Soligenix Payday, Delayed, Unlikely to be Denied

Breakthrough cancer drug on track for its own recovery

Takeaways

• Biopharma Soligenix HyBryte™ therapeutic was in late stages when the Covid-19 pandemic caused manufacturing disruptions
• Simultaneously, the company pushed back its regulatory new drug application (NDA) submission process, following discussions with the FDA, by up to a year in order to include further data in the NDA filing
• On the news, SNGX share price dropped by one-third before recovering
• Still, compared to its peers, the stock is not far behind the pack over the past month
• Even without immediate prospects with the FDA, it is still advancing toward commercialization in such markets as U.K., European Union and Japan
• HyBryte is a therapy for a rare skin cancer with an annual revenue potential of $250 million worldwide
• Soligenix also has other therapeutics and public health solutions in its product portfolio

 One of the last victims of the Covid-19 pandemic – or more precisely, the production shutdowns it caused – has been Soligenix (Nasdaq:SNGX), a late-stage biopharma company that brings therapies for rare, so-called “orphan” diseases to market. While it appeared Soligenix might need intensive care, to be fair, its prognosis remains positive.

In a May 7 regulatory filing, the Princeton, N.J.-based company reported that at this time it would not be pursuing a rolling NDA submission  with the U.S. Food and Drug Administration for its cancer drug hypericin, tradenamed HyBryte. Over the next four trading days, SNGX shares lost one-third of their price and, while they have since recovered some of that value, this stock is arguably more beat down than it deserves to be.

Also, we shouldn’t view Soligenix’s temporary issues in isolation. This past month has not been kind to small-cap biotechs in general, as they have mostly fallen short of the broader market. Windtree Therapeutics (Nasdaq:WINT) has had almost as rough a time as Soligenix, and yet SNGX is a consensus Hold and WINT is a Strong Buy. Go figure.

Of course, each company in a sector is different, and in this peer group those differences can be stark. Still, one has to wonder if SNGX might not be a bit oversold.

“It doesn’t appear that there will be too much of a delay in getting [HyBryte FDA-]approved compared to previously guided timelines,” according to Zacks Small-Cap Research analyst David Bautz, who values SNGX at $6 per share. “In addition, the company has a very strong balance sheet and there will be little to no budgetary impact caused by the change.”

Taking its medicine

The most important point is that the FDA didn’t say “no”, nor was the process materially altered.

As a potential temporary or reversible measure, Soligenix released guidance that it had decided to forego rolling review AT THIS TIME, meaning the Company may revisit it in the future.  For those not familiar with a rolling NDA, it is a fast-track process in areas of unmet medical need that enables applicants to submit sections of an NDA as they are completed (e.g., clinical) rather than having to wait to submit until the entire NDA (all sections) are complete. However, as noted by Zack’s analyst David Bautz, previously released guidance by the company had indicated that even with a rolling NDA submission the final module would not be submitted until the first half of 2022 with FDA approval in late 2022, thus there ultimately may not be much of a delay with FDA approval now expected in the first half of 2023.  Meantime, HyBryte has proven successful in Phase 3 trials to treat a rare skin cancer called cutaneous T-cell lymphoma. In the Securities and Exchange Commission filing, Soligenix CEO Christopher J. Schaber avers that the company “now plans to submit the NDA in the first half of 2022 with corresponding potential FDA approval adjusted to the first half of 2023.” In other words, the money would start rolling in less than one year later than planned.

“One year” is also roughly how long the world had been coping with Covid-19, which Schaber cites as one cause of the manufacturing delays that would have kept HyBryte away from U.S. pharmacy counters. So it is almost irrelevant from a business perspective that Soligenix needs extra time to include additional data in their NDA submission to FDA.

It’s also worth noting that, of the $250 million annual revenue Soligenix projects for HyBryte, approximately $90 million would come from U.S. patients. Just three days after filing that 8K, the company announced that HyBryte was awarded an “Innovation Passport” fast-tracking the approval process in the U.K. Earlier, the Japan Patent Office allowed Soligenix’s application for issuance.

Marching forward with multiple shots…

According to Soligenix’s presentation to investors, HyBryte has proven to be efficacious in as little as six weeks, compared with at least 12 months with current CTLC treatments, and is effective against both surface patches and deeper plaque lesions. Clinical studies indicate it is safe and well-tolerated. Soligenix believes that insurance companies would be likely to reimburse patients for the treatment.

The company also has a Phase 3  trial cleared through FDA for a treatment of pediatric Crohn’s disease and Phase 1/2 for intestinal inflammation due to radiation. This last one is viewed by the company’s management as having even greater commercial potential than HyBryte.

Meantime, Soligenix has an entirely separate division focused on public health solutions to combat such viruses Ebola, Marburg and – as you might have guessed – Covid-19, among others.