Matinas BioPharma Holdings Inc (MTNB) Can Take A $350M Antifungal Market From Gilead Sciences, Inc. (GILD)

In most cases a new method of drug delivery can occasionally alter markets a bit and cause some shifts. In rare cases though, it can fundamentally change an entire sector. The case of Gilead Sciences, Inc. (NASDAQ:GILD) and Matinas BioPharma Holdings Inc (OTCMKTS:MTNB) around a niche antifungal drug called amphotericin B may just be that rare case. Here’s why.

Life-threatening candidiasis fungal infections are not usually encountered by healthy people, but among leukemia patients for example, who have just had their immune systems zapped for a bone marrow transplant, they are a serious issue. Then why not take a simple prophylactic antifungal and solve the problem? The answer is that the most effective candidiasis antifungal is extremely toxic. Amphotericin B is an absolute last resort. Taking it as a prophylactic would be just as dangerous as a life-threatening systemic candida infection.

Gilead sells a version of the drug called AmBisome, the name a melding of amphotericin b liposome, which suspends the active drug in an inert compound with the goal of shielding the body from its devastating side effects in a last-resort scenario. AmBisome sells approximately $350 million a year, and it’s still a last-resort drug, never used as a prophylactic for leukemia patients against candidiasis.

From Gilead Sciences, Inc. (NASDAQ:GILD), we know two things. First, amphotericin B works (though admittedly we don’t need Gilead for that) and two, that reformulations of the antifungal also work, and they sell.

Back in late-September, Matinas began dosing patients in a Phase IIa trial for its own version of amphotericin B. Matinas’ version is called, for now, MAT2203, or encochleated amphotericin B. The active drug is packaged in tiny envelopes called cochleates, which unfurl and release the drug only when the envelopes are engulfed by white blood cells. The white blood cells then move on to attack the infection, armed with the drug inside them already, and all this without the drug being exposed to the blood stream.

Market Exclusive had the opportunity to speak with Matinas about the trial and its progress, and what we found particularly unique was the public display of confidence in this mid-stage trial, something that is quite rare among small companies like Matinas that typically cannot afford to overinflate investor hopes. Overt optimism often invites too much speculation, something that can lead to high and undesired volatility, especially in a small-cap stock like this.

And yet, in its press release on the beginning of dosing for this trial, Matinas says the following (emphasis added):

“BASED ON THE FAVORABLE RESULTS OF THE MAT2203 PHASE 1 STUDY AND EXTENSIVE PRECLINICAL DATA, WE ANTICIPATE THAT THIS STUDY WILL DEMONSTRATE THE EFFICACY OF MAT2203 ALONG WITH IMPROVED TOLERABILITY. WE LOOK FORWARD TO REPORTING TOPLINE RESULTS IN THE FIRST HALF OF 2017.”

A company openly announcing its anticipations without qualifiers is not something to be brushed over. We understand confidence behind closed doors, but why openly invite high expectations, especially when every word of every press release is combed over exhaustively?

The answer we got was fascinating. Besides the solid data from previous safety and efficacy trials, and what we know from Gilead and its own version of the same drug, we learned that for infectious disease drugs specifically, translation from murine (mouse) models to humans is much more assured. Why? Because in both cases with infectious disease, the same drug is killing the same pathogen directly, rather than relying on a mouse model that may resemble a disorder only symptomatically. Plus, a 28-day toxicology study on rats for encochleated amphotericin-B showed no signs of toxicity even with a 200-fold higher dose than intravenous. Strong evidence that the cochleates are shielding the body from the drug’s toxic side effects. The remaining question is, does the drug still work when encochleated?

Matinas BioPharma Holdings Inc (OTCMKTS:MTNB) thinks so, and felt comfortable publicly stating what it in fact anticipates, and that is a successful Phase IIa trial for MAT2203. Management did clarify, however, that the language of the press release, though carefully chosen, was not indicative of any actual data seen regarding the trial currently taking place. Only past data and extrapolation.

Amphotericin B’s toxicity notwithstanding, the reason it is the gold standard in candidiasis is that it is not metabolized in the liver, and therefore there are no drug-to-drug interactions. This is crucial because again, these infections happen most often in leukemia patients who are immunocompromised, and leukemia patients are on a lot of drugs already. Candida infections occur in 20% of these patients, and that’s why the Phase IIa is focusing on hereditary immunocompromised patients, then to be shifted to a prophylactic trial of 400-500 immunocompromised patients

After completion of this Phase IIa scheduled for the first-half of next year, the following Phase III intends to be a prophylactic study – an area that market leader Gilead has not ventured into. This in itself is noteworthy, because the thought of using such a toxic antifungal as a prophylactic was, until now, unthinkable. If the company can even get to actively planning the Phase III, which it will if this Phase IIa succeeds, it would mean that the cochleates are safe to the extent that the FDA is willing to allow a Phase III prophylactic trial using a drug that was been hitherto considered too toxic to even test in such a way.

The key then, is that the very fact that a Phase III trial would even be allowed with such a drug would itself prove that Matinas’ encochleates actually work, at least in terms of shielding the body from the toxic side effects of dangerous drugs, and that itself should be a huge value booster.

Bottom line with Matinas is this: if the Phase II succeeds by mid-2017, we’re looking at a drug that could displace Gilead Sciences, Inc. (NASDAQ:GILD)’s $350M AmBisome and eclipse it as a prophylactic, at least. This could conceivably expand its market over $350M because a prophylactic would be across the board.

Once Matinas BioPharma Holdings Inc (OTCMKTS:MTNB) has that foot in the door, it will continue encochleating more drugs, and it is already working on potential blockbusters including amikacin, another toxic anti-infective used as a last resort against hospital-borne superbugs. With finances sufficient to get it through this crucial Phase IIa and only a small sales force needed to actually market encochleated amphotericin B given the focused patient population, we see Matinas as a Big Pharma-independent firm and a rare low-risk, high-return stock, especially at a sub-$100M market cap.

Note: This article is written by David Rich and was originally published at Market Exclusive.