Shares in 4D pharma [DDDD] have been somewhat revived after a cancer drug passed phase I/II of clinical trials ahead of schedule. 4D pharma’s share price is up more than 80% since 8 March (as of 1 April), having hit an intraday high of 76.6p on 23 March following news of the results.
Shareholders may have felt some relief after a prolonged downturn in the stock. Since opening at 1,450p on 18 May 2021, 4D pharma’s stock has fallen over 95%. Year-to-date the stock is down 25.56% and over the past 12 months it has slumped 65%.
However, with 4D pharma publishing financial results for 2021 at the start of April, several treatments in the pipeline and the positive trial results, is the stock about to turn a corner?
4D pharma’s share price responds to positive trial data
4D pharma’s share price popped on 23 March after the company announced that it had reached a primary efficacy target in the ongoing phase I/II trial for its kidney cancer treatment MRx0518 with Merck’s [MRK] anti-PD-1 therapy Keytruda in patients with solid tumors.
4D pharma said in a statement that the primary endpoint for its part B signal study was more than three out of 30 patients per tumour group achieving clinical benefit, defined as complete response, partial response, or stable disease for at least six months. To date, 20 patients have enrolled on part B of the study with four out of the first 16 evaluable patients having achieved clinical benefit.
“Today’s results in renal cell carcinoma, meeting the predefined primary efficacy endpoint early in this difficult to treat population, marks another important step forward for MRx0518 and the increasing importance of the microbiome in cancer treatment,” said Dr Alex Stevenson, 4D’s chief scientific officer.
Promising pipeline but no commercial revenues
Positive news over the trial data is always going to be well received, however the key investment question for any pharmaceutical company is what the pipeline of treatments looks like. 4D pharma has 14 treatments across several areas in its pipeline, with the most advanced being a treatment for irritable bowel syndrome, according to its 2021 annual report published at the start of April.
Yet the pharmaceutical company is still to generate commercial revenues from product sales. So far the company has generated money from a collaboration agreement with Merck. This came in at £500,000 for the years ended 31 December 2021 and 2020, respectively. Most of the company’s funding has come from the issuing of ordinary shares. In 2021 it also added a loan facility from Oxford Finance, which has added to the cash total for the current year.
As of 31 December 2021, the company had cash and cash equivalents worth £15.5m. Over the next 18 months, 4D pharma said it will need an additional £20.4m for research and development activities and £13.7m for general and administrative costs.
“We have incurred losses and generated negative cash flows from operations since inception. To date we have not generated significant revenue, and we do not expect to generate significant revenues from the sale of our product candidates in the near future,” 4D pharma said in its annual report.
Analyst takes on 4D pharma’s share price
Following the MRx0518 plus Merck’s Keytruda trial dates release, Ladenburg analyst Michael Higgins upped his price target on 4D pharma’s US-listed shares to $37 from $35, keeping a ‘buy’ rating on the shares. Higgins described the results on highly refractory solid tumor patients as “impressive”. In July last year, Charden analysts put a $40 target on the stock, along with a ‘buy’ rating.
Given that the stock has already declined from its March high to close Friday 1 April at 39.9p, investors will need to weigh up whether the price pop was a short-lived event. 4D pharma’s historic stock performance can’t be overlooked and there is no guarantee that any of its drugs undergoing trials will go to market.
Disclaimer Past performance is not a reliable indicator of future results.
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