The Pending Acquisition of a License for the Anti-Cancer Agent E7777 Could Be a Transformative Event for Citius Pharmaceuticals (CTXR)
Bullish Golden Cross Chart Set-up
“FDA granted orphan drug designation (ODD) to E7777 for the treatment of PTCL and CTCL, respectively, making it eligible for seven years of market exclusivity post-approval.”
Good day everyone,
We are updating our coverage of Citius Pharmaceuticals, Inc. (NASDAQ: CTXR), a late-stage pharmaceutical company developing a pipeline of critical care products, stem-cell therapy, and oncology products.
Current price $2.12/share (at market close September 7, 2021)
There’s lots to unwrap about the agreement CTXR has developed with Dr. Reddy’s.
Before I get to that I want to discuss how the chart is set up for a bullish golden cross.
As the stock continues to trade above the 200-day, 50 day and the 20-day simple moving average (SMA). This indicates that the chart is setting up to see the 20-day SMA (in an uptrend) cross the 50-day SMA in the next few trading sessions. This midterm bullish indicator is called a golden cross and could be signaling higher price levels ahead.
Under the terms of this agreement, Citius will acquire Dr. Reddy’s exclusive license of E7777 from Eisai Co., Ltd. and other related assets owned by Dr. Reddy’s. Citius’s exclusive license rights include rights to develop and commercialize E7777 in all markets except for Japan and certain parts of Asia. To me, the fact that Eisai retained the rights in its own backyard could be a testament to E7777s potential.
CTXR will fund the upfront $40M payment with cash on hand. At the end of Q2 the company reported $115M of cash on hand.
Eisai used an anti-cancer agent, that is now E7777 in a drug call ONTAK that was approved by the FDA and on the US market from 2008 until 2014 when Eisai voluntarily pulled the drug to reformulate and improve it. Dr. Myron Czuczman, Executive Vice President and Chief Medical Officer of Citius is also an oncologist. Dr. Czuczman said, “given E7777’s improved purity compared to ONTAK®, unique mechanism of action, and the well-known safety and efficacy profile of denileukin diftitox, this new biologic could offer CTCL patients and their physicians an important and effective tool with which to manage this incurable disease.
President and CEO, Myron Holubiak stated, “This opportunity is consistent with our strategy of investing in assets that have differentiated upside potential and unique commercial advantages. With its substantially completed development work and purified formulation, now is an ideal time to add this near BLA-ready and, we believe, de-risked asset to the Citius pipeline. If approved, we intend to leverage the planned commercial infrastructure being developed for Mino-Lok® to launch E7777, providing Citius with potentially two marketed products.”
I think the key phrase in Mr. Holubiak’s statement is differentiated upside potential. Let’s remember that Mino-Lok, currently the company’s flagship product has been shown to be effective against c. Auris in an in-vitro study and may be effective in other infection indications beyond central venous catheters. E7777, while shown to be effective against CTCL may be just as effective in other oncology indications.
E7777 is a recombinant fusion protein that combines the interleukin-2 (IL-2) receptor binding domain with diphtheria toxin fragments. The agent specifically binds to IL-2 receptors on the cell surface, causing diphtheria toxin fragments that have entered cells to inhibit protein synthesis. E7777, a purified version of denileukin diftitox, is a reformulation of previously FDA-approved oncology treatment ONTAK®. ONTAK® was marketed in the U.S. from 2008 to 2014, when it was voluntarily withdrawn from the market to enable manufacturing improvements. These improvements resulted in E7777, which maintains the same amino acid sequence but features improved purity and bioactivity. E7777 has received regulatory approval in Japan for the treatment of CTCL and PTCL. In 2011 and 2013, the FDA granted orphan drug designation (ODD) to E7777 for the treatment of PTCL and CTCL, respectively, making it eligible for seven years of market exclusivity post-approval.
We want to point out that CTXR has a long association with The University of Texas MD Anderson Cancer Center, a comprehensive cancer center in Houston, Texas. It is the largest cancer center in the U.S., known both for cancer treatment and oncology research. Two of CTXRs products, Mino-Lok and Mino-Wrap are licensed from MD Anderson. Two members of the CTXR scientific advisory boards, though not oncologists, are from MD Anderson.
The acquisition of the E7777 license may be a transformative event for CTXR. I’ve seen transformative events before. In 2011 I began watching a pharma company called Vertex, a small cap NASDAQ development stage company. Their revenues (from collabs and royalties) in 2010 were $143M and their net loss was $754M. They had a product in a phase 2 trial called telaprevir to treat hepatitis C. Fast forward to 2012, telaprevir was approved and generated $1.5B in revenues for the company. Today, Vertex is worth $50B.
More on CTXR and their new late stage pipeline coming soon.
The Traders News Group
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