Here's Why We're Still Bullish On Matinas BioPharma Holdings Inc (NYSEMKT:MTNB)

Back at the beginning of June, we highlighted Matinas BioPharma Holdings Inc (NYSEMKT:MTNB) as being a company to keep an eye on in the biotechnology space. The company had a presentation near term that would offer insight into the ongoing development of its lead antibacterial asset in two similar, but different, indications, and we opined that said presentation could induce some upside momentum based on the abstract published ahead of the event.At the time, the company was trading for around $2.34 share.At the start of this week, Matinas put out topline from a phase 2 study of the asset in question and has taken a hit as a result. At the close on Monday, the company went for two dollars a share – a 14% discount on the price of which we first covered the stock.We can't always be right.While the abstract data pointed towards a positive outcome, topline from the actual trial (which read out a bit earlier than expected) seems to go against the implied outcome of the abstract and the presentation.With that said, there may still be an opportunity here to capitalize on the decline.For those who missed our first piece, Matinas is developing a drug called MAT2203 in two primary indications – chronic mucocutaneous candidiasis (CMC) and vulvovaginal candidiasis (VVC). CMC and VVC are basically scientific wordings for thrush, with the former affecting the mouth and the latter affecting the vagina.The phase 2a covered by the abstract compared the drug to the current standard of care formulation of its active compound; a drug called amphotericin B, which is a broad spectrum fungicidal agent and that in its current formulation, is an intravenous (IV) administration.MAT2203 is an oral formulation of the same compound, designed to overcome some of the safety and tolerability issues associated with the IV administration formulation (primarily, kidney toxicity).In the trial for which we just got top line, MAT2203 went up against another already approved drug called fluconazole, which is the standard of care treatment in VVC. Basically, the drug showed that it wasn't as effective as fluconazole, falling short on cure rates pretty much across the board.The failure to show comparability to fluconazole is what is driving the decline, and that's what markets are focusing on right now.As we said though, however, things might get a lot better.Bacterial resistance is a major problem right now. Companies are scrambling to develop alternative antibiotics because the current assets on the market are losing efficacy and will continue to do so quickly over the coming years. In the VVC indication, fluconazole is the only option available to patients. While (as per this latest trial) it cures around 75-80% of patients currently, this is going to dip over the next 10 years, and alternative antibiotics need to pick up approval and serve as a second line option for the increasing number of patients resistant to fluconazole.We think MAT2203, despite its inferior performance, could well fit this remit. The drug has demonstrated strong clinical benefit in the CMC indication (as per the abstract we linked to above) and cured between 55-60% of women in the VVC study. That's not fantastic, but it's far from a failure, and especially for an oral administration asset, it's not bad at all. There's also the potential for direct to site administration, which in the case of VVC especially, could both improve on the just mentioned cure rates and overcome the safety issues of IV administration.For us, the strategy going forward for Matinas in this program has to be the collation of a whole suite of data demonstrating clinical benefit in a variety of infectious diseases. If the company can show that it works, even marginally, in a number of different target indications, and assuming the safety profile remains benign (as has been the case to-date) then there is very little reason for the FDA to turn it down as and when it goes in front of the agency in NDA form.The FDA knows that the next 20 to 30 years are going to be critical in terms of getting new antibiotics to market, and we think the agency will have no problem approving this one if Matinas can bolster the current clinical benefit numbers across a few more targets.This, of course, is going to cost money, and Matinas don't have a great deal of cash on hand at the moment. Chances are, then, we're going to see a raise, and said raise is likely to be dilutive to all shareholders. With that said, we think markets recognize this asset's potential (as inferred by the 14% decline on the latest news, which in the grand scheme of things is relatively small), and that the gap on the recent hit should close relatively quickly.Get the whole story: check out our previous coverage of this one here.We will be updating our subscribers as soon as we know more. For the latest updates on MTNB, sign up below!Image courtesy of Iqbal Osman via FlickrDisclosure: We have no position in MTNB and have not been compensated for this article.