Grant Zeng, CFA
Bio-Path Holdings, Inc. ( BPTH )is a development stage biotech company. The Company was founded with technology from The University of Texas, MD Anderson Cancer Center dedicated to developing novel cancer drugs under an exclusive license arrangement. Since its inception, the Company has acquired three exclusive licenses from MD Anderson Cancer Center for three lead products and related nucleic acid drug delivery technology, including tumor targeting technology.
The Company’s key technology licensed from MD Anderson is neutral lipid drug delivery technology (neutral liposome). The liposomal technology enables systemic delivery of antisense, small interfering RNA (siRNA) and hydrophobic small molecules for treatment of cancer. Bio-Path recently licensed new liposome tumor targeting technology, which has the potential to be applied to augment the Company’s current delivery technology to further improve the effectiveness of its antisense and siRNA drugs under development as well as other future liposome-based drugs. The liposome technology is already in clinical test and tumor targeting technology is still in the research and development stage
Bio-Path’s lead drug candidate liposomal Grb-2 (L-Grb-2, BP-100-1.01) is an antisense drug candidate currently in a Phase I clinical trial. Bio-Path’s pipeline also includes liposomal Bcl-2 (L-Bcl-2, BP-100-1.02), a liposome delivered antisense cancer drug that targets the lymphoma and certain solid tumor markets, and liposomal FAK (L-FAK, BP-100-2.01), a liposomal delivered siRNA drug candidate. While liposomal FAK is still in pre-clinical development, a pre-IND package for liposomal Bcl-2 has been filed with the FDA which could lead to this drug candidate receiving an IND next year to commence a clinical trial.
In addition to its existing technology and drug candidates under license, the Company has a close working relationship with key members of the MD Anderson’s staff, which should provide Bio-Path with the opportunity to license promising new drug candidates in the future. Bio-Path expects the working relationship with MD Anderson to enable the Company to broaden its technology to include cancer drugs other than antisense and siRNA.
Bio-Path’s business plan is to act efficiently as an intermediary in the process of translating newly discovered drug technologies into authentic therapeutic drug candidates. Its strategy is to selectively license potential drug candidates for certain cancers, and to advance these candidates through proof of concept into a safety study (Phase I), and human efficacy trials (Phase IIA), and then potentially out-license individual successful drug candidates to a pharmaceutical company.
We are optimistic about the great potential of the Company’s neutral lipid drug delivery technology and ligand-enhanced lipid tumor targeting technology, which enable systemic delivery of antisense, RNAi and siRNA drug candidates. Antisense and siRNA are two of the most promising targeted therapeutics, but are challenged by their systemic delivery and distribution into diseased areas in humans. Bio-Path’s two platform technologies have great potential to achieve this goal.
Bio-Path’s pipeline targets the multi-billion dollar cancer market. The Company has advanced its lead antisense cancer drug candidate liposomal-Grb-2 (L-Grb-2) into Phase I clinical trials using its neutral lipid drug delivery technology. The Company’s two other cancer drug candidates liposomal-Bcl-2 (L-Bcl-2, antisense) and liposomal-FAK (L-FAK, siRNA) are at the pre-clinical stage and the Company plans to bring them into clinic soon as funding levels permit.
With a good working relationship with the prestigious MD Anderson Cancer Center, combined with its two drug delivery platform technologies, the Company’s pipeline could be easily expanded into other therapeutic areas in a rapid and cost-effective way.
We think Bio-Path’s out-license oriented growth strategy is highly workable in the current pharmaceutical/biotech environment. We believe current market environment is favorable for small biotech companies in terms of out-licensing to and partnering with big pharma/biotech companies. This strategy will greatly reduce the risks associated with drug development and help to build shareholder value rapidly.
We think Bio-Path’s shares are undervalued based on the Company’s fundamentals. We understand the Street discounts the Company’s value because of its early stage pipeline and the uncertainty of its drug delivery technology. But we have a different opinion. Investors should also consider the great potential of the Company’s platform technology and pipeline. For investors with high risk tolerance, Bio-Path should be considered as a component of the portfolio.
We rate the Company’s shares Outperform with a six to twelve month price target of $3 per share. Major risks associated with our call include early stage of development and cash burn.
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