BEND, OR / ACCESSWIRE / June 7, 2017 / I have been invested in and following the Soligenix (NASDAQ: SNGX) story for nearly 5 years. In that time period the company has achieved all that it said it would, yet the share price is down and has many investors frustrated and questioning why they chose to invest in Soligenix. As a nearly 15 year veteran fund manager in the microcap healthcare space, I can tell you that the path to success from concept to FDA approval is a long and costly one. As an investor, if you are right, an investment in a microcap biotech can be life changing and incredibly rewarding, as it has been for me a number of times and if wrong, which I also have been a number of times, painful and just gut wrenching. When I am looking at micro-cap biotech companies I have an interest in buying, I want to know management is going to be smart with the money they raise and not dilute me or spend on frivolous things, like spending $10M on a corporate facility that has a putting green and campus for employees to slack off. Soligenix has been incredibly frugal with the dollars they have raised and in the past two years they have spent a mere $5.5M/year developing their compounds. Let's compare Soligenix to OncoSec (NASDAQ: ONCS), which has a $22M mkt cap. OncoSec has spent approximately $50M in the past two years and yet has nothing to show other than some "collaborations" and open label studies aka nonsense. Soligenix has two Phase 3 assets in the clinic and has also been able to win approximately $60M in funding from the U.S. government for its vaccine programs under development. Not to pick on OncoSec, but it is almost laughable that a company like OncoSec has a greater valuation than Soligenix, but why and most importantly when and will Soligenix reward investors?
Over the past three years active fund managers have had their teeth handed to them by passive funds (ETF's). As such money has flowed from active fund managers, people who manage your money, to passive fund managers, simply buying indexes like the S&P 500 or ETF's. This has led to a massive shrinkage of the available pool of capital for micro-cap biotech' companies and as such terms of capital raises have been egregious and almost all micro-cap biotech companies that have raised money in the past 18 months that have a market cap of $100M or less, have seen their share prices erode by almost 50% or more post the capital raise. This is because the hedge funds providing the capital demand steep discounts and heavy warrant coverage. Soligenix experienced this is December 2016, but has now put itself into a position of strength with a balance sheet that easily gets them through 2017 and deep into 2018, something strategic investors are aware of. I mention strategic investors because companies who have late stage assets with compelling early stage data to support the Phase 3 trials are typically either purchased or they enter into collaboration with a well-heeled partner (company with lots of cash). These partners or collaborators will assume the funding liability the Phase 3 trials may represent in exchange for a percentage of future revenues or percentage of the asset or company.
Three weeks ago, Soligenix reported its long term Phase 2 follow-up results for its Oral Mucositis compound SGX942 (dusquetide). That data essentially matched the data we have seen all along and was outstanding! SGX942 demonstrated a significant reduction in the median duration of severe oral mucositis in patients with head and neck cancer (HNC), and these data has been published in the peer-reviewed journal Biotechnology Reports. These 12-month data further support the safety and tolerability of SGX942, with the 1.5 mg/kg treatment group demonstrating accelerated tumor resolution and a decreased mortality rate relative to the placebo group. SGX942 demonstrated a positive statistic trend (p=0.08) in the mortality rate with SGX942 versus palcebo at 12 months, despite not powered to do so.
As a first-in-class innate defense regulator (IDR), dusquetide modulates the innate immune system, enhancing its tissue-healing and anti-infective mechanisms and decreasing the often deleterious inflammatory responses. The pathogenesis of oral mucositis involves the dysregulation of the innate immune system. In a randomized, double-blind, placebo-controlled Phase 2 clinical trial in 111 patients, SGX942 (1.5 mg/kg dusquetide) successfully reduced the median duration of severe oral mucositis when compared to placebo by 50% in all patients, and by 67% in patients receiving the most aggressive chemo-radiation therapy (CRT) for treatment of their HNC. In addition to the oral mucositis findings, decreases in the bacterial infection rate were observed with SGX942 treatment, along with an increased incidence of "complete response" of tumor (i.e., disappearance) at the one month follow-up visit and a reduction in opioid pain medication use.
Long-term follow-up data indicate that the tumor resolution was enduring and, moreover, that the mortality rate in the SGX942 1.5 mg/kg treatment group was lower (p=0.08) than the placebo group over the 12 months following completion of CRT (remember this Phase 2 study is a dose escalation study). These data further support the safety and tolerability of SGX942 in this patient population. Potential ancillary benefits of utilizing SGX942 for the treatment of oral mucositis include the reduction of infection, the accelerated tumor resolution and the decreased mortality rate.
Soligenix recently announced that it has received US Food and Drug Administration (FDA) clearance to advance the pivotal Phase 3 clinical trial and released the protocol study design for SGX942, following the completion of the Phase 2 follow-up visits late last year. The Phase 3 study utilizes the patient population at highest risk of severe oral mucositis as identified in the Phase 2 study (i.e., those receiving the most aggressive CRT). While the drug effect was 67% in the Phase 2 study, a much more conservative estimate was utilized in planning the Phase 3 study, yielding a study size of approximately 190 subjects. SGX942 will be administered in conjunction with the CRT, as a treatment for oral mucositis. Of note, this Phase 3 study will also support potential approval in Europe by the European Medicines Agency (EMA). Soligenix has said that this pivotal Phase 3 study will be open to enrolling patients as soon as this month.
Those in the orphan drug industry, such as Alexion (ticker: ALXN) $22B mkt cap (just throwing out a name of a large orphan drug company), are potentially paying close attention to the SGX942 trial because this drug, if approved, could represent a billion dollar opportunity. If you recall, I was invited to Chair the Pitch & Partner Session of the World Orphan Drug Congress in late April of this year:
http://www.terrapinn.com/conference/world-orphan-drug-congress-usa/speakers.stm.
That conference was crawling with business development types looking for companies like Soligenix which may augment an existing commercial or development pipeline.
In closing, I haven't even touched on the pivotal Phase 3 CTCL candidate that is actively enrolling patients or the vaccine pipeline that has the potential to garner a Priority Review Voucher (PRV) if/when FDA approved (PRVs can be sold to other companies and have sold for as much as $350M), and won't because I don't want to turn this article into a 40 page read. Soligenix has third party validation given back in September 2016, Soligenix entered into an exclusive license agreement granting rights to SciClone (Nasdaq: SCLN, $514M mkt cap) to develop, promote, market, distribute and sell SGX942 in patients with head and neck cancer. The licensing agreement includes the People's Republic of China, including Hong Kong and Macau, as well as Taiwan, South Korea and Vietnam (the "Territory"). This exclusive agreement builds on an existing collaboration between the two companies, in which SciClone provided its complete oral mucositis clinical and regulatory data library to Soligenix in exchange for certain, previously undisclosed, commercialization rights to SGX942 in the Greater China market.
The bottom line is this, Soligenix has the best risk/reward profile of any micro-cap biotech company I have seen in my career and my guess is something along the lines of a collaboration or even an acquisition may happen before the end of September, this year. I am basing this assumption on my experience and basing on what multiple business development types have told me as to what they look for when they seek to collaborate or acquire. To be clear, no business development individual or entity has expressed a specific interest in acquiring Soligenix or any of their compounds in development to me. I have never had any insider knowledge regarding Soligenix, nor will I ever. I am just mentioning the facts and sharing what my experience has led me to assume so take my opinion for what is worth. There are three categories that I need to feel comfortable with when I evaluate a biotech company, the first is management. In my opinion, Soligenix has a world class Management Team, Scientific Advisory Board and Board of Directors. The second category is product pipeline and Soligenix has the most broad and diverse product pipeline I have ever seen for a sub $20M market cap company. The last category is capital structure and Soligenix has ample cash, solid institutional investors and no toxic resets or nonsense that could pose a problem to a common stock shareholder such as me and my firm. I am optimistic and hopeful that Soligenix will reward investor's faith and reward it in the very near future and adamantly believe that Soligenix offers the best risk/reward profile of any micro-cap biotech company that is public. Now I will pray I am right.
By Ross Silver - CEO, Sylva International LLC
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https://sylvacap.com/disclaimer
Contact: info@sylvacap.com
SOURCE: Sylva International LLC
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