modulator (SERM) drugs, such as tamoxifen or raloxifene (Evista) orally for five years, to reduce the risk of developing cancer. However, the risks of adverse events (AEs), including blood clots and stroke, limit usage of these drugs to less than 1% of eligible patients (Waters et al. 2012). Atossa is developing a topical gel formulation of afimoxifene, the active metabolite of tamoxifen, for ADH. Licensed from Besins Healthcare, afimoxifene gel should have a lower risk of systemic AEs than oral SERMs, and may have wider appeal for cancer prevention.

Phase II afimoxifene trials planned for 2016

Afimoxifene safety has been studied in over 450 patients in Phase I and II studies, and the gel was shown in a NCI Phase II study (n=27) to have a similar effect as oral tamoxifen on Ki-67, a marker of cellular proliferation. Atossa plans to start a Phase II study in 2016, and may use its own breast aspirator devices and laboratory tests to detect ADH (less invasive than core needle biopsies, the current standard procedure). It will measure the effect on hyperplasia vs placebo.

Intraductal fulvestrant to enter Phase II

Atossa should also soon start a Phase II study (n=30) with fulvestrant, administered using the firm’s proprietary intraductal microcatheters. The trial will recruit patients with breast cancer or ductal carcinoma in situ (DCIS), who are scheduled for mastectomy, and will be compared to intramuscular (IM) fulvestrant, Fulvestrant, marketed by AstraZeneca, is approved for certain hormone receptor-positive metastatic breast cancers. Atossa aims to show that its proprietary microcatheters can provide more targeted treatment with fewer side effects than IM administration, the typical form that the drug is administered. Results are expected in mid-2017.

Valuation: EV of $10m with upside driven by data

Q315 net cash was $7.8m with a 9M15 operating cash burn rate of $10.0m. We estimate net cash should last into Q216. The firm will need capital to advance its clinical trials, which if positive, could raise interest in its cancer-prevention platform.

Consensus estimates

Year
end

Revenue
($m)

PBT
($m)

EPS
($)

DPS
($)

P/E
(x)

Yield
(%)

12/14

0.5

(14.7)

(0.61)

0.0

N/A

N/A

12/15e

8.5

(13.3)

(0.50)

0.0

N/A

N/A

Source: Bloomberg

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United Kingdom

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Wellington +64 (0)48 948 555

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New Zealand

Frankfurt +49 (0)69 78 8076 960

Schumannstrasse 34b

60325 Frankfurt

Germany

London +44 (0)20 3077 5700

280 High Holborn

London, WC1V 7EE

United Kingdom

New York +1 646 653 7026

245 Park Avenue, 39th Floor

10167, New York

US

Sydney +61 (0)2 9258 1161

Level 25, Aurora Place

88 Phillip St, Sydney

NSW 2000, Australia

Wellington +64 (0)48 948 555

Level 15, 171 Featherston St

Wellington 6011

New Zealand

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