Last week Bioasis Technologies Inc. (BTI:TSX.V) heard back from the FDA on written questions they had submitted. These questions concern their lead investigational candidate xB3-001 and its development path. The company's goal, of course, is to bring this therapeutic into clinical development and human testing through the IND (Investigational New Drug application) process. Engagement with the FDA is a key step in that process, as the agency will opine on the suggested development pathway and provide key feedback to the program's design.
It's important from the company's perspective to take the feedback from the FDA very literally. If you want their eventual approval, it pays to follow their guidance. Equally important is the way the company relays its FDA interactions to the investment community. Investors want to know what's going on, but the FDA really doesn't want its comments shared with the world, nor for a company to imply that the FDA is providing anything resembling endorsement of a yet-to-be-approved product.
The result of this is typically a very bland press release discussing the fact that the FDA has looked at their program. Bioasis is a classic example of this where, in their PR, they state, "We are pleased to have completed the pre-IND process, with the FDA providing helpful guidance for the continued advancement of xB3-001. . .We appreciate the FDA's feedback as we endeavor to treat HER2+ brain metastases utilizing our innovative and robust blood-brain-barrier technology."
All of which tells us, basically, nothing. However, in a call with Bioasis'CEO Dr. Deborah Rathjen, I got the opportunity to glean some additional insight into the FDA interactions and their meaning for the company, along with additional information about the current focus of the company; the conversation we had was full of what I would describe as very positive news.
Regarding the FDA communications, Dr. Rathjen was very pleased with the results. Her comments could be summed up as saying that they couldn't have asked for a better result. The FDA gave feedback and suggestions on course of action, but, overall, they basically had no issues with the clinical pathway that Bioasis is pursuing. This is evident in the fact that the development timeline hasn't changed as a result of the meeting. The company is still hopeful to have an approved IND and to be performing first-in-human trials sometime next summer. Trust me when I say that, if they can achieve this, we will likely be looking at a market cap that is substantially higher than today's $18 million.
However, here's the bad news. To get through an IND process that is going to last about a year, this company is going to need more money. The recent financing provided them with some breathing room, but not for nearly long enough. This has been the constant Achilles heel for Bioasis. How can the stock get going when there's another financing lurking?
In this regards, Dr. Rathjen seemed more confident and upbeat than ever. The ability of the xB3 platform to work in multiple potential applications gives the company many potential licensing opportunities. In particular, Dr. Rathjen spoke about how they have revised their licensing strategy and how their recent attendance of BIO has generated significant opportunities. Maybe the absolute highlight of our call was when she discussed how the excitement around xB3 has led to a competitive licensing situation with many (eight?) potential partners competing for indications. Obviously a license with a big upfront payment is the best kind of financing. While there are no promises of this happening, the impression I got was that investors might be hearing some good news along this avenue in the future.
This certainly makes sense for two reasons. First, the company needs more money. If there weren't any interested parties circling for licensing opportunities, I doubt Dr. Rathjen would have invested personally in the last round. Instead, she'd likely be on the road positioning for more cash.
Second—and isn't this the most important piece of the puzzle—Dr. Rathjen tells me that she's continually impressed that the technology and the science is exceeding her expectations. Without a successful platform technology, we have nothing. Her excitement and enthusiasm with the work being done is palpable and provides me with confidence.
Bioasis has struggled mightily in the past couple of years. The lack of funding and turmoil in leadership has been tough on all investors. In Dr. Rathjen, we appear to have a calm, intelligent and thoughtful leader. The company is taking the right steps to bringing a potential blockbuster to market. The communication strategy under this CEO is much less promotional, but the work being done is more rational and productive. After getting this most recent update on their FDA correspondence, the licensing opportunities and the state of the technology, I am certain that the risk/reward of Bioasis stock is more compelling than ever.
Daniel Carlson is the founder and managing member of Tailwinds Research Group and its parent company DFC Advisory Services, which is a licensed registered investment advisor (CRD # 297209). Tailwinds is a microcap focused research company that provides research on and consults to over 20 emerging growth companies in the technology and life sciences arenas. DFC Advisory Services is an RIA that manages money dedicated to investing in the companies covered by Tailwinds. For more information on these two companies and their track record, please click here. Prior to founding these two entities, Dan spent many years working with small public companies, having been CFO of two public companies and helping finance many others. A 1989 graduate from Tufts University with a degree in Economics, Dan’s formative years in business were spent as an equity trader, first on the Pacific Coast Stock Exchange then on the buyside at several multi-billion dollar firms.
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