Anthera Trades Near Cash; Stock Has Room To Run

In late November, PropThink wrote about Anthera Pharmaceuticals (ANTH), noting that the company’s lead drug candidate, blisibimod (or B-mod), has promise for the treatment of systemic lupus erythematosus (SLE), however, the potential need for capital could keep the stock from rising. On January 30th, the company did in fact raise $40M in an equity offering, and now the stock trades at a market value just about equal to net cash (cash minus debt). As a result, investors get a chance to own ANTH with minimal value being assigned to the prospects for B-mod, and we believe investors will start to buy the stock given this favorable metric. JP Morgan, the underwriter of the equity offering, published on ANTH Tuesday, and has assigned the stock a $2.00 price target, hence, ANTH is up in early trading this morning. According to Yahoo! Finance, the average Wall St. analyst price target on ANTH is $2.60, so there’s significant upside in the name if B-mod is, in fact, successful in its clinical development.

B-mod is a selective peptide/antibody antagonist of the cytokine BAFF, and is currently the subject of a Phase III trial for SLE (the CHABLIS-1 SC trial). This trial (and a planned second Phase III trial – CHABLIS-2 SC) are designed to take advantage of the information learned in the prior Phase II PEARL-SC study, which demonstrated that in patients with clinically active disease (SELENA-SLEDAI > 10) who were also taking corticosteroids, a 200mg weekly dose of B-mod led to a statistically significant benefit at week-8 based on SRI criteria (22.6% B-mod response versus 6.4% placebo response, p=0.023). SRI is defined as patients who respond to treatment and achieve a pre-specified reduction in SELENA-SLEDAI (active disease). Additionally, at week-16, these patients saw a statistically significant 35.4% B-mod response vs.17.0% for placebo (p=0.04), and through the 24 week endpoint, a highly statistically significant 41.7% B-mod response was observed (vs. 10.4% for placebo, p < 0.001). The Phase III program will utilize the 200mg dose and the specific patient criteria in the above subset from the PEARL-SC study, meaning that the Phase III trials have a higher chance of success. Finding the proper dose and patient population is precisely what Phase II is about, and it appears that ANTH has found the right mix after combing through the results of earlier trials. Expectations are for interim 12-month results from the first 100 patients in CHABLIS-1 SC to report out sometime in mid-2014, with final 52-week results from the full 400 patients by mid-2015.

Anthera is also developing B-mod for IgA nephropathy and lupus nephritis, which is not significantly factored into many analyst’s models. The BRIGHT SC is the company’s 48- patient Phase II trial to evaluate B-mod in IgA nephropathy (IgaN), designed to observer significant reductions in proteinuria. This trial is anticipated to begin in 1H 2013, and initial interim data could report out as soon as the end of this year or in early 2014. With two kicks at the can, potential for B-mod to be a half-billion dollar drug or more, and trading at slightly more than cash, investors seem to be giving ANTH another look.