4D Pharma shares have jumped following positive clinical trial results. Where next for the biotech?
Shares in 4D Pharma received a welcome boost this week after the company posted positive results from a clinical trial of its early-stage cancer drug. In Phase I/II trials the product hit its end point early in treating patients with kidney cancer. The drug was administered in combination with Merck’s drug Keytruda. 4D Pharma has a research partnership in place with the drug giant.
Shares in the biotech jumped 29% to 58p following the encouraging test results, although they have since fallen back to 48p.
"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 the company’s chief scientific officer, Dr Alex Stevenson.
Chief executive Duncan Peyton told IGTV that the data was "really meaningful... in proving [4D Pharma's] thesis."
4D Pharma’s ‘drugs from bugs’
The biotech company is developing a stable of drugs to treat cancer, Parkinson’s disease, irritable bowel syndrome and asthma. Its pipeline of five products is based on bacteria found in the human gut - what it terms ‘live biotherapeutics’ from the human microbiome.
4D Pharma is dual-listed on AIM and Nasdaq and has a market capitalisation of just £91m. Two of its Parkinson’s disease products also recently received the go ahead from the US regulator to enter clinical trials.
Trading at just 48p, the shares have lost two-thirds of their value since reaching a high of 156p in September 2020 - 56% in the past year.
4D Pharma burning through cash
Developing drugs is an expensive business. The biotech burned through £56m last year and only has £20m in funding left, making it likely that a cash call will be required later this year. Certainly, management said at its recent half-year results that it has enough funds to take it through to the fourth-quarter of 2022.
4D Pharma also has a $30m cash facility lined up with Oxford Finance. The company recently signalled it may list up to $150m of shares on Nasdaq as American depository shares, following a filing with the US Security and Exchange Commission.
Investing in biotech companies is high risk and Phase III clinical trials can prove costly. It can take more than a $1bn to bring a new drug to market. Failure rates are high and it is common for even late-stage products to fail in the clinic. The bulk of 4D Pharma’s drugs are still relatively early-stage, with two at the Phase II stage.
The company’s technology is promising but it will need to raise further cash this year. However, securing a licensing deal or other positive trial-related news flow could provide a further boost for the shares. Its partnership with Merck is also a plus point.
Go short and long with spread bets, CFDs and share dealing on 16,000+ shares with the UK’s No.1 platform.* Learn more about trading shares with us, or open an account to get started today.
* Best trading platform as awarded at the ADVFN International Financial Awards 2021
Piper Terrett | Financial writer, London
29 March 2022