ContraFect Corporation (CFRX) is a microcap company that has an important upcoming catalyst in the form of phase 2 data from its trial of CF-301 in serious infections caused by Staph aureus including MRSA. This is interesting because the company has licensed technology from the Rockefeller University which has twenty years of research behind it. This is the so-called lysin technology which adds a new dimension to our never-ending fight against germs. Given the proliferation of antibiotic-resistant bacteria, this first proof of efficacy of the technology becomes extremely interesting.
The Lysin technology
Lysins are basically enzymes which may be used for treating bacterial infection. Essentially, this enzyme is extracted from natural bacteriophase which are viruses with the potential to infect bacteria. Lysin, in its recombinant form, alters the structure of the bacterial peptidoglycan cell wall, leading to quick death of the bacteria. Owing to this property, Lysin has strong potential for treating ailments caused by bacteria. CFRX is looking to employ this technology to develop treatments for bacterial diseases, which are currently treated with the use of antibiotics.
However, Lysin technology has an edge over current antibiotics available. Due to their different modus operandi, Lysin technology is relatively quicker acting than regular antibiotics. It is also synergistic with current antibiotic treatments, that is, Lysin products may be used along with conventional antibiotics, leading to more efficient treatment. Arugably the biggest point in favor of Lysin technology is that it has low propensity to develop resistance. Currently, one of the most alarming challenges faced by medical community is the emergence of superbugs which are immune to current antibiotics. According to WHO, some of the previously controlled ailments such as tuberculosis, pneumonia and gonorrhea are likely to emerge as massive threat again, on account of antibiotics resistance. In such scenario, lysin technology is expected to create a niche market for itself.
Further, CF-301 is also selective in its target. Since the drug works by breaching cell wall, it is able to distinguish between good and bad bacteria. Conventional antibiotics are broad spectrum in their operations as they tend to destroy body flora, whether it is good or bad. The platform under development will ensure that good bacteria are not harmed while bad bacteria are destroyed. This factor makes CF-301 a far safer option than current crop of antibiotic treatments.
In vitro results
ContraFect has carried out in vivo, in vitro and surveillance studies to measure the efficacy and safety of its lead drug candidate CF-301, designed for treating Staphylococcus aureus (Staph aureus) bacteremia, including endocarditis. The drug is currently in Phase 2 trials and top line results from the study are likely to be out in the fourth quarter of this year. The in vitro experiments of the drug have shown that CF-301 is 12 to 18 times faster in killing Staph aureus than regular antibiotics currently available. The results further showed that CF-301 is also effective in treating biofilm infections, which are currently treatable only surgically. The drug has been found successful in clearing biofilms in models. These results are highly encouraging as the company is moving on to report final results later this year.
The market potential
As illustrated above, CF-301 and lysin technology platform being developed by the company have strong potential ahead, especially in the wake of emergence of drug resistant superbugs. For ContraFect, CF-301 is the only potential revenue generator in the medium term. According to company management, it is estimated that there are over 200,000 cases of Staphylococcus aureus infections every year in the US alone. A large number of such cases are now caused by drug resistance bacteria, where the drug has the potential to create a niche market. Apart from this, the drug is also likely to cannibalize regular antibiotic market, which is expected to be a $57 billion market by 2024.
However, it is a little too early to factor in the potential revenue stream from CF-301, which is still in Phase 2. At the current point, the most impactful catalyst will be the reporting of Phase 2 results later this year. That being said, the analysis of potential market size shows that the company is working towards capturing a highly lucrative market. Further, the company also has strong IP protection for the platform till 2032, which may be helpful in warding off competition for a considerable period of time. Such exclusivity will allow the company to create a market subsegment for itself.
Although I like the lysin concept, I am not particularly willing to invest in a co without phase 2 data trading near all time highs. If the price is lowered, sure; they have cash to follow through with their ideas.
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Disclosure: I/we have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.
I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.
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