For all those ready for the pandemic to be over, Todos Medical (TOMDF:OTCQB) announced some game-changing news last week. The stock has been slow to react to the news that in a phase 2 clinical study, Tollovir, an oral antiviral, showed a 100% reduction in mortality over the standard of care (SOC) which included the Gilead Sciences Inc. (GILD:NASDAQ) antiviral, remdesivir.
A 30% improvement over the SOC is typically the threshold of an approvable drug, so the muted market reaction could have been based on the low sample size, but meta-analysis reveals a very exciting and consistent find. Tollovir is the first drug in the hospitalized setting that has the potential to truly take dying off the table.
Meta-Analysis of Tollovir in Hospitalized Patients: Unprecedented Efficacy
A meta-analysis of both Tollovir trials — both of which had similar results — shows that the drug likely had a profound effect on patient recoveries, from eliminating death to shortening hospital stays. Todos released the results of an observational study a few months ago showing a complete reduction in death as well as a reduction in hospitalization duration and inflammatory markers. There was some question as to whether these results were biased as it was not a placebo controlled trial, and the observational arm patients were chosen to match the baseline characteristics of the patients who took the 3CL protease inhibitor.
However, about a week ago, Todos released results from a placebo-controlled study, their phase 2 study, that confirmed the efficacy seen in the observational study. The phase 2 study showed that Tollovir reduced COVID-19 related deaths to zero in the treated group, yet again. And consistent with the prior study, Tollovir showed a drastic reduction in inflammatory markers and hospital stays.
Pooling the results, there were 24.1% deaths in the placebo group and an additional 17.2% of patients who didn’t die but still deteriorated in clinical condition, requiring a ventilator before recovering. On the contrary, no Tollovir-treated patients deteriorated to ventilation and recovered, or died as a result of COVID-19.
While the sample size is still relatively small, the magnitude of effect observed could not be better, and short of a large-scale clinical trial confirming these results, Tollovir has blockbuster potential.
Tollovir Versus the Standard of Care With Remdesivir
Remdesivir is the first and only antiviral to receive full regulatory approval in COVID-19. Remdesevir tallied $5.6 billion in sales last year, but more importantly became the standard of care. Although clinicians blindly use it because there are no other drugs in the hospitalized setting, many with liver and kidney issues are precluded from taking it still because there remain issues of toxicity.
There is also a body of evidence from the Solidarity Trial that suggests that it doesn’t work. From a mechanism of action (MOA) point of view, the antiviral remdesivir should have little effect in the cytokine storm phase of the disease because it has no anti-cytokine activity. There is evidence that the active virus can persist for up to 83 days according to a Lancet meta-analysis, which gives weak credence to using an antiviral even in hospitalized patients.
Lowering the time of hospitalization was the basis for the approval of remdesivir because it did not show a reduction in viral load. Tollovir in comparison reduces the time of hospitalization and potentially eliminates death.
Investors should really pay attention to the mortality benefit.
“We’re the only oral antiviral, to my knowledge, on the planet that has shown positive data in a hospitalized setting in COVID-19.”
— Gerald Commissiong, Emerging Growth Special Investor Conference
Manufacturing Insight for EUA Submission
One of the criteria that any drug company needs to satisfy for an EUA is the ability to meet expected demand. The CEO of Todos said “We definitely don't have all the infrastructure in place to meet the demand we expect for Tollovir, but we are putting it in place and have been doing so for quite some time.”
He referenced Todos’ current capability in producing the commercially available nutraceutical Tollovid, which he characterized as very similar to Tollovir. Currently they are manufacturing Tollovid in a cGMP facility that also has the authorization to make botanical drugs.
This gives them the flexibility to quickly ramp up manufacturing capacity should they need it.
He said in the interview that TOMDF can definitely meet the demand in hospitalized patients, and, if stretched, the patient population that is looking to stay out of the hospital. If they also pursued the indications for Long Covid or pediatrics, they admitted they would be stretched and need to do some prioritization.
One of the theories behind the cause of Long Covid is persistent reservoirs of the virus in certain tissues.
Pricing and Market Opportunity, U.S.
Figuring out the cost of a hospitalized patient during this pandemic has been a moving target. Moreover, it varies from state to state and from variant to variant and even varies with the type of hospitalization.
One of the most comprehensive reports seems to be Becker's Hospital CFO Report completed in October 2021 before the Omicron variant spiked. Depending on the state, non-complex hospitalizations ranged from $31K to $111K, and the complex hospitalizations ranged from $216K to $472K.
CNN summarized some figures that help investors get a ballpark idea on how big the savings could be. Using the meta-analysis data, a reduction of six days in non-complicated hospitalizations would equal $131K cost saving.
If investors just looked at the saving of reducing the most recent peak in hospitalization, which reached 150,000 hospitalized, it would have resulted in a saving of $19.65 billion.
Healthcare payers should be quick to endorse this treatment.
To illustrate the sheer magnitude of potential sales, assume TOMDF simply matched remdesivir’s price of $3,120 and treated just one week’s worth of patients during the Omicron surge it would have resulted in $468 million of TOMDF revenue for the week.
The overall cost of COVID-19 hospitalization is decreasing so the total benefit may be slightly overstated in this example, but the cost-to-benefit ratio is so high that it cannot be overlooked. The company hasn’t given any guidance on pricing so reasonable estimates like the current cost of remdesivir were used to calculate the revenues.
Tollovir Approval Pathway
TOMDF has completed 2 clinical trials in Israel. It's logical based on this compelling data that they will move forward with an EUA application in Israel and Greece. One notable zealot for Tollovir is Dr. David Greenburg, who is a member of the COVID vaccines advisory team for the Ministry of Health in Israel.
While there are no assurances they will get an EUA, an advocate can typically help with the timing of the process. Todo’s European licensing and distribution partner T-Cell Protect has established inroads to the health minister of Greece, which could translate into an expedited look at the results. While there are a number of other jurisdictions they could target, the United States appears to be a priority.
The CEO indicated that the next step was a pre-IND meeting with the FDA. They waited to pursue the U.S. regulatory agencies until the phase 2 trial data was available. The regulatory team thought it would bolster their case to have phase 2 results in hand for the data-driven FDA. Their rationale was that the FDA was much more likely to take them seriously than if they approached with an observational study.
The CEO also explained that a highly credible team was in place and that they have had dialogue with some clinical trial sites in the United States.
Muted Market Reaction
Normally at Vision & Value we comment on the science, the mechanism of action, and a comparison amongst the competitors, but TOMDF seems to be a very special case where we have to explain away the massive valuation gap that exists between their current regulatory phase and the market cap of the company.
The company has a $40 million market cap, and this includes an operational testing lab and over $50 million in R&D assets. Phase 3 COVID-19 drugs are worth much more than $40 million. CytoDyn Inc (CYDY: OTCQB) for example, has a Phase 3 COVID-19 drug called leronlimab, and its market cap is $435 million. It's a great proxy for TOMDF because of the late stage of the disease leonlimab is targeting.
CYDY also has an HIV drug that is compiling documents for their BLA filing. The potential of COVID-19 is what both CYDY and TOMDF investors are speculating on, which means half their business has been assigned little to no value by the market, which puts them on equal footing for comparison purposes.
Using the most conservative of metrics, there is an existing 10X discrepancy in valuation that doesn’t even factor in the high likelihood of a EUA for Tollovir. This value gap can be explained by the legacy convertible noteholders.
In the last quarter of 2021 these noteholders were subject to a lock up and leak out agreement. In mid-December they were clearly out of stock to sell as the outstanding share count remained stable for over a quarter, and then the stock rose over $.10 for a short period of time, and then came down almost immediately after a posting on OTC Markets that indicated the outstanding shares rose by approximately 100 million.
For close to 2 months this structured seller has put a lid on the price appreciation. Based on the volume of shares traded from mid-December, this seller is critically low on shares, and any volume catalysts could break the stock free from its artificial trading range and allow movement in the direction of fair value.
Media Exposure
The CEO had been an outspoken voice on testing and oral antivirals. He’s been on major outlets like FoxBusiness, Yahoo! Finance, Black News Channel, NTD News, Newsy, and Newsmax, to name a few chronicled on their YouTube channel. Notably missing from this list is CNBC which doesn't cover stories on companies below $100 million market cap. They have Super Bowl exposure and are the main sponsors of Celebrity Flag Football. Also on their team are Wall Street pros Peter and Jon Najarian that have endorsed TOMDF’s vision and have extremely close ties to CNBC and its producers.
This is a widely televised TV show, and investors might not be connecting the dots to FOX Sports and how big of a deal this really is. Sinclair Broadcasting bought FOX Sports in 2019 for $10 billion and then licensed it to Bally’s casino who rebranded it Bally Sports. This two-hour show will be on Direct TV and available on cable networks like Xfinity, Spectrum, Cox, AT&T, and Optimum.
There are 4.4 million subscribers to Bally Sports. Investors really could be missing the power of pre-Super Bowl advertising and how it can change the fortunes of companies that capitalize on the exposure.
Fundamental Catalysts Coming
The company is expected to close the acquisition of NLC Pharma, which gives the company and investors a rich pipeline of future indications. Todos also explained that additional biomarker data was coming that could remove all doubt surrounding the small trial size.
The company has been hitting new milestones on its testing business and may have more in the works. Regulatory news could really jumpstart the stock.
The TolloTest could find itself a partnership and begin development. One of the top catalysts could be the company filing for its Pre-Ind or submitting an EUA package in Israel or Greece.
Investment Summary
The main takeaway for investors should be the realization that Tollovir takes dying off the table.
They announced compassionate use approval in Israel and have a task force member on their side, which is a very positive tell toward a EUA in Israel. This headline news of Tollovid besting Remdesivr as the SOC is already in the public domain, but no one seems to be paying attention or the stock would be significantly higher.
A large seller is annoyingly exiting the position, but investors need to weigh the risks of him selling versus the potential of a highly undervalued stock running 10X. At any moment they could be hit with a swell in volume as influencers or media coverage captures investors imaginations. Buying will beget more buying as they cross the $100 million market capitalization threshold and get a possible shot of a CNBC mention.
Any number of catalysts could light the stock on fire, but the match could be the completion of a crossover round which would spell the end of the programmatic selling as the company repays the notes. Therefore, the biggest risk to TOMDF is short-term in nature, which makes it highly attractive on a risk-to-reward basis.
A drug with no safety signals and better than remdesivir in a head-to-head look is surely worth more than $40 million market cap.
Vision and Value is an investor, small business owner, and a mechanical engineer.
Disclosures:
1) Vision and Value: I, or members of my immediate household or family, own securities of the following companies mentioned in this article: Todos Medical CytoDyn Inc. My company has a financial relationship with the following companies referred to in this article: None.
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