Botanix Pharma is about to release Phase II results on their blockbuster acne drug. If positive, this stock will run!
Botanix Pharma (ASX:BOT) is an Australian medical dermatology company engaged in the development of cannabinoid-based products for the treatment of a range of skin conditions and are working to get the first cannabinoid products approved by the FDA.
If successful, they will dominate the multi-billion dollar dermatology market, which has seen very few new products approved in the last 20 years. And the results for their first potential blockbuster drug are due for release this month!
The Jewel in the Crown
BTX1503 is the company's leading asset. It's a synthetic-cannabinoid (CBD) with the patented PermetrexTM delivery system that is used for the treatment of moderate to severe acne. A $5 billion-dollar industry that has not seen a new drug brought to the market in 20 years. The drug is currently in Phase II trial.
Acne is a $5 billion-dollar industry that has not seen a new drug brought to the market in 20 years.
Acne is one of the most common dermatological disorders. It affects 9.4% of people worldwide and approximately 50m people in the US alone. Although the condition can affect people of all ages, it is most prevalent among teenagers and is present in more than 85% of people between the ages of 12 and 25. What's important to remember here is:
- All of the incumbent topical drugs in market do the same thing
- They all come with various long-term usage side effects such as dryness and itchiness
- In more severe cases, there are systemic side effects with oral ingestion
- There have been no drug innovations since the 1997 US release of Tazorac® (Allergan)
- All new drugs are simply iterations and generics.
- No-one has studied the effects of cannabinoid-based treatments for this market.
Currently, Botanix is the only pharmaceutical player studying the effects of the CBD compound on dermatological diseases, and this first-mover advantage creates an opportunity to really dominate the market where the incumbents consist of generic brands which produce significant side effects and safety issues when used as a long term treatment method.
All products made by BOT utilise synthetic CBD in conjunction with PermetrexTM skin delivery technology. PermetrexTM is a dermal delivery formulation technology that allows 10 to 20 times more of the active ingredient to get through the skin to better treat the disease. BOT has exclusive rights to this technology, developed by Dr Eugene Cooper, for all drugs that treat dermatological conditions.
This also makes the company a very strong acquisition candidate, should they successfully license the first product to market. One only needs to look to GW Pharmaceuticals (NASDAQ:GWPH) with its Epidiolex drug – the first-ever FDA-approved cannabis-based drug. The company currently sports a $5.5 billion market cap and is the best proxy for how to model and evaluate the potential of Botanix Pharma.
And the Winner is…
It's hard not to be bullish about the potential for a successful Phase II study when you consider the results from the BTX 1503 Phase 1b study that was completed in 2018. The results suggested that the product delivers on par efficacy-based results (even higher some of the time) as the incumbents, but (and it's a big one) with a statistically significant improvement in the safety profile.
BTX1503 - Same results but with significantly fewer side effects.
Which would you rather your teenager use, if they both delivered successful treatment outcomes? Especially when some of those side effects include cancer risks, birth defects and risks of suicide?
The Phase II study involves 360 patients and is a randomized, controlled, blind study, that has been running for 12 weeks across 28 sites in Australia and the US. The primary endpoint of the trial is absolute change from baseline to week 12 in inflammatory lesions. Should the results of this be positive, then in plain terms, BOT would be off to the races.
The most likely outcome from there would be a licensing deal with a Big Pharma player that would deliver significant upfront cash flow, and medium-term licensing royalties post successful Phase III study outcomes.
"Botanix is uniquely positioned and poised for success with its pipeline of novel therapies that have the potential to meet many unmet patient needs. The Company is also way ahead of the curve with its delivery technology, PermetrexTM, a highly elegant formulation with considerable potential across the broader dermatology space."– Vince Ippolito, President Botanix Pharma
And one shouldn't overlook the fact that the Executive-President, Vince Ipollito – a US-based dermatology industry leader with over 30 years of pharmaceuticals experience – has been there and done that, having sold Anacor to Pfizer for a cool $5.2 billion. He spent nine months doing his own due diligence on Botanix, before joining the board. And now that he's there, he's ensured that the Who's Who of Whoville in the pharmaceutical world is watching this one.
Disclaimer: Past performance is not an indicator of future performance.
With a market cap just shy of $250 million, positive results could easily propel this cannabis biotech to Unicorn status. The results are coming, and as they hit the final 100…Botanix Pharma is perfectly positioned.
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