MediciNova, Inc. (MNOV)

[Minding]

MediciNova Is An Excellent Opportunity In The Biotech Space
Jun. 22, 2015 2:34 PM ET | About: MediciNova, Inc. (MNOV), Includes: IPF
Disclosure: I/we have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours. (More...)

From http://seekingalpha.com/article/3275225-medicinova-is-an-excellent-opportunity-in-the-biotech-space?ifp=0

Summary

MediciNova is focusing its efforts on MN-166 and MN-001.
MN-166 is being developed in multiple indications, while MN-001 is being developed in NASH and IPF.
MediciNova looks undervalued based on the potential of its pipeline.
MediciNova Inc. (NASDAQ:MNOV) is a small cap biotech company based in La Jolla, California-based company, with multiple products in its pipeline. The company is currently focusing its efforts on the development of MN-166 or Ibudilast in multiple indications and MN-001 for the fibrotic diseases such as NASH and PF. Recently, MN-166 was granted an Orphan Drug Designation by the FDA for Krabbe Disease. MN-001 has also been granted an Orphan Drug Designation for the treatment of idiopathic pulmonary fibrosis (NYSEARCA:IPF). MNOV has two more products in its pipeline. Despite a robust pipeline, MNOV only has a market capitalization of under $100 million. Even if MNOV is successful in developing and bringing to market just one of its two lead products in one or two indications, there could be tremendous upside.

MN-166

MediciNova is currently focusing its efforts on the development of MN-166 and MN-001. MN-166 is an inhibitor of macrophage migration inhibitory factor (MIF) and certain phosphodiesterases (PDEs). It has been in use for more than two decades in Japan and Korea for the treatment of asthma and post-stroke dizziness. MNOV licensed MN-166 from Kyorin Pharmaceuticals in 2004 and is developing it for the treatment of primary progressive and secondary progressive multiple sclerosis (NYSE:MS), amyotrophic lateral sclerosis (ALS) and drug dependence.

Around 2.3 million people globally are affected by MS, according to the National Multiple Sclerosis Society. While there are existing therapies available for MS, there is a need for a safe and effective therapy for primary and secondary progressive MS. Following promising results from Phase 2a trial in primary progressive and secondary progressive MS, investigators from NeuroNEXT commenced evaluation of MN-166 in both the conditions in the U.S. NeuroNEXT is a NIH-funded Phase clinical trial network. Recruitment and enrollment of patients in the clinical trial began in late 2013. In May, MNOV announced that the trial was fully enrolled. The company expects the trial to be completed in 2017.

MNOV also has an ongoing trial of MN-166 in ALS, which is being conducted by Carolinas Neuromuscular/ALS-MDA Center at Carolinas Healthcare System Neurosciences Institute. The trial will be evaluating several efficacy endpoints in addition to monitoring the safety and tolerability of MN-166 60 mg/day versus placebo when administered in combination with riluzole. In February, MNOV enrolled 30 of the 60 patients planned for the trial. In April, MNOV announced positive interim safety data from the clinical trial.

MN-166 is also being evaluated in methamphetamine-dependent users. Investigators at UCLA commenced a Phase 2 trial in MA-dependent users in 2013 after obtaining grant funding from NIDA. In February 2013, MN-166 was also granted a Fast Track Designation by the FDA for the treatment of MA dependence. UCLA has also received funding from the NIAAA to commence a Phase 2a study to evaluate MN-166 in a sample of 24 non-treatment seeking individuals with either alcohol abuse or dependence.

Investigators at Columbia/NYSPI have initiated at NINDA-funded Phase 2a clinical trial of MN-166 for the treatment of prescription opioid dependency. Last year, MNVO announced positive interim results from this study.

MN-166 has also been granted an Orphan Drug Designation by the FDA for the treatment of Krabbe disease, a rare genetic degenerative disorder. Currently there is no cure for the disease and it is fatal in general before two years of age. The company has previously opened an Investigational New Drug (NYSE:IND) application with the Division of Neurology products for MN-166.

MN-001

MN-001 is a novel, orally bioavailable small molecule compound. MNOV completed a pre-clinical study assessing the drug's potential clinical efficacy for the treatment of NASH. NASH is a common liver disease, resembling alcoholic liver disease but is found in people who do not drink or drink little alcohol. NASH affects 2%-5% of the American population, according to the U.S. National Digestive Diseases Information Clearinghouse. NASH can lead to liver cirrhosis.

NASH is being seen as a multi-billion opportunity, given its prevalence and significant unmet medical need. Several companies are currently focusing on NASH treatment. The NASH treatment market could evolve into a multi-billion opportunity, although it will be highly competitive. But the FDA has granted MN-001 a Fast Track Designation for the treatment of patients with NASH with fibrosis.

MN-001 also has an Orphan Drug Designation for the treatment of IPF, which was granted by the FDA in October 2014. In February, the FDA approved the protocol for Phase 2 trial of MN-001 in IPF.

MNOV Looks Undervalued

MediciNova's pipeline has huge potential. However, this is not yet reflected in the company's share price. MNOV shares are currently trading around $4, although their performance this year has been impressive. Year-to-date, MNOV has gained more than 30%.

Each of the indications that MNOV is targeting with its MN-166 and MN-001 is represents a major opportunity. The top five drugs for the treatment of MS had each had sales of more than a billion dollars in 2013. But as I noted that there is still a need for safe and effective treatment options and MN-166 has the potential to emerge as one. Even if MN-166 achieves $500 million in sales for MS, which is a very conservative estimate, then MNOV could have significant upside. MA dependence is once again a major opportunity for MNOV. According to data from Rand Corporation, the economic burden of MA dependence is around $23.4 billion and currently there are no available treatments.

MN-001 in NASH also represents a multi-billion dollar opportunity for MNOV. Many analysts believe that the NASH treatment market could become even bigger than the hepatitis C treatment market, which is expected to exceed $15 billion by the end of 2022. Although the NASH treatment market is expected to be extremely competitive, MN-001 could generate significant sales for MNOV even if the company is able to gain a small portion of this market.

The only issue with MNOV is when its drugs will reach the market. I believe that this is the reason why investors are keeping away from this opportunity. MNOV's clinical trials for MN-166 and MN-001 are investigator-sponsored and funded with or without government grants. This means that the company has not been able to advance its pipeline as quickly as investors would have liked. Of course, this is part of MNOV's strategy of advancing its pipeline through non-dilutive financing. However, MNOV plans to enter into strategic alliances with major pharmaceutical companies once it enters into late-stage product development. This could accelerate the development and commercialization process.

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