Ritter Pharmaceuticals Inc (NASDAQ:RTTR) Is Cheap Right Now Ahead Of A Catalyst

Ritter Pharmaceuticals Inc (NASDAQ:RTTR) took a hit at the end of September on the news that the company was set to raise $23 million in an underwritten public offering.The company fell from a little over $0.55 a share to $0.30 a share – a decline of 45%.Throughout October and early November Ritter's share price has fluctuated a bit but – on aggregate – has remained relatively flat, meaning the raise-driven discount remains in place for the stock as things stand. RTTR Daily ChartThese sorts of offerings almost always translate to some downside in the share price of the companies that carry them out, primarily because the shares issued on the back of the raise translate to a degree of dilution, proportionate in scale to the size of the issue.There's often an opportunity, however, to pick up shares at a discount – especially if the company that's issuing the shares can use the cash to push through a major catalyst and – in turn – push its share price up subsequent to the decline.So is that the case here?In order to answer, we've got to look at what Ritter is doing on the development front and – on this front – things are pretty exciting.The company's lead development asset (and the one that both accounts for the majority of its current valuation and serves as the focus of this discussion in terms of having the potential to drive value) is a drug called RP-G28.This one is targeting lactose intolerance and – because of this – it's pretty exciting. Lactose intolerance is a condition that affects millions worldwide and, right now, there's neither a cure for it nor any really effective treatments. Patients that are lactose intolerant just have to avoid lactose – that's the only real solution.If the company can get RP-G28 to market in this indication, it has the potential to become the first FDA-approved treatment in this field and – in turn – could be a billion-dollar drug with very little in terms of marketing push required.So that's the opportunity – where do things stand in terms of progress towards this aim?The company completed a phase II trial earlier this year and did so pretty successfully. However, in order to get this drug green-lighted by the FDA in the US in its target indication, Ritter is going to have to conduct two phase III trials, each one the same size of the phase II just mentioned.That's no easy task and it's not going to be cheap either – hence the amount of capital raised as outlined above. The primary endpoint of both studies will evaluate what's called a patient's composite LI symptoms (including abdominal pain, cramping, bloating and gas) after a lactose challenge, comparing baseline symptom scores to 30-days post-treatment symptom scores to assess patients' clinically meaningful benefit.This is similar in concept to the phase II study, which is a positive for the company in the sense that the assumption is that if it can hit this endpoint once it can hit it again, but there are certain elements of the two phase III studies that make things a little more complicated. Specifically, the FDA has required certain durability factors built into the protocol and these are going to have to be met if the company is to show that its drug doesn’t just work but that it can maintain an efficacy effect over an extended period of time.So that's what's next – we want to see initiation (which will likely take place early next year) and, subsequently, strong data from both phase III studies as they each complete.The risk of immediate dilution is negated by the September raise but there's a good chance we'll see further issue nearing the close of the phase III studies, in anticipation of a commercialization run.We will be updating our subscribers as soon as we know more. For the latest updates on RTTR, sign up below!Image courtesy of Senado Federal via FlickrDisclosure: We have no position in RTTR and have not been compensated for this article.