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Ampliphi Biosciences Corp (NYSEMKT:APHB) Is Trying To Conquer The Bacterial Resistance Space

Ampliphi Biosciences Corp (NYSEMKT:APHB) Is Trying To Conquer The Bacterial Resistance Space
Written by
Chris Sandburg
Published on
February 14, 2017
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Ampliphi Biosciences Corp (NYSEMKT:APHB) just presented at the 19th Annual BIO CEO and Investor Conference at the Waldorf Astoria in New York City. The goal of the presentation was to highlight the company's breakthrough bacterial treatment, and raise awareness as to the data said treatment has produced in the early stage testing. As an awareness exercise, it seems to have worked. The company is drawing what looks to be some speculative volume, and we expect it to pick up strength midterm on the back of this increased investor attention.For those not familiar with this company, Ampliphi is a development stage biotechnology entity with a focus on the development and commercialization of drugs to target bacterial disease and infection. In the US (and indeed, globally) right now, there is a huge problem with bacterial resistance. Infections that were relatively easy to treat 20 years ago are now becoming almost impossible to overcome, and new strains of bacteria (things like hospital borne infections – MRSA, etc.) are popping up every day.This company's development program is rooted in science that goes back millions of years. To understand how it's treatment works, it's first important to understand the function of what is called a bacteriophage. Bacteriophages are the natural predators of bacteria, and are believed to be one of the most (if not the most) abundant life forms on Earth. Historically, they would target a range of different bacteria. Over time, however, they have evolved to target a single-type bacterium, and the theory that underpins the treatment in question is that you can use a bacteriophage that is selective to a particular bacteria to target and kill said bacteria when it infects a human.The selectivity means healthy tissue is unaffected (and the healthy bacterial microenvironment, say in the gastrointestinal tract, remains intact) while the target bacteria is destroyed. Also, according to the hypothesis that underpins this sort of treatment, bacteriophages are able to penetrate what is called the bacterial microfilm, which is a sort of barrier that bacteria create on infecting humans and that serves as the root of bacterial resistance in many instances.AmpliPhi's application of this scientific concept, and by proxy, its leads development asset, is a drug called AB-SA01. Towards the end of last year, the company reported data from two phase 1 studies of SA01 in a target indication of chronic rhinosinusitis, and the data suggested some degree of clinical benefit. It is this data that management is peddling around the conference circuit, and that will underpin the advancing of AmpliPhi's pipeline into mid-stage development.And it is this advancing that presents us with the next major near-term catalyst, and underpins our bullish thesis on the stock. Management plans to initiate a phase 2 study investigating SA01 in the same indication during early second-half 2018. If the data drawn from this study falls in line with that produced by the phase 1 investigation, it should underpin advance into a registration trial, and beyond that, an NDA submission to the FDA. Of course, there is plenty that could go wrong between now and NDA submission (the development pathway for bacterial infection drugs is notoriously difficult to preempt) and therein lies the primary risk of an exposure at this early stage. Phase 1 data is important, but is not necessarily indicative of a drug's ability to perform successfully when a patient sample is expanded in a phase 2 study and beyond. There is also the potential for dilution, with cash on hand at last count (September 30, 2016) reported at just $3.9 million. To offer some perspective, that is probably enough to carry the company through end 2017, but the advancing of SA01 into mid-stage development will likely necessitate an equity raise.With that said, if the group continues to perform, any downside pressure should be mitigated, or completely negated, by speculative trigger pulling on catalyst release.We will be updating our subscribers as soon as we know more. For the latest updates on APHB, sign up below!Disclosure: We have no position in APHB and have not been compensated for this article.

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