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Re: WiseYoda post# 5902

Thursday, 08/17/2017 9:32:58 AM

Thursday, August 17, 2017 9:32:58 AM

Post# of 8287
The company’s news, prospects and financials are just getting better
The shares have consolidated and drifted back to value levels
Acquisition of Hoth Therapeutics is now closed
Additions to the board of directors

Spherix, Incorporated (NASDAQ: SPEX)

Current price $1.29
Tiny 5.76 million share float
52-week range $.83 - $4.75
Q1 revenue up 371% (yoy)
No debt


We will discuss the company’s positive news and metrics below, but we first want to address the current share price.

In June SPEX shares hit their 52-week high of $4.75/ share after we brought it to you at $1.00/share. The shares hovered around $2.50/share for a few weeks and then drifted down to today’s price of $1.29/share. While $1.29 is a significant gain from our initial $1.00 alert level, these shares are again, right now, are in the value range.


The Business

Spherix has little to no debt and they seem dedicated to staying that way. The acquisitions they have made are structured so there is no legacy debt or additional costs.

Patent Monetization:

Spherix owns or controls hundreds of patents and licenses. The Spherix patent portfolio includes the U.S. and foreign patents and pending patent applications in the wireless communications and telecommunication sectors, including data, optical and voice technology, antenna technology, Wi-Fi, base station functionality, and cellular as well as U.S. patents in pharmaceutical technology. The Spherix portfolio includes intellectual property (IP) formerly belonging to the communications giant, Nortel Networks, regarding fiber optic transmission. SPEX monetizes these IP assets through licensing and/or litigation to protect their interest in these assets. Spherix has partnered with Equitable IP, a company that specializes in monetizing these types of IP assets. The relationship with Equitable allows SPEX to monetize these intellectual property assets without incurring litigation costs.

Hoth Therapeutics:

In June 2017, the company announced a deal for a controlling interest in Hoth Therapeutics, a development stage biopharmaceutical company focused on the development of therapeutics for patients suffering from atopic dermatitis, such as eczema. While we disclosed this development in our June Newsletter, the deal closed after, on July 3rd. Hoth Therapeutics is the exclusive sub licensee of proprietary, patented, drug compounds developed at the University of Cincinnati and tested at the University of Miami to treat eczema. The lead drug candidate at Hoth is Biolexa.

Biolexa has achieved positive results in its initial studies conducted at the University of Miami. In addition, Biolexa has the advantage of a shorter-than-average FDA approval process, with the ability to start Phase 2 FDA testing under the 505(b)(2) regulatory pathway. This may result in lower development costs and shorter development time. Under 505(b)(2), testing time is often 66% to 75% less than for a new drug.

According to a GlobalData PharmaPoint research report, eczema impacts millions of Americans and is expected to represent a $5.6 billion market by 2022.

The company’s efforts are focused on moving Hoth into a Phase 2 study and providing additional infrastructure support. Under the terms of the Hoth transaction, Spherix’s monetary investment in Hoth is fixed and they do not anticipate additional funding from Spherix to develop Biolexa.

In July, Spherix formed a Technology Advisory Board to help with the development of the Hoth product(s) and the potential acquisition of more biotechnology assets. The company just announced the addition of Dr. Scott T. Tagawa to the Company’s Technology Advisory Board. Dr. Tagawa is the Richard A. Stratton Associate Professor in Hematology and Oncology and an Associate Professor of Clinical Medicine and of Clinical Urology at Weill Cornell Medicine. You can read a full bio of Dr. Tagawa here (insert link)

Consolidation in the Dermatology/Eczema Market

The eczema space has been active from an M&A perspective. Large pharmaceutical companies recognize the substantial unmet need for treatments in dermatology, such as atopic dermatitis, and are actively seeking out assets with near term revenue potential.

An example would be Pfizer's May 16, 2016 decision to acquire Anacor Pharmaceuticals for approximately $5.2 billion. Anacor's main drug candidate (crisaborole) at the time of acquisition by Pfizer was a topical treatment for mild to moderate atopic dermatitis. Anacor shareholders got a 55% premium for their shares when Pfizer announced the acquisition. At the time of the Anacor buyout, analysts saw pharma giants Novartis or Allergan as more likely buyers. Novartis, Allergan, or other big pharma companies may currently be in the market for an acquisition in the dermatology/eczema space.

We won’t go through the bios of the Spherix team, you can read those on their Website, http://spherix.com/about_us.php but they have extensive experience in patent monetization, biotechnology, and marketing.

Two weeks ago, Spherix CEO, Anthony Hayes, issued a letter to shareholders. The full text of that letter can be viewed here: http://www.prnewswire.com/news-releases/spherix-issues-letter-to-shareholders-300497987.html

Conclusion

A good portion of the value of Spherix shares lies in the monetization value of the over 400 patents they control and the potential of Biolexa.

The Nortel Networks patents have great potential as Nortel, a former communications behemoth, developed a lot of technology still used in communications today. At one time, the Nortel IP portfolio was valued at $20 billion. The Spherix/Equitable partnership currently has several lawsuits pending for infringement of the Nortel patents against such companies as Sprint, Frontier Communications, Cincinnati Bell, and others.

The acquisition of Hoth and Biolexa creates a monetization model with huge potential for a profitable exit. Remember, Pfizer paid $5.2 billion in cash to acquire an eczema drug that was still under FDA review.

Spherix has an asset base to monetize that could potentially be worth $$billions.