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Theratechnologies Inc (OTCMKTS:THERF)'s Near Term Catalyst Could Spark A Return To Upside

Theratechnologies Inc (OTCMKTS:THERF)'s Near Term Catalyst Could Spark A Return To Upside
Written by
Chris Sandburg
Published on
November 9, 2016
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Theratechnologies Inc. (OTCMKTS:THERF) traded essentially flat throughout July and August, a few spikes aside, but during the last couple of months picked up some momentum, reaching highs ahead of $2.6 a share at the October-November cross. The stock has now settled around the $2.3 mark, and there's a near term catalyst we think could spark a return to the upside momentum and bring about further gains heading into the end of the year. It's a classic biotech binary event, so there's some risk involved, but we think the lead-in facts suggests it outweighed by the reward on this one.Here's what we're watching, and why.First, a quick introduction to the company.Thera is a specialty pharmaceutical company with a focus on addressing clinical unmet needs in the US and Canada. The company is based in Montreal, and it's primary listing is in Toronto, but it's listed OTC in the US. Thera has one product already in commercialization in both the US and Canada – a product called EGRIFTA. The product picked up approval back in 2010, with a target indication of treating HIV patients with lipodystrophy, a condition in which excess fat develops in different areas of the body, most notably around the liver, stomach, and other abdominal organs. The condition is associated with many antiretroviral drugs used to treat HIV.The drug generates a little less than $7 million a quarter revenues, and the company generated a net profit third quarter this year of around $900K (reported as CAD$1.2 million).We'll say right off the bat, that for a company of this size, with a late stage development asset (the drug we're about to highlight as providing the near term catalyst), a black bottom line is anomalous.So what's the catalyst?It relates to a late stage asset called ibalizumab. The drug remains in the HIV spectrum that Thera is currently targeting, but instead of targeting an associated symptom of HIV, it's trying to go after HIV itself. One of the major problems with HIV treatments is what's known as MDR, or multi drug resistance. MDR rates vary from patient to patient, but the phenomenon essentially means that any single, or combination of treatments designed to reduce viral load in HIV patents (viral load is the flagship measurement of severity).Thera has developed ibalizumab as a sort of reinforcement treatment for patients with HDR HIV, for whom current SOC regimens are failing. It's administered alongside the ongoing regimen, and the goal is to return that patient to a reduced viral load trend.The company just completed a pivotal for the drug, and topline looked great. A total of 40 patients were enrolled in the study. Seven days after the loading dose, 83% of patients achieved a ≥ 0.5 log10 decrease from baseline compared with 3% during the seven-day control period. This ≥ 0.5 log10 decrease was the primary, and with a p-value of <0.0001, stat significance is pretty much totally indisputable.Markets didn’t respond as enigmatically as they might have to the numbers, however, and we think it's because investors are waiting for full release, which is going to detail safety data and secondary endpoints across an extended period (24 weeks) before pulling the trigger.In turn, we think this secondary release gives us a great catalyst ahead of a BLA filing, and eventual approval, if the numbers line up as expected.The drug is on a rolling submission, having picked up Breakthrough Therapy designation from the FDA, and so the submission is already well underway (it's actually Thera's partner, TaiMed Biologics that is doing the filing) and so if the numbers come out positive, we expect a submission completion before close of the year.We will be updating our subscribers as soon as we know more. For the latest updates on THERF, sign up below!Disclosure: We have no position in THERF and have not been compensated for this article.

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