Last time we covered Q BioMed Inc (OTCMKTS:QBIO), we noted that the company was one of our favorite under the radar biotechnology stocks. At the time, it was trading for pretty much bang on four dollars a share. During the three months subsequent to our highlighting it, the stock has dipped to $3.84, or by around 4%.
Across this period, there have been a couple of key operational updates, both of which markets seem to have completely ignored. We said it was under the radar, after all, and it looks as though there is still some way to go before it flags up on the screeners of wider markets.
So long as it remains under the radar, of course, there is an opportunity to pick up an exposure to the company at discounted rates. With this in mind, here is what has happened recently that we view as pertinent and what we are looking for next as potentially bringing this stock into the spotlight.
So, Q BioMed is a healthcare company with one asset already on shelves in the US and another couple of assets in its development pipeline. The already commercialized asset, what’s called SR-89, is a reformulation of an already very well established pain management asset called Strontium Chloride. This is widely used in oncology and is known for being mixed with toothpaste as a sort of chronic bone pain relief treatment in metastatic cancer patients.
Q BioMed has taken Strontium Chloride and turned it into an injectable formulation, which has shown to be able to provide relief for months after initial (single) injection – a far more convenient way of providing pain relief for these patients.
Anyway, this is something we have gone into in quite a lot of detail in the past and it’s not our focus here. All that is important is to know that this is already on shelves and is a bread-and-butter revenue generator for the company.
What is our focus, is the development pipeline and, specifically, a collaboration that was announced back during late September with an entity called Sphaera Pharma.
In April this year, Q BioMed acquired a license to a drug called QBM-001 from a private entity, ASDERA LLC. The drug is primarily indicated as a migraine candidate but Q BioMed and Sphaera want to go after something different with it – what’s called pediatric nonverbal disorder. This is a condition where children don’t learn how to speak and current theory suggests that the inability to learn verbal communication is rooted in faulty synaptic channels in the brain. The ions that regulate these channels are rooted in migraine onset, so there’s the link between the two conditions and, through the regulation of these ions with QBM-001, Q BioMed thinks it can help young children to develop and maintain healthy synapses and, in turn, overcome the problem associated with nonverbal communication.
It’s a big ask, but an interesting one, and one that – if successful – will fill an as-yet unaddressed need in the US.
It’s a rare condition but that doesn’t mean there isn’t revenue to be generated from it. The price of orphan drugs averages at around $100,000 annually. With 20,000 children suffering from this condition in the US, that’s a $2 billion market in and of itself. Expand that to the 30,000 suffering in Europe and the rest of the world and the market potential climbs to $5 billion.
So what are the catalysts?
Preclinical testing of the new drug is currently underway and a final product is scheduled to be ready by the middle of October. This means we should see an IND before the end of the year and, subsequently, a trial initiation at some point early 2018. Management expects to go after the 505(b)2 regulatory pathway in the US, meaning the drug could jump straight into a pivotal trial (likely a phase 2/3) if the FDA approves said pathway.
Keep in mind that there is a near-term dilution risk as it will cost money to conduct a pivotal trial, even one done so under the 505(b)2 framework, but that far from outweighs the potential upside on this drug reading out as effective come topline.
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Disclosure: We have no position in QBIO and have not been compensated for this article.