INNATE IMMUNOTHERA NPV (OTCMKTS:INNMF): Is There Any Room For A Recovery Position?

INNATE IMMUNOTHERA NPV (OTCMKTS:INNMF) is grabbing headlines right now, but for all the wrong reasons. The Australia-based biotechnology company hit press during the second quarter on the back of its ties to Republican Congressman Chris Collins, who is Innate's largest stockholder and, somewhat controversially, a member of a subcommittee overseeing health policy in the US.Back at the start of June, MarketWatch reported that Collins "talks about (Innate) the way you’d talk about your kid hitting a home run." Fast forward a few weeks and CNBC is highlighting the close to $17 million loss that Collins has taken (on paper, at least) on the back of Innate's latest development related release.With the mainstream coverage pretty much across the board covering the Collins side of the story, here's our take on what really matters – the science that underpins the release, the medical need, the data and what's next for the company and the asset in question.The study was a phase IIb study set up to investigate the safety and efficacy of a drug called MIS416 in an indication of in patients with secondary progressive multiple sclerosis. This type of MS is defined as a stage of MS that comes after relapsing-remitting MS in the majority of cases and that Neurologists generally define as a "sustained build up of disability, independent of any relapses." The majority of patients with remitting MS will eventually develop secondary progressive, but the time to development can vary considerably from one patient to another. Needless to say with around 400,000 MS suffers in the US alone (expanding to 2.5 million globally) it's a dramatic unmet need and one that's crying out for a fresh treatment option to hit shelves.This drug specifically is a nanoparticle type drug that the company created from a form of bacteria and then combined with two immune-modifying molecules. In MS, the activity of the immune system (and specifically, it's inability to maintain control over itself) is the driver behind the disease's progression. The idea behind MIS416 was that it could serve as a sort of surrogate control to over activity, overseeing the immunomodulatory role that's lacking in this population.It's a neat MOA, but as the data just proved, it doesn’t seem to be too effective – at least not in a majority of MS patients.The study enrolled 93 patients and randomized them to an active and a placebo arm. The patients were dosed and then followed up against a number of industry standard MS severity scales to assess impact. The three primary scales used were the Multiple Sclerosis Impact Scale, the Neurological Fatigue Index for patients with multiple sclerosis, and the Brief Pain Inventory.As per the results, the drug failed to induce any statistically significant improvement over placebo when measured against any of these framework scales.So were there any positives that might suggest room for recovery?Well, the drug was safe and tolerable, with no real adverse event concerns reported. That's a minor positive, but it's not going to get the stock moving. What might do, however, is a post release analysis that's set to take place in the coming months. Innate is sponsoring an independent analysis that is in place to determine whether there is any subset of patients that might benefit, based on a particular biomarker. It's a long shot, but it wouldn’t be the first time a company has salvaged a seeming non starter if it pays off, and as such, there looks to be very little value in exiting a position at current prices and – potentially, for the risk tolerant biotech investor – some value in picking up a punt-type exposure at rock bottom in advance of a biomarker efficacy readout. The company expects to put forward further details at some point during early August, so any such exposure is a short term one, at least based on the thesis outlined above.We will be updating our subscribers as soon as we know more. For the latest updates on INNMF, sign up below!Image courtesy of Ted Van Pelt via FlickrDisclosure: We have no position in INNMF and have not been compensated for this article.