ANTH Trading Higher On Additional Data; Need For Capital Could Cap Upside

Anthera Pharmaceuticals (NASDAQ:ANTH) is getting another lift Wednesday, as the company announced additional data from the Phase IIb PEARL-SC study for its primary value driver, blisibimod (B-mod), at the Asian Lupus Summit. The Pearl-SC trial missed its primary endpoint earlier this year, and while the stock got crushed, B-mod still has promise as a potential treatment for systemic lupus erythematosus (SLE), a serious autoimmune disease. In addition to prior favorable Pearl-SC data presented earlier this month at the American College of Rheumatology (ACR) meeting in Washington DC, the poster presented at the Asian Lupus Summit highlights additional data on B-mod’s effect on renal disease in lupus patients. Both the pooled B-mod treatment group and the 200mg blisibimod treatment group (once-weekly dosing) showed a statistically significant reduction in proteinuria. These data plus the Pearl-SC data presented at ACR support that the drug may have a real future, fueling upside in the shares today.

The late-breaker poster presentation at the ACR meeting in mid-November showed that weekly use of blisibimod achieved a statistically significant SRI-8 benefit at 16 weeks (35.4% on treatment vs 17.0% placebo, p=0.04), and this benefit was maintained through 24 weeks (41.7% vs. 10.4%, p<0.001). Additionally, 25% of patients receiving 200mg blisibimod once-weekly achieved SRI-7 (p=0.003) compared to 8.7% on placebo, and 25% patients achieved SRI-8 (p=0.001) vs. 7.6% on placebo. Data at ACR also indicated strong trends toward increased time to first lupus flare and time to first severe lupus flare vs. placebo as measured by the SLE Flare Index. Notably, more patients were able to reduce concomitant steroid use, and like the data in the Asian Lupus Summit poster, significantly greater reductions in proteinuria were also seen in the poster at ACR.

As of the end of 3Q 2012, ANTH had $42.5M in cash and equivalents, but has begun paying back debtholder Hercules the $22.6 million that it owes. The company expects to have enough cash to start its Phase III program for B-mod (the CHABLIS-SC1 trial), which is anticipated to begin in 1Q 2013. Analyst price targets range between $2.00-$3.00 on the stock, and some believe the company could seek a partnership to help conduct and fund the Phase III programs for B-mod. Given the need for cash in the next couple of quarters, we believe ANTH shares could rise a bit from here, but investors playing this beaten down asset should keep powder dry to invest after the company raises sufficient capital to fund the Phase III program or to be in a position of strength to negotiate an attractive partnership.