In a Jan. 26 research note, analyst Jason Kolbert reported that Maxim Group initiated coverage on Atossa Genetics Inc. (ATOS:NASDAQ) with a Buy rating and $2 per share target price (the stock is currently trading at around $0.74 per share). "We see multiple catalysts ahead as trials begin and data emerge in 2018," he added.
Atossa is developing the drug endoxifen that "could be better" than Tamoxifen, "the most widely used drug to prevent breast cancer recurrence," Kolbert noted. Endoxifen is one of the compounds into which Tamoxifen metabolizes.
The biotech is formulating endoxifen in two ways, both of which should enter Phase 2 clinical studies this year, Kolbert explained.
One is an oral form to prevent breast cancer recurrence in Tamoxifen-refractory patients. In Phase 1, oral endoxifen showed a positive safety profile and "endoxifen levels above the 30nM therapeutic threshold," Kolbert indicated.
The second formulation is a lotion for reducing high density breast tissue, or mammographic breast density, which increases the risk of someone developing cancer or can hide existing tumors. Kolbert noted that "the latter is critical as during the early stages of breast cancer, this could prevent women from receiving available viable therapies with high cure rates."
About both the oral and topical versions of endoxifen, Kolbert explained they are "505(b)2, based on known data for safety and efficacy of tamoxifen and its metabolite endoxifen, meaning potentially accelerated timelines to approvals."
With respect to Tamoxifen, the analyst noted it has "considerable side effects which create a real risk/reward scenario given the chronic nature of the therapy." Further, "up to 50% of women" poorly metabolize the drug and, therefore, receive an inadequate endoxifen dose. This can increases the chance of recurrence.
Atossa also a working on a "microcatheter delivery system for the intraductal delivery of drugs or biologics (including chimeric antigen receptor T cells [CAR-T]) directly into the breast," Kolbert wrote. This method of getting drugs to a patient via the nipple prevents the adverse side effects associated with systemic delivery.
A related study involving the breast cancer therapeutic fulvestrant is underway in Phase 2, where intraductal delivery via microcatheter is being evaluated against intramuscular injection in patients with estrogen receptor-positive ductal carcinoma in situ and Phase 1/2 (local) invasive breast cancer. "The study will evaluate safety, drug distribution, hormone receptor expression and effect on lesion size," said Kolbert.
Also in progress is preclinical evaluation of the microcatheter system in delivering CAR-T treatment to breast cancer patients. Kolbert noted, "The rationale is to minimize side effects like cytokine release syndrome and maximize CAR-T targeting to the tumor."
As for the potential value of Atossa's stock, Kolbert concluded that the company's therapeutic "candidates are known drugs with published safety and efficacy profiles, which is derisking." While Tamoxifen and fulvestrant cumulatively "generate about $2 billion" per year, "just a small portion of the market points to upside at the current ~10 million valuation," he said. Additional upside could come from the CAR-T program, "as it could attract a partner."
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Disclosures from Maxim Group, Atossa Genetics Inc., Jan. 26, 2018
I, Jason Kolbert, attest that the views expressed in this research report accurately reflect my personal views about the subject security and issuer. Furthermore, no part of my compensation was, is, or will be directly or indirectly related to the specific recommendation or views expressed in this research report.
I, Jason McCarthy, Ph.D., attest that the views expressed in this research report accurately reflect my personal views about the subject security and issuer. Furthermore, no part of my compensation was, is, or will be directly or indirectly related to the specific recommendation or views expressed in this research report.
The research analyst(s) primarily responsible for the preparation of this research report have received compensation based upon various factors, including the firm's total revenues, a portion of which is generated by investment banking activities.
Maxim Group makes a market in Atossa Genetics Inc.
Maxim Group managed/co-managed/acted as placement agent for an offering of the securities for Atossa Genetics Inc. in the past 12 months.
Maxim Group received compensation for investment banking services from Atossa Genetics Inc. in the past 12 months.
Maxim Group expects to receive or intends to seek compensation for investment banking services from Atossa Genetics Inc. in the next 3 months.