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Atossa Genetics Inc (NASDAQ:ATOS) Explodes Up The Charts

Atossa Genetics Inc (NASDAQ:ATOS) Explodes Up The Charts
Written by
Alex Carlson
Published on
February 19, 2016
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Source: livingsuperhuman.com

Shares of Atossa Genetics Inc (NASDAQ:ATOS) have exploded up the charts recently on news of insider buying and optimism for upcoming clinical trial updates. Shares have also put in a critical double bottom and the lows look to be in on the stock. After a horrible 2015, things are looking better for ATOS so far this year.

Atossa Genetics describes itself as being focused on improving breast health through the development of pharmaceuticals to treat breast health conditions. Atossa's topical Afimoxifene Gel is a gel reformulation of Tamoxifen. Only 1% of women with breast cancer chose to take the side effect ridden Tamoxifen. That leaves 99% of those that did not as potential users of Afimoxifene Gel. At its peak, Tamoxifen sold $1 billion, which goes to show the potential market demand for Afimoxifene Gel. What plagued Tamoxifen was the side effects. Among the side effects some patients experienced were early menopause, hot flashes, an increased risk of uterine cancer, strokes and blood clots, and low sexual desire.

The second item in the pipeline is a new way of administering fulvestrant through the milk ducts of the breast via microcatheters, which Atossa has a patent on. Currently, fulvestrant is administered through the buttocks via AstraZeneca's Faslodex. The potential here is that this delivery method is more concentrated and will save on costly monthly injections. Atossa also sees intraductal fulvestrant as a neoadjuvant before surgery to remove breast tumors. By delivering a higher concentration via the Atossa route, it will shrink the tumor much faster before surgery. The current process takes 3 months whereas Atossa can cut this down to 1 month.

Breast cancer is a large market with an immediate need for better solutions as it affects 1 in 8 women in their lifetime. For investors, the market potential is expected to reach $24 billion this year in terms of predictive breast cancer diagnostic and drug treatment.

Last year, the National Cancer Institute, Division of Cancer Prevention, approved a Letter of Intent submitted by a member of the Consortia for Cancer Prevention Clinical Trials Program for the study of Afimoxifene Gel in women with DCIS. The Consortia includes five major medical research centers: the University of Arizona, Northwestern University, Mayo Clinic Foundation, M. D. Anderson Cancer Center and the University of Wisconsin.

In December, Atossa sold to the NRL Group 100% of its shares of Common Stock in its wholly-owned subsidiary, the National Reference Laboratory for Breast Health, Inc. (the "NRLBH"), while retaining 19% ownership through Preferred Stock. Atossa received $50,000 on December 16, 2015, for the sale of the Common Stock and the right to receive, commencing in December 2016, monthly earn-out payments equal to 6% of gross revenue of the NRLBH, up to a total of $10,000,000. Atossa also has the right in four years to sell its Preferred Stock to the NRL Group for the greater of $4,000,000 or fair market value. As a result of the transaction, the NRL Group is taking over the management, operations and related costs of the NRLBH. This sale turned Atossa into a pure play biotech.

We are now waiting on the first participants to enroll in Atossa's Phase 2 clinical trial of intraductal fulvestrant. This trial is an open-label, non-randomized pharmacokinetic study of pre-surgical fulvestrant in women scheduled for mastectomy. Eligible subjects will be identified with breast cancer or DCIS, specifically mastectomy. The first 6 subjects will be treated with intramuscular fulvestrant. The subsequent 24 subjects will receive fulvestrant by intraductal instillation. All subjects will be monitored for systemic and local adverse events during the procedure, and following the procedure until mastectomy. Subjects that receive fulvestrant will undergo serial blood draws to determine fulvestrant blood concentration levels. The trial is expected to start this month and conclude September 2017 with a primary completion date of March 2017.

Another development that occurred includes COO Scott Youmans resigning on February 12 after only 5 months on the job. Some have said that it was due to a personality clash with CEO Steven Quay. However, we see it as due to the transition to Atossa becoming a pure play biopharma. With the sale of the diagnostics business, there was no reason to keep Youmans around and pay his salary.

Last month, Atossa filed a lawsuit against Besins Healthcare Luxembourg SARL. Atossa claims that Besins breached the Intellectual Property License Agreement dated May 14, 2015 (the "License Agreement"), under which Besins licensed to Atossa the worldwide exclusive rights to develop and commercialize Afimoxifene Topical Gel, or AfTG, for the potential treatment and prevention of hyperplasia of the breast. The complaint seeks compensatory damages, a declaration of the parties' rights and obligations under the License Agreement, and injunctive relief.

Currently trading with just a $14 million market cap, Atossa has over $7 million in cash on its balance sheet. We see Atossa Genetics as a good risk/reward setup at current levels. Insiders obviously think so as well as we've seen insider buying lately. CEO Steven Quay picked up 50k shares last month at $.20 while Director Chen Shu-Chih picked up 15k shares in one transaction and 50k shares in another. While the dollar amounts are not huge, they are an indication that insiders think the low might be in and that there's upside ahead. For continuing coverage on ATOS and our other hot stock picks, sign up to Insider Financial today and get our free penny stock newsletter!

Disclosure: We have no position in ATOS and have not been compensated for this article.

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