Can Fite BioPharma Ltd (CANF)

[midastouch017]

CANF - Potential 500%+ Gainer Following Upcoming Announcement Of IND And Phase 2 COVID-19 Clinical Trials

Jun. 27, 2020 7:16 PM ET|1 comment |About: Can-Fite BioPharma Ltd. (CANF), Includes: CAPR, EDSA, GILD, INO, NVAX, VXRT

Summary
The company is expected to file IND and Phase 2 protocol to evaluate Piclidenoson in COVID-19 infected patients with moderate-to-severe symptoms following outcome of pre-IND FDA meeting.

Can-Fite oral drug has significant advantages over competitors Capricor and Edesa while all claim similar mode of action which is to modulate the immune system to prevent cytokine storm complications.

Can-Fite offers significant advantages over recent high-fliers VXRT, EDSA, and CAPR as discussed in this article.

Excluding the COVID-19 opportunity, CANF has an advanced clinical pipeline with an addressable market exceeding $150 billion in liver cancer, NASH, reumathoid arthritis, psoriasis, erectile disfunction, and inflamation.

In the last 7 months institutional ownership has increased by 50% according to Fintel. The most recent addition is CVI Investments Inc. reporting a 7.1% ownership in the company as reported on June 19, 2020.

Discussion
According to its website, Can-Fite BioPharma Ltd. (NYSE:CANF) (TASE: CFBI) is an advanced clinical stage drug development Company with a platform technology that is designed to address multi-billion dollar markets in the treatment of cancer, inflammatory disease and COVID-19. Can-Fite's platform technology is based on a specific target, the A3 adenosine receptor (A3AR), present in high concentrations in inflammatory and cancer cells but not in normal body cells. The company's proprietary drugs target and bind with A3AR and cause cancer and inflammatory cells to die. This creates a targeted anti-cancer and anti-inflammatory effect, while leaving normal cells unharmed. The A3AR receptor is also a biological predictive marker which helps to identify individual patients' responsiveness to our drugs.

The Company's lead drug candidate, Piclidenoson, is currently in Phase III trials for rheumatoid arthritis and psoriasis. Piclidenoson has been approved for a pilot clinical trial in Israel to treat COVID-19 infected patients with moderate-to-severe symptoms.

The activity of Piclidenoson as an anti-inflammatory agent has been tested in a number of different experimental models including adjuvant and collagen induced arthritis and inflammatory bowel disease. In all models tested, Piclidenoson induced a robust anti-inflammatory effect measured by clinical and histological disease scores.
Can-Fite's liver drug, Namodenoson, is headed into a Phase III trial for hepatocellular carcinoma (HCC), the most common form of liver cancer, and successfully achieved its primary endpoint in a Phase II trial for the treatment of non-alcoholic steatohepatitis (NASH).

Namodenoson has been granted Orphan Drug Designation in the U.S. and Europe and Fast Track Designation as a second line treatment for HCC by the U.S. Food and Drug Administration. Namodenoson has also shown proof of concept to potentially treat other cancers including colon, prostate, and melanoma. CF602, the Company's third drug candidate, has shown efficacy in the treatment of erectile dysfunction.

The U.S. Patent and Trademark Office issued a Notice of Allowance to Can-Fite for Namodenoson in the treatment of NASH & NAFLD. A patent was issued for Namodenoson in the treatment of NASH in South Korea, where the drug is out-licensed for this indication. Can-Fite has also filed a new patent for Namodenoson to be used as a combination therapy with checkpoint inhibitors for oncology indications. Based on its recent scientific findings in cannabinoid-based drugs, Can-Fite has filed patents for the use of such drugs to treat cancer, autoimmune, inflammatory and metabolic diseases.
Piclidenoson and Namodenoson have an excellent safety profile with experience in over 1,500 patients in clinical studies to date.
Can-Fite To Advance Piclidenoson To Phase 2 Clinical Trials
On June 9, 2020, the company announced that the FDA has provided detailed comments regarding the prospective use of Piclidenoson to treat patients suffering from COVID-19. The FDA’s response allows Can-Fite to proceed to the next step of formally submitting an IND for Piclidenoson in this indication.

Can-Fite CEO, Dr. Pnina Fishman commented,

“We are grateful for the thoughtful and comprehensive guidance from the FDA. Using the FDA’s feedback on our clinical trial, we anticipate submitting an IND shortly. We believe that Piclidenoson’s anti-viral, anti-inflammatory, anti-rheumatic properties and excellent safety profile make it a strong candidate for the potential treatment of COVID-19.”

The planned Phase II trial will evaluate the efficacy and safety of Piclidenoson, when added to the current standard of care treatment, for COVID-19 infected patients with moderate-to-severe symptoms.

During the 1Q 2020 conference call CEO Fishman commented:

"We had previously announced that we were approved to commence a COVID-19 clinical study in Israel. While we did commence this trial, we have not enrolled patients due to the decreasing number of COVID-19 patients in Israel. We’re now focusing our COVID-19 clinical development in U.S. which currently has the largest number of cases in the world. During the first quarter, we also entered collaborative research agreement with the Lewis Katz School of Medicine at Temple University, Philadelphia to study the anti-viral activity of Piclidenoson on COVID-19 viral load."
The timining for these clinical trials could not be better because as we all know over 20 states have recently reported near-record levels of COVID-19 contamination. In fact, several cities and counties have declared Level 1 (Severe) category such a Harris County in Texas because local hospitals are approaching capacity limits.

It is widely known that some critically ill COVID-19 victims experience Cytokine Release Syndrome or CRS as an adverse event that may result in multiple organ failure or acute respiratory distress syndrome (ARDS). CRS is defined as an inflammatory condition occurring when a large number of lymphocytes and/or myeloid cells are being activated, releasing high levels of inflammatory cytokines. CRS can occur within minutes or hours, but it can also take place days or weeks later.

Several recent publications suggest that in the later stages of COVID-19 related complications overstimulation of the immune system is likely responsible for triggering CRS causing the body to become overwhelmed with pro-inflammatory molecules. CRS is initially manifested by high fever, nausea, headache, tachycardia, hypotension, cardiac dysfunction, rash, and shortness of breath. However, this immune response may become excessive thus inducing accelerated and hard to control pneumonia, multiple organ failure, ARDS, and ultimatelly death. Ironically, it appears that the body's uncontrolled overreaction to COVID-19 is what delivers the fatal blow rather than the virus itself.

Can-Fite CEO Fishman has deep personal knowledge in the area of cytokine storm, sepsis, and Cytokine Release Syndrome. On January 30, 2019 she co-authored the article entitled: "Targeting the A3 adenosine receptor to treat cytokine release syndrome in cancer immunotherapy."

In this article CEO Fishman states:

"The main cytokines involved with CRS include tumor necrosis factor-a (TNF-a), interferon ? (IFN-?), interleukin 1ß (IL-1ß), interleukin 2 (IL-2), interleukin 6 (IL-6), interleukin 8 (IL-8), and interleukin 10 (IL-10), all known to be involved in the regulation of the innate and cellular immunity. Following immunotherapy, the inflammatory cytokines are released, enhancing the immune response and activating the proliferation of immune cells to further secrete more inflammatory cytokines. This chain of events leads to a loop between the inflammatory cytokines and the immune cells, which may result in a cytokine storm."

"Adenosine, a ubiquitous purine nucleoside, induces a plethora of effects in the body via its binding to four adenosine receptors A1, A2a, A2b, and the A3. Highly selective agonists to the A3 adenosine receptor act as inhibitors of proinflammatory cytokines, possess robust anti-inflammatory and anticancer activity, and concomitantly, induce neuroprotective effects. Piclidenoson and namodenoson belong to this group of compounds and are effective upon oral administration, show an excellent safety profile in human clinical studies, and therefore, may be considered as drug candidates to treat CRS."

"Overall, it looks like the current treatments for CRS are not satisfactory, and there is a need for a drug that will concomitantly act as a robust anti-inflammatory that will also prevent neurotoxic manifestations (referring to Piclidenoson which is the drug chosen for the company's COVID-19 therapy program)."

As the reader can probably judge by reading the previous paragraphs, it is obvious to see why CEO is passionate about the opportunity to help COVID-19 victims as quickly as practically possible. Furthermore, she has several decades of research in the area antiinflammatory drug development (more on this on the pipeline discussion later in this article).

Piclidenoson has a well-established safety profile in clinical studies in the U.S. and abroad, and has been dosed in over 1,000 patients for the treatment of rheumatoid arthritis and psoriasis. The use of A3AR agonists as potent anti-inflammatory agents in addition to standard of care in acute infectious diseases where host defense responses are overwhelming, leading to cytokine storm and death, is supported by several peer reviewed studies, as well as by Can-Fite’s own work in the field of adenosine biology. A3AR agonists have been shown to be effective in models of inflammatory cytokine production and sepsis resulting in apoptosis of inflammatory cells.
The following is a summary of how the company sees the COVID-19 therapy opportunity from the company's most recent Corporate Presentation:

What Should Investors Expect When Can-Fite Announces IND and Phase 2 COVID-19 Clinical Trials?

With the renewed fears about an earlier-than-expected second wave that's starting to criple again parts of the US and many countries around the world, many COVID-19 plays will be on the radar of opportunistic investors in the next few weeks/months.

This week we saw Vaxart (NASDAQ:VXRT), Inovio (NASDAQ:INO), (Novavax:NVAX), and others reach new highs. Last week there was Edesa (NASDAQ:EDSA), and a few others; a few weeks ago we saw Capricor (NASDAQ:CAPR) and a dozen others. Invariably, each and everyone of these companies have gained from several hudred to several thousand percent in 2020. For instance NVAX started te year at $4/share and now it's hovering around $80/share. VXRT started the year at 35c and this week it spiked to $14/share (4000% gain!!) and finally settled around $9/share.

I believe CANF will be another big winner going forward as soon as the company releases IND and Phase 2 COVID-19 news. I expect news this coming week or shortly thereafter per CEO comments. It might not gain 4000% like VXRT but I believe 500% is reasonable and sustainable.

There are several similarities between CANF, EDSA, CAPR, and VXRT each having advantages and disadvantages over the other:

Let's look at CAPR. On April 29, 2020 the company reported:

"five male patients and one female patient (between ages 19 and 75) suffering from COVID-19 received IV infusions of 150 million allogeneic cardiosphere-derived cells (CAP-1002). Of the five patients on ventilator support, four patients no longer required ventilator support within just one to four days following the infusion. The fifth patient remains on mechanical ventilation and the sixth patient is receiving supplemental oxygen and is currently clinically stable."

The news sent CAPR flying from $2 to $11/share. However upon closer examination, there was no mention about the patients risk factors (race, diabetes, cancer, etc,) other than age and sex. Also, there was no mention about the standard of care being applied to those patients at the time, or any other synergistic therapies that might have skewed the results. Success with six patients is hardly statistically significant. Additionally, long-term ally Cedars Sinai hospital which runs the company's HOPE-2 Duchenne Muscular Dystrophy (DMD) clininical trials was the sponsor of that study.

So what is the similarity between CANF and CAPR? It's essectially the mode of action of Capricor's CAP-1002 and Can-Fite's Piclidenoson. They both use the drug's immunomodulatory properties use to modulate inflammatory cytokines and to regulation of the immune response to prevent cytokine storm and sepsis.

The significant difference is the availabilty of the drug for massive global consumption.

Capricor's CAP-1002 is an IV-infused allogeneic cardiac cell based therapy, and by its own nature its availability for large-scale application might be limited.
Piclidenoson on the other hand is an orally bioavailable drug that can be produced/manufactured by the millions and easier transportable globally where needed
One huge difference between CAPR and CANF's is that CANF's late-stage pipeline has an addressable markets (excluding the COVID-19 windfall) at least 10-fold greater than Capricor's DMD addressable market of far less than $1B for its DMD program. The addressable market for the company’s Cannabinoid Based Pharmaceuticals alone addressing autoimmune, cancer, and metabolic indications is almost $60B.

CANF's combined addressable markets for Piclidenoson (rheumathoid arthritis and soriasis), Namodenoson (liver cancer, NASH), and CF602 for erectile disfunction indications exceed $100 billion as seen in the company's most recent corporate presentation:

One advantage that Capricor might claim is that it's developing exosome-based vaccines for COVID-19. However, in the company's most recent presentation they expect to initiate clinical evaluation in 1H 2021. It is known that vaccine development is a long process that will ultimately cause the demise of NVAX, VXRT, INO and others when reality sets in.

Since I've mentioned COVID-19 vaccines I will make a couple of comparison's with this week's darling VXRT.

But first, I would like to mention a recent article by Seekingalpha contributor Et al BioCapital entitled: "Vaccines Will Underwhelm, And Why Gilead Has A Substantially Larger Market Opportunity" discusses the challenges and dificulties related to developing a vaccine for the highly mutated and unpredictable "behavior" of the novel COVID-19 coronavirus. In the end, only the large players will be able to survive the attrition that will ultimately occur leaving small-time vaccine plays like VXRT, INO, CAPR, and other like them with nothing to show for after several rounds of dilution to fund those studies. The proverbial "Buyer Beware" should be high on the minds of investors chasing some high-flier COVID-19 plays having weak fundamentals.

The biggest similarity between CANF and VXRT are that both will use orally-administered therapy/vaccine. This is huge in that they are not dependent on temperature and can be shipped and deployed all over the world quickly where needed providing an enormous logistical advantage in large, global therapy campaigns .
However, adverse events can occur with both, but obviously some IV drugs carry a different set of risks such as bruising, infection, and blood clots at the infusion site.

Pills are certainly much more convenient. Most of the time, when we are established on a safe and stable dose, we can gulp them down in our PJs in the privacy of our home. They are portable and accessible when we travel.

But that convenience carries different concerns. Absorption can be effected by what we eat and what other medications we take. We don’t usually read the package insert on our infusions, but we really should for any oral meds. Some pills’ pharmacokinetics are profoundly impacted by what else we ingest.

One significant difference between CANF's pipeline (as shown above), and that of VXRT is that Vaxart's is early stage and CANF's is late stage. Most of VXRT's candidates are in preclinical with the most advanced entering Phase 2 as ween in te following slide from the company's

It's no wonder that at the start of the year Vaxart's market cap was less than $10M. There is a huge disconnect with the $600M market cap which temporarily reached over $700M on the heels of yesterday's announcement that its oral COVID-19 vaccine has been selected to participate in a non-human primate (NHP) challenge study, organized and funded by Operation Warp Speed. According to the press release, Operation Warp Speed is a new national program aiming to provide substantial quantities of safe, effective vaccine for Americans by January 2021. I wish VXRT management and investors success for the benefit of human kind.

My last comparison is between the value proposition of EDSA's and CANF's COVID-19 therapy programs.

On June 15, 2020 Edesa announced that it has received expedited approval from Health Canada to begin a Phase 2/3 clinical study of its investigational drug, EB05, which the company is developing as a potential treatment for moderate to severe COVID-19 patients. The stock price jumped from $2.8 the day before to $10/share on 55M shares traded the day of the announcement.
Edesa's press release states:

"EB05 is a monoclonal antibody that has demonstrated the ability to suppress the release of proinflammatory cytokines that are often observed in severe COVID-19 patients. Specifically, the drug inhibits toll-like receptor 4 (TLR4) signaling - a key component of the innate immune system and an important mediator of inflammation responsible for acute lung injury that has been shown to be activated during SARS and Influenza infection. Based on previous clinical data and the mechanism of action, the company believes that modulating this well understood signaling pathway could reduce the number of ICU patients and intubation/ventilation procedures, ultimately saving lives."
Sounds familiar? this is virtually the same mode of action being claimed by Capricor's CAP-1002 and CANF's Piclidenoson...to mudulate the immune system to prevent cytokine storm and its associated problems as discussed several before in this article.

Just as in the case of Capricor's CAP-1002, CANF's Piclidenoson has a significant advantage over Edesa's IV-infused EB05 because it is orally available.

The other significant adavantage of Can-Fite over Edesa is the degree of clinical development and the significantly larger addressable markets for the potential drug candidates (over $150B vs less than $5B). Below is Edesa's current pipeline as shown on the company's website:

Upcoming Milestones

The following are the milestones the company lists for the rest of 2020 including two Phase 3 readouts in 4Q 2020. Not included are milestones related to its cannabinoid program with partner Univo Phrapaceuticals as shown on the last slide of this section:

Financials

On June 10, 2020 the company announced that it has raised $8M by entereing into definitive agreements with several institutional and accredited investors for the purchase and sale of 3,902,440 of the Company’s American Depositary Shares (ADSs), at a purchase price of $2.05 per ADS, in a registered direct offering. Can-Fite has also agreed to issue and sell to the investors, in a concurrent private placement, unregistered warrants to purchase up to an aggregate of 1,951,220 ADSs. The warrants will have an exercise price of $2.50 per ADS and will be exercisable at any time upon issuance and will expire four and one-half years from the date of issuance.

The funds fron this equity raise, plus the exercise of warrants, and the $6M the company had at March 31,2020 are expected to carry the company through 2Q 2021

Institutional Ownership

In the last 7 months institutional ownership has increased by 50% according to Fintel. The most recent addition is CVI Investments Inc. reporting a 7.1% ownership in the company as reported on June 19, 2020.

Analyst Opinion

Three analysts have a average BUY rating on CANF stock with a median price target of $7/share

Conclusions

On June 9, 2020, the company announced that the FDA has provided detailed comments regarding the prospective use of Piclidenoson to treat patients suffering from COVID-19. The FDA’s response allows Can-Fite to proceed to the next step of formally submitting an IND for Piclidenoson in this indication
The company is expected to file IND and Phase 2 protocol to evaluate Piclidenoson in COVID-19 infected patients with moderate-to-severe symptoms following outcome of pre-IND FDA meeting.
Can-Fite oral drug has significant advantages over competitors Capricor and Edesa while all claim similar mode of action which is to modulate the immune system to prevent cytokine storm complications.
Can-Fite offers significant advantages over recent high-fliers VXRT, EDSA, and CAPR as discussed in this article. All three stocks gained from 400% to over 1000% following news related to their COVID-19 programs. I expect CANF stock to also experience a significant jump in valuation probably in the 500% area. It is likely that CANF's gain will be more sustainable since it has a significant late-stage pipeline with two Phase 3 readouts scheduled for 4Q 2020.
The biggest similarity between CANF and VXRT are that both will use orally-administered therapy/vaccine. This is huge in that they are not dependent on temperature and can be shipped and deployed all over the world quickly where needed providing an enormous logistical advantage in large, global therapy campaigns.
One huge difference between CAPR and CANF's is that CANF's late-stage pipeline has an addressable markets (excluding the COVID-19 windfall) at least 10-fold greater than Capricor's DMD addressable market of far less than $1B for its DMD program. The addressable market for CANF's Cannabinoid Based Pharmaceuticals alone addressing autoimmune, cancer, and metabolic indications is almost $60B. CANF's combined addressable markets for Piclidenoson (rheumathoid arthritis and soriasis), Namodenoson (liver cancer, NASH), and CF602 for erectile disfunction indications exceed $100 billion.
CANF's current market cap of less than $30M and over 50% institutional investor ownership translates into a float of less than 10M shares.
On June 10, 2020 the company announced that it has raised $8M by entereing into definitive agreements with several institutional and accredited investors for the purchase and sale of 3,902,440 of the Company’s American Depositary Shares (ADSs), at a purchase price of $2.05 per ADS, in a registered direct offering. Can-Fite has also agreed to issue and sell to the investors, in a concurrent private placement, unregistered warrants to purchase up to an aggregate of 1,951,220 ADSs. The warrants will have an exercise price of $2.50 per ADS and will be exercisable at any time upon issuance and will expire four and one-half years from the date of issuance. The funds fron this equity raise, plus the exercise of warrants, and the $6M the company had at March 31,2020 are expected to carry the company through 2Q 2021.

I encourage investors interested in CANF stock to carefully review all the risks and uncertainties as detailed in the company's filings with the SEC.
Disclosure: I am/we are long CANF.

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