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Catalyst Biosciences Inc (NASDAQ: CBIO) Is Today's Biotech Focus

Catalyst Biosciences Inc (NASDAQ: CBIO) Is Today's Biotech Focus
Written by
Jarrod Wesson
Published on
April 13, 2017
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Catalyst Biosciences, Inc. (NASDAQ: CBIO), the clinical-stage biopharmaceutical company, just received a milestone payment with completion of Investigational New Drug (IND) approval enabling toxicology studies. Due to this outstanding news and its fundamentals, which we will note later, the company has become our new profile. Take a look at the recent price spike:SourceCompany and productsCatalyst Biosciences develops products in the field of hemostasis (the process that regulates bleeding) and, more specifically, is working on therapies for patients with hemophilia. According to the last 10-k, the company is said to be a leader in the field of subcutaneously (“SQ”) dosed coagulation factor prophylactic therapies for individuals with this illness.What is the Hemostasis & Hemophilia? It is a rare disorder that results from a genetic or an acquired deficiency of protein required for normal blood coagulation. There are two major types A and B, and they are caused by alterations in Factor VIII or Factor IX genes respectively. The company is trying to develop the next generation of subcutaneous prophylaxis using enhanced potency Factor VIIa and Factor IX variants. The first one is in phase 1, whereas the latter is in a preclinical stage.SourceAccording to estimates of the company, the total amount of worldwide sales of Factor IX-containing products was approximately $1.2 billion. These numbers include revenues from other competitors, such as Pfizer, Inc. Bioverativ and Swedish Orphan Biovitrum. Yes, the competitors are very big, but the final amount of revenue that the company is targeting is big as well.Recent developmentsOn April 11, 2017, the market got to know that Catalyst Biosciences had achieved a key milestone under its collaboration with ISU Abxis to advance the Factor IX program towards its first human clinical trial. The company completed the CB 2679d/ISU304 toxicology studies and obtained milestone payment as a result. The company explained the technical details of this new development using the following words in the press release:

"CB 2679d/ISU304, a highly potent next-generation coagulation Factor IX variant, has demonstrated the potential to normalize human Factor IX levels with a daily subcutaneous injection in preclinical studies. Currently approved therapies rely on frequent intravenous infusions where adherence is difficult and convenient access to peripheral veins is a problem, often requiring the use of central venous access devices with the associated risks of infection and thrombosis. Catalyst’s collaborator, ISU Abxis (KOSDAQ: 086890), plans to initiate a Phase 1/2 proof-of-concept study with single and multiple subcutaneous injections in individuals with severe hemophilia B in the second quarter of 2017." Source

On March 30, 2017, the company released more good news. It had received the notice from the European Patent Office that the opposition period for a patent granted to Catalyst had expired and no opposition had been filed. The patent is the following: "Factor VII polypeptides that are modified and uses thereof" (European patent EP 2679678). It was added in the same communication that the company now owns 62 issued patents worldwide including patents in the United States, the European Union, China and Japan.Finally, another very good news concerning the business of Catalyst Biosciences was received in February 01, 2017. The company announced positive preclinical results in models of hemophilia A and B with marzeptacog alfa (activated). Nassim Usman, Ph.D., President and Chief Executive Officer of Catalyst, said the following about this announcement:

“These results demonstrate that CB 2679d/ISU304 has significantly higher potency compared with other Factor IX products and has the potential to be dosed by SQ injection and achieve stable normal activity levels - an attribute shared by no other Factor IX product on the market or in clinical development. In addition, the marzeptacog alfa (activated) SQ preclinical results, daily SQ dosing achieved steady-state levels of Factor VIIa sufficient to correct coagulation abnormalities. We anticipate initiating a SQ efficacy trial of our next-generation Factor VIIa in individuals with hemophilia B with inhibitors in 2017.” Source

You will be able to find a summary of the results presented at the European Association of Haemophilia and Allied Disorders (EAHAD) 10th Annual Congress in Paris, France in the following link.Balance Sheet Situation and per share figuresThe balance sheet of this company looks very solid, not like some other biotech companies that we have seen out there and that we normally do not even mention to subscribers. It looks healthy, have a look at the photo of the assets made on December 2016 and note that the company does not show a large amount of intangibles. The most important in the balance sheet is the cash in hand, which is good:

  • Cash And Cash Equivalents: $30 million
  • Short Term Investments: $7 million
  • Total Current Assets: $37 million
  • Total Assets: $37 million

The liabilities look good too, very little as investment managers like:

  • Short term debt: $19 million
  • Accounts Payable: $2 million
  • No long term debt
  • Total liabilities: $22 million

The share price as of April 12, 2017 is $5.43 and the total amount of shares outstanding are 1.24 million. Thus, the share price is trading at an extremely low price, as the cash per share is about $17, and its book value per share is $20.05. According to these numbers, if a hedge fund buys out this company and liquidates it, it could make a total investment return higher than 100%. Some other authors on other websites claimed that the company was undervalued as well. This is from Seeking Alpha and this old one too.Relevant funds with stakes in the companyWe could identify the following funds that own stakes in the company. This is a list:

  • Goldman Sachs Group, Inc.
  • KCG Holdings, Inc.
  • Renaissance Technologies, LLC
  • UBS Group AG
  • BlackRock Institutional Trust Company
  • Vanguard Group, Inc.

It is important to always check what the big boys in the industry are doing. They are the smartest in the room, so it's a good idea for retail investors to keep an eye on what smart money is doing.ConclusionCatalyst Biosciences, Inc. is delivering positive news and the market is liking what progress the company is making. Additionally, we saw that the company is working with two new candidates and is receiving approvals from the relevant health-care authorities. We cannot forecast what will happen next, but if the good news continues, the share price should keep rising. We also believe that there is an opportunity here for value investors considering that shares are trading below both cash/share and book value/share. In addition, other authors on Seeking Alpha have said exactly the same about this company in the past. Everybody can't be wrong when it comes to CBIO.We will be updating our subscribers as soon as we know more. For the latest updates on CBIO, sign up below!Disclosure: We have no position in any of the securities mentioned and have not been compensated for this article.

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