Biotech

CytoDyn Doubles Down on Revenue and EUA Strategy with Philippines Announcement

CytoDyn Inc. (OTCMKTS: CYDY) announced yesterday that it shipped 28 doses of leronlimab under Compassionate Special Permit (CSP) to one hospital in the Philippines so that it could be administered to 28 critically ill COVID-19 patients.  It was also negotiating the sale of 100,000 vials for CSP use.  What makes this order so significant is that it comes on the heels of a patient that was successfully treated with leronlimab a week earlier.  This critically ill COVID-19 patient spent 10 days on high flow oxygen and was treated with multiple doses of the approved drugs dexamethasone and tocilizumab, but failed to respond.  After injection with leronlimab the patient “significantly improved” within 35 hours and was well enough to be taken off high flow oxygen and discharged 2 days later from the hospital breathing on his own.  Many call this anecdotal data, but Bruce Patterson said it the best, “Anecdotes don’t come off life support.”

Revenue, Revenue, Revenue (Philippines, Brazil, and Canada)

One of the most significant milestones for a drug company is the transition to revenue.  Although the order was only 28 patients it does represent the first revenues the company has recorded in its history. If the company sold the leronlimab for $500 per vial it works out to $56,000 in sales. This sale was to only one hospital a week after the first patient was discharged, but it’s clear that the remarkable improvement in the first patient set off a firestorm of activity. The CEO of CytoDyn said:

“Based upon the speedy recovery of the first COVID-19 CSP patient in the Philippines, we are coordinating very closely with Chiral and the regulators to ensure we are expediting as much leronlimab as needed. We remain hopeful that all of these coordinated efforts will continue to expand the availability of leronlimab to the Philippines.” – CEO Nader Pourhassan

More hospital announcements are expected in the near future which means CytoDyn should ship more leronlimab and generate more revenue for the company.  After the 28 patients are dosed news of recoveries should follow.  Investors need to remember that leronlimab reduced 14-day mortality by 82% in critically ill patients.  That mortality endpoint was statistically relevant which means patients will recover, and if leronlimab gets patients out of the hospital faster and prevents them from dying the news might go viral among the rest of the hospitals. 

No real context was given surrounding CytoDyn’s potential order for 100,000 vials which represents 25,000 CSP patients, but at $1000 per vial it could represent $100 million in sales.  Many investors seem to be missing the point that as recoveries grow so does the likelihood of additional sales.  The CSP program is not an EUA but it is the next best thing and does represent revenue and additional patient data. CSP’s patient data is collected in the same fashion as a clinical trial.  

Ex-Philippine President Joseph Estrada was put on the ventilator 2 days ago which represents a huge wildcard in the Philippine strategy.  There are quite a few message board rumors that his son knows about leronlimab and is trying to get it. When Boris Johnson got sick the rumors emerged.  When Trump got sick rumors emerged that the monoclonal antibody he was taking was leronlimab.  With the massive transformation of that one CSP patient it seems very likely that Estrada’s family is moving forward to get leronlimab.  A save of this high profile politician could heighten the awareness in the Philippines.  

 On the investor update yesterday the CEO of CytoDyn indicated that half of the currently available supply of 1.2 million vials of leronlimab would be set aside for Brazil pending an EUA. Assuming a price of $1000 per vial, this represents a sale of $600 million. Through their partner  Biomm SA they are in active discussions with ANVISA, the regulatory body in Brazil.  They plan to enroll patients in Brazil and are asking to do compassionate use.  

Pathway to Brazilian EUA

  1. Re-analyze the data incorporating the data from the OLE patients 
  2. Complete the CD16 trial with 200 patients and an interim analysis at 75 patients
  3. Conduct a CD17 study that has 3 arms, 2 doses, 4 doses, and placebo.  

With over 20,000 patients in ICU, Brazil needs to find something that works fast. If they see it working a deal could be put together quickly.   

Health Canada also represents another opportunity to bring in sales.  Pourhassan confirmed that his regulatory team thought that an agreement to conduct a clinical trial in Canada would meet the minimum requirements to sell the product. The company is widely expected to file its Interim Order (IO) to Health Canada.  

Imminent Short Attack

The shorts were very active yesterday spreading FUD on the message boards and Twitter.  Even Adam Feuerstein tweeted a comment on the loss of Chief Scientific Officer Mahboob Rahman with a funny video clip.  They were pointing out how Rahman’s name was removed from the conference call lineup between April 1st and April 5th.  Speculation Mahboob was gone took the price lower yesterday as investors feared that Mahboob was a critical part of the BLA filing. 

After the market closed an 8-K filing revealed that Mahboob’s departure was confirmed.  To most, it was evident almost immediately on the first conference call introduction back in November where he rambled about his life story and credentials that he was a very easy-going guy that didn’t want to be tied to timelines.  Here was a guy that quit his job to spend more time with his son.  He didn’t do anything in 6 months and was not aggressive enough. He was a big pharma exec that was accustomed to having a big staff to lean on. Losing him will not cost CytoDyn any time, but it might speed things up. It’s very clear that Nader was sick of the excuses, got another contractor to pick up the pieces and move the BLA forward. 

Pourhassan explained that the receptor occupancy test had issues with the assays.  They have two different companies working on a solution and plan to present the test to the FDA shortly along with the dose justification.  He also explained that the company was also prepared to make an argument to the FDA that a Receptor Occupancy test isn’t needed. The BLA appears to be back on track with the apparent firing of Mahboob Rahman.    

Top Short Themes 

  • They have no CSO to file the BLA or submit the EUA
  • There is no conditional EUA
  • Cannot get approval without USA approval first
  • There’s a $200 million shelf registration that will cause massive dilution
  • Financier Fife is a bad guy for giving CytoDyn money since he’s under investigation
  • Suing AF could expose Cydy to criminal charges
  • Lenzilumab is going to get an EUA first  
  • Over 50 lawsuit reminders for class action trying to bury good news

Top Bull Themes

  • Long Hauler trial completed
  • Recnors testimony about his COVID condition was very insightful
  • Big Pharma deal in discussion stage but cannot comment
  • Biomm partner in Brazil  could accelerate “other indications”
  • Compassionate use is just as good at an EUA
  • Breakthrough Therapy meeting for cancer is looking really good
  • Readily available supply makes leronlimab attractive for an EUA 
  • Minimal dilution and possible money in bank
  • AF lawsuit being filed against STAT  
  • Mahboob was ineffective at filing the BLA

Open-Label Extension (OLE) Wildcard

The primary purpose of an Open-Label Extension (OLE) trial is to gather additional data supportive of the clinical trial while the FDA is reviewing the application for approval.  It’s used to enhance the Phase 3 data.  During the conference call, the company announced they had enrolled 55 people in the OLE and observed overall 28-day mortality of 16.7% in the active arm versus 28% in the active arm of the CD12 trial.  The 28-day mortality rate of the placebo group was 37%. When combined this data is good enough to resubmit to the FDA and all the other regulatory agencies.  

Investment Summary

The United States won’t look at anecdotal data and never has enough data from large randomized controlled trials, but there is a big COVID-19 problem in the Philippines and they seem to care more about solutions than p values.  The move to order leronlimab for 28 CSP patients telegraphs a major shift in Filippino policy.  Based on the quick recovery of the first leronlimab patient an entire hospital ordered.  The next tier of orders to CytoDyn could be based on multiple recoveries in the hospital that could lead to multiple hospitals in a region ordering.  If the statistics play out and confirm an 82% responders rate a EUA from the Philippines seems reasonable by the end of the month. The deal with Brazil seems to be moving at a breakneck pace and the OLE data could push them past the tipping point into the sales zone as they realize this drug can save lives and get people out of the hospital quicker.  All the noise from the shorts is exactly that NOISE.  Investors need to look beyond just the probability of drug approval in the USA.  The foreign countries represent a very lucrative market for leronlimab and once approved they have multiple indications in cancer, NASH, GvHD, Stroke, and MS that could finally morph the company into big pharma.  With the only effective solution for COVID-19 right now and other disease indications, CytoDyn represents the most de-risked stock in the biotech sector. Any short inspired sell-off is likely to be met with enthusiastic buying.

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Disclosure: Insider Financial and its owners do not have a position in the stocks posted and have posted this article for free without editorial input. This article was written by a guest contributor and solely reflects his opinions.

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CytoDyn Doubles Down on Revenue and EUA Strategy with Philippines Announcement
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