Lpath Gets Attention From Pfizer and Analysts as a Potential Buy-Out Candidate

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Lpath Gets Attention From Pfizer and Analysts as a Potential Buy-Out Candidate
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LOS ANGELES, CA--(Marketwire -11/17/11)- Lpath (OTC.BB: LPTN.OB - News), a San Diego-based firm, whose shares currently trade just under $1 appears to be a potential acquisition target. The firm' therapeutics platform is showing strong data that their drug-discovery engine has a unique ability to bind to and inhibit bioactive lipids that contribute to various diseases. Morgan Joseph, a firm with research analysts who distinguish themselves by zeroing in on quality companies with growth prospects and which often present special situations, recently rated the firm a "Buy" with a price target of $8.

This past summer, Bristol Myers Squibb acquired Amira Pharmaceuticals, another San Diego-based firm whose small-molecule discovery and development firm was developing new drugs to treat inflammatory and fibrotic diseases. The buy-out price totaled $325M up-front plus a potential earnout of $150M.

With their ImmuneY2 platform technology, Lpath is generating antibodies against other bioactive-lipid targets, thus creating a compelling pipeline of therapeutic candidates.

A recently released NIH study found that both Avastin and Lucentis are equally effective in treating age-related macular degeneration, but Lpath's iSONEP drug candidate has caught the eye of the industry because in addition to working in similar fashion to those drugs, published data shows that the drug also appears to mitigate the scar tissues and inflammation associated with the eye disease.

In fact, early clinical data results suggest that iSONEP might actually "melt away" less mature lesions. Those with occult-type disease represent ~ 70-80% of the market, but close to 90% of the newly diagnosed patients.

AMD is the leading cause of blindness in the U.S., and results from abnormal growth and leakage of blood vessels in the retina.

Given Lucentis revenues of $2.9 billion, and the number of patients receiving this regimen escalating dramatically, there is little doubt that there is a market opportunity for Lpath's drug candidate and evidence shows that the firm's pipeline may actually have several other blockbuster drug candidates in the making.

Already Pfizer has an established partnership (possible $500+M) with the firm for their ocular drug iSONEP with indications in Wet AMD, RPE Detachment, Diabetic Retinopathy.

It is public knowledge that Lpath is actively exploring partnership opportunities for some of their other unpartnered programs. Their program for Lpathomab is showing promise in several disease areas of unmet medical need, where there are large market opportunities exist in areas like Neuropathic/inflammatory pain, Diabetic neuropathy and Traumatic brain injury.

In addition, published data shows that the drug's neuro-protective qualities may allow it to 'carry over' to the Alzheimer's and stroke space. Recently released non-confidential information shows that Lpath is pursuing partnering discussions with other Pharma companies about this drug candidate.

It is important to realize that Lpath's proprietary ImmuneY2™ process generates high-binding and specific monoclonal antibodies against disease causing bioactive lipids. Using this ImmuneY2, Lpath has already generated three proprietary drug programs, two of which are in Phase 2 (Pfizer has partnered one and has a right of first refusal on the other).

Those three drug programs are currently advancing to commercialization and according to the latest investor presentation by the company, as much as 41% of the current share float is now being held by "smart money" institutional investors. Insiders hold 12% of the company. From a financial perspective, the company also shows a strong balance sheet with a cash runway scheduled to last through June 2013.

Late last week, rumors and reports started to flow that the firm will have results from their current Phase II drug studies released (after the start of the new year) and that they could be in line for a buy-out offer if the data looks as good as anticipated. We have reached out to management for clarification on both of those issues and they have agreed to an interview which will be published next week.

Given the current lack of market attention, shares appear undervalued at the current $63M market cap.

We would advise that investors watch the trading action and decide if the upside risk here is worth taking a position in the firm as either a trade candidate or longer term-investment.

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