Here's Why Windtree Therapeutics Inc (OTCMKTS:WINT) Could Be A Nice Recovery Play

Sometimes it is easy to overlook the complexities associated with conducting a clinical trial. As the number of sites increases and, concurrently, as the number of patients enrolled increases, and especially as relates to a globally conducted investigation, the potential for input error rises. Sometimes, this sort of error can have a material impact on the outcome of the trial in question.Of course, when the data from the trial hits press, markets often overlook these sort of error inputs and base their interpretation of the data on the topline readout. When this happens, there's often an opportunity to pick up an exposure at a discount in anticipation of a trial sponsor rectifying the error ahead of the next investigation and – in turn – improving the likelihood of success come trial-end.One such opportunity just presented itself.The company is Windtree Therapeutics Inc (OTCMKTS:WINT) and the trial that just completed was a phase IIb study investigating the company's lead development asset – a drug called aerosolized KL4 surfactant – In a target indication of respiratory distress syndrome (RDS) in premature infants.Here is the data detailing the outcome of the study.The trial failed to hit against its primary endpoint of a reduction in what is called CPAP failure (CPAP the standard of care treatment in the space; basically an artificial respiratory system forcing air into the lungs of these newborns) as compared to placebo.The idea is that by combining the above-noted surfactant (as administered with the company's AEROSURF technology) with SOC, the chances of CPAP failure should decrease. Early data, and specifically that derived from a phase 2a study that was set up in almost exactly the same way as this failed phase 2b was, but with a smaller patient population, looked promising. The numbers suggested that AEROSURF treatment reduced the rate of CPAP failure as compared to placebo and markets headed into this data readout expecting a similar result.[embed]https://www.youtube.com/watch?v=eikfArKjQ50&t=[/embed]This didn’t happen, of course. However, the failure might not have been rooted in the drug itself, but instead in a technical complication with the administration system.Specifically, a large number of the patients enrolled were subject to interrupted treatment based on a filter blockage. As many as 65% of a higher dose administration were subject to this sort of interruption and there is a good chance that the interruption translated to a reduced efficacy as compared to placebo. Indeed, and as per this conference call, management put forward some pretty compelling evidence that suggested the removal of these interruptions from the data set translates to a marked improvement in performance for the drug as compared to placebo in this study.Importantly, the blockages have been identified as being caused by a specific batch of filters, meaning any further investigation can be carried out without blockages impacting the end results. Based on the implications of this statement, management has set about putting a protocol together for a phase 3 study in the same indication using the same asset and is set to present this protocol to the FDA near term. The protocol will include measures to ensure that these blockages don't have an effect on outcome, meaning when the data is released, there's a good chance it will replicate that which the company collected during the successful phase 2a study as opposed to that collected on the back of the just-released, and failed, phase 2b.If this is the case, there's no reason Windtree can't recover a large portion of its lost market capitalization as and when the data hits press. Indeed, there's a good chance we will see not just a closing of the gap, but a run above and beyond the company's latest pre-release valuation.Going forward, we are looking for a slightly more detailed analysis of the investigation (management admitted that it rushed to get a topline readout in the hands of markets ahead of the holiday period in the US) and for this detailed analysis to support the suggestion made on the conference call that removal of the blockage patients from the overall data points to clinical benefit.We will be updating our subscribers as soon as we know more. For the latest updates on OTCMKTS:WINT, sign up below!Image courtesy of Jonny Hunter via FlickrDisclosure: We have no position in WINT and have not been compensated for this article.