First Wave Bio

INVESTMENT HIGHLIGHTS

Stock Information

Price as of 10/27/21 $2.58
52 Wk High – Low $2.51 – $26.30
Est. Shares Outstanding 9.97M
Market Capitalization $25.81M
Average Volume 1.12M
Exchange: NASDAQ

First Wave BioPharma, Inc., is a clinical stage biopharmaceutical focused on the development of recombinant proteins for the treatment of gastrointestinal diseases. The company’s lead therapeutic is MS1819, a recombinant lipase for the treatment of exocrine pancreatic insufficiency. It is also developing two clinical programs using proprietary formulations of niclosamide, a pro-inflammatory pathway inhibitor. Interim data to date on its MS1819 trial is excellent, meeting both primary and secondary endpoints.

Near-Term Catalysts

  • Multiple shots on revenue-generating goals through multiple clinical stage programs
  • Transformative acquisition with AzurRx Biopharma expands GI related treatment pipeline adding multiple potential near-term catalysts
  • MS1819 Phase2 Trial – 100% of treated patients reaching both primary and secondary endpoints. Add on data expected for its formulations processes expected before year’s end
  • Best-in-class Phase2 trial results could attract attention from Big Pharma looking to gain an advantage treating EPI in patients with Cystic Fibrosis
  • MS1819 assigned an INN by World Health Organization. Validates the drug and brings global attention to Phase2b trial
  • MS1819 and PERT combination showed meaningful improvement in coeeficient in fat absorption primary endpoint
  • Data from 20 out of 20 patients suggest AZRX combination therapy can be most effective for cystic fibrosis patients with EPI
  • Completed enrollment into Part 1 of its RESERVOIR Phase 2 clinical trial of Niclosamide, targets COVID-19 gastrointestinal infections
  • Well-capitalized with roughly $13 million on hand after underwritten public offering and exercise of warrants
  • May be the only drug candidate advancing through trials that can alleviate the more than 20-30 per day pill burden that comes with current PERT therapy
  • Trial updates by end of 2021 and first part of 2022

First Wave  BioPharma Snapshot

AZRX reported stellar topline results from its Phase 2 MS1819 Combination Trial. The study is evaluating MS1819 in combination with the current standard of care, porcine-derived pancreatic enzyme replacement therapy (PERT), to treat severe exocrine pancreatic insufficiency (EPI) in patients with cystic fibrosis (CF).

Results are about as good as it can get, with 100% of treated patients reaching both primary and secondary endpoints. Further, data showed clinically meaningful improvement in Coefficient of Fat Absorption (CFA) endpoints, and most importantly, showed that its combination therapy may benefit cystic fibrosis patients with severe EPI.

Moreover, data from its Phase2a arm of the trial was so compelling that regulators allowed for early termination and a progression directly to a Phase2b trial. Also, confidence at the is high, which is always a good sign. The team is taking the next steps to accelerate potential marketing approval by finalizing the development of a new enteric-coated microbead formulation they believe can enable more medication to reach the small intestine and enhance its therapeutic potential. AZRX expects its formulation work to be completed by the end of this year. That puts another potential catalyst into view.

Another positive is its impressive cash position, which can be used as leverage for potential partnerships or as a means to accelerate trials on its own. Either scenario is a win for shareholders. AZRX noted its balances are sufficient to fund the next stages of its program development. In fact, AZRX is using some to commence developing a new enteric-coated microbead formulation for MS1819 and advance toward a bridging study in 2022 evaluating the formulation as a single-agent therapy. That initiative puts another revenue-generating shot on goal from its MS1819 program in the queue.

Combining the benefits from recent milestones reached, the back half of 2021 could be a transformative period for AZRX. As it stands, its already published data supports higher prices going into Q3 and Q4. Moreover, AZRX stock offers investors an early chance to own part of a showing an ability to effectively treat a niche but valuable market to treat EPI in patients with CF. Moreover, its drug candidate is a safe and effective therapy showing no severe adverse events. Investors should note that MS1819 is one of the only known late-stage drug candidates in development showing the potential to fill the gap where PERT alone is insufficient.

While the value of its MS1819 program creates a compelling investment proposition on its own, investors would be wise to value the totality of the AZRX pipeline. Included in that evaluation should be a presumption that AZRX is likely to entertain potential licensing and partnership opportunities. At $0.58 per share, the stock price appears to be substantially undervalued. That’s especially true for AZRX heading toward a Phase 3 trial where the treatment duration is roughly 10-12 weeks of treatment. Hence, as the nears that portion of its study, expectations are for its share price to respond in tandem to the upside.

Competitive Analysis

AzurRx is exceptionally well-positioned to capitalize on substantial drug treatment opportunities from its targeted pipeline. Its most advanced Phase 2 study, MS1819, published topline data showing a likelihood for it to become a front line treatment for EPI in patients with cystic fibrosis. Notably, with Big Pharma more focused on acquiring new drugs rather than developing them, AZRX is ideally positioned to attract substantial interest.

Notably, AZRX management has consistently said that as a develop and clinical-stage focused company, they are willing to monetize assets in a way that makes sense for its and shareholders. Hence, with the competitive environment limited for AZRX targeted indications, they appear well-positioned to shop assets as part of a broader development strategy.

Moreover, with AZRX studies being relatively short in duration (6-10 weeks), catalysts can come quick. Also, with its RESERVOIR trial targeting COVID-10 related gastrointestinal infection, opportunities to receive outside funding to accelerate its study is possible. Any move forward, however, increases the competitive distance between AZRX and its competitors in securing the leading spot to treat EPI and GI related to COVID.

Catalyst Watch

AZRX is on the catalyst watch list. At current levels, the share price appears to entirely ignore the compelling data published from its Phase2 MS1819 trial. Further, programs advancing gastrointestinal infections related to COVID-19 should be a factor in its valuation as well. Neither program appears too priced into the stock at a level appropriate to each drugs billion-dollar its market potential.

Further, its cash position is a further strength that the markets are missing. While partnerships, licensing, and collaborations could be in play, AZRX is positioned to advance trials on their own. If so, AZRX has said they can complete the next stages of its program development.

Indeed, the back half of 2021 is setting up to be a transformational period for AZRX. The data generated to datae is nothing short of spectacular. While its share price is consolidating at the $0.60 level, it’s likely that Big Pharma is taking a look at its data behind the scenes. Recent acquisitions in the sector indicate that the appetite for drugs that can change a treatment landscape are in fashion. Expect AZRX to get some interest. The data published is too good to ignore.

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Big Picture Opportunity

AzurRx BioPharma is positioned for rapid share price appreciation resulting from its excellent topline data readout for its MS1819 asset. Those results help put at least one potentially strong catalyst in view in the coming weeks. At current share price levels, its assets and clinical-stage pipeline present a compelling investment opportunity for investors looking for growth and value combined.
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