Markets Have It Wrong On Biopharmx Corp (NYSEMKT:BPMX)

Earlier this week we took a look at development stage biotechnology company Biopharmx Corp (NYSEMKT:BPMX) as part of this coverage. Our thesis was pretty simple. The company had taken a bit of a beating on some negative press from a range of financial media outlets, and we felt that the sentiment that derived from this negative press was unwarranted. In turn, we suggested that it was due for a turnaround, and specifically, we highlighted the potential for some near-term data hitting press as potentially catalyzing said turnaround.Fast-forward a few days, and the data has hit press, just as we expected it might. The response, did not fall in line with our expectations. The company has taken a close to 30% hit on the release pre-market, and chances are that throughout the day we are going to see a number of outlets lead with this decline as a headline focus.Take a look at the data, however, and the response seems entirely unwarranted. Again, then, we think that there is an opportunity here to get into Biopharmx at a discount rate, and benefit near-term from a market revaluation as traders realize the errors in their interpretation of the numbers.Here is a look at the data in question and what it actually means.For those new to this company, Biopharmx is developing a lead asset called BPX-01 in – first and foremost – an acne indication. We won't go into the drug in any detail here, as we have covered it quite a lot in the past. Readers looking to catch up can do so here. As a quick intro, it's a topical formulation of an already approved drug called minocycline. Basically, an acne cream.The data just released derives from a phase IIb study that was set up to compare two different concentrations of the drug (1% and 2%) against a vehicle control.Patients were dosed across a 12-week period, and the endpoints associated with the study referred to progression (or otherwise) from baseline at week 12.So, the primary endpoint was statistically significant reductions in non-nodular inflammatory acne lesions when compared to vehicle. In both instances, high and low dose, active beat out on control at 12 weeks. In the higher dose, the data showed a reduction of 15.4 from baseline across 72 patients, with a p=value of 0.022 compared to vehicle. In the lower dose, the data showed a reduction of 15.5 from baseline across 73 patients, with a p=value of 0.037 compared to vehicle. As a reference point, the vehicle on (which looked at 74 patients) logged a reduction of 11.3 from baseline.So, that is a statistically significant primary endpoint hit against a vehicle for both investigated doses – in other words, trial success.A secondary endpoint was set up to guide the protocol for a pivotal trial, if (and now when) the phase IIb succeeded. This endpoint looked at the proportion of subjects with at least a two-grade reduction in IGA to clear "0" or almost clear "1." Against this endpoint, 22.7% of the higher dose population registered a hit while 16% of the lower dose population registered a hit. 17.1% of the vehicle arm also scored and at least two grade reduction. None of these numbers were reported as statistically significant (we will come back to this).It is the lower dose's inferiority to vehicle against this endpoint that we believe must be the root of the negative interpretation – and if it is, the interpretation is flawed.IGA is an industry standard measurement in the dermatology space (as well as others) and there's every chance that a pivotal trial will need an IGA endpoint if it is going to get a regular three green light on completion. That's why BiopharmX has included it as an endpoint in the study. First of all, the higher dose did show a positive trend against vehicle – good news. Second, if it is the statistical significance element of the results that markets are worried about, the study was not powered to provide statistical significance against this endpoint. That is a key point. If the company decides to use IGA in pivotal, it can alter trial size and set up to accommodate the necessity for statistical significance against this endpoint, no problem.The bottom line here is that this data is certainly strong enough to warrant advance into a pivotal trial, and suggests strong clinical benefit in patients that desperately need an alternative to current standard of care. We should get some more detailed data towards the end of this month (or perhaps during early June), and we expect markets to have realigned to reflect the above interpretation of the numbers (as opposed to the current market interpretation) by that time.We will be updating our subscribers as soon as we know more. For the latest updates on BPMX, sign up below!Disclosure: We have no position in BPMX and have not been compensated for this article.