AIM and Nasdaq listed Motif Bio Plc, a clinical stage bio-pharmaceutical company specialising in the development of novel antibiotics announced yesterday that the FDA has accepted for filing their New Drug Application (NDA) for Iclaprim Motif Bio’s lead drug candidate.

Iclaprim is new antibiotic that targets gram positive bacteria and has had a somewhat unfortunate past, it was originally owned by Aprida who brought the rights for it from Roche back in 2001. Aprida ran two phase III trials with Iclaprim targeting complicated skin and skin structure infections. An NDA was filed with the FDA based on these two trials but Iclaprim was rejected for failing to show inferiority. Whilst it may sound alarming that Iclaprim has previously been rejected by the FDA there were circumstances surrounding the rejection that need to be taken into consideration. Iclaprim is safe and effective and just happened the be in the right place at the wrong time with the previous application. Just before Iclaprim’s previous submission a similar drug which had already been approved was later found to cause severe liver issues the ensuing scandal resulted in a regulatory environment where it was near impossible to get new antibiotics approved.

The regulatory environment has changed significantly since Iclaprim’s first rejection with it now being widely recognized that there is an urgent need for new antibiotics to combat antibiotic resistant bacteria, especially antibiotics with under utilized mechanisms of actions such as Iclaprim’s. With antibiotic resistance seen as potentially one of the biggest threats facing humanity over the coming years new antibiotics are now much more likely to be approved by the FDA. Testament to the change in the regulatory environment towards antibiotics there were three antibiotics which were rejected around the same time as Iclaprim; omadacycline, dalbavancin and dalbavancin. Two of these have since been approved and the third recently submitted a new NDA with the FDA.

Since acquiring the rights to Iclaprim Motif Bio has completed two successful Phase III clinical trials (REVIVE-1 and REVIVE-2) with Iclaprim achieving the primary endpoint of non-inferiority (NI) (10% margin) compared to Vancomycin in both trials. Iclaprim was well tolerated and showed strong efficacy and safety. The main target market for Iclaprim is high risk MRSA patient populations, both the REVIVE-1 and REVIVE-2 trials tested patients with ABSSSI or acute bacterial skin and skin structure infections so hence ABSSSI is the condition which Motif Bio is seeking approval for. ABSSSI is one of the most common bacterial infections, with 3.6 million patients hospitalised annually in the U.S alone. The current standard of care for ABSSSI is Vancomycin, but Vancomycin is tough on the kidneys so can present problems for patients for renal impairment. Unlike many standard of care antibiotics, iclaprim is only minimally cleared via the kidneys (<2% of the administered dose was recovered unchanged in the urine). No nephrotoxicity was observed with Iclaprim in either of the REVIVE trials and dosage adjustment has not been required in patients with renal impairment. Because of this Motif Bio believes that Iclaprim may be the ideal choice as the first-line therapy in ABSSSI patients with renal impairment, an addressable market of c. US$2.8bn globally.

Despite all the success and progress which has been made by Motif Bio with Iclaprim to date the shares have not performed well, having peaked at 70p in 2015 they are currently trading at 33.25p and are looking significantly undervalued. Motif bio’s market cap currently sits around the £100 million mark, to put that market cap into perspective similar-stage US-based comparators presently achieve market capitalisations in and around the US $500 million mark. Analyst’s at Northland Capital currently have 116p price target on the shares giving an upside of 248%. Motif Bio has secured a priority review for Iclaprim from the FDA meaning the approval decision is due by the 13th February 2019. Given the potential upside and the FDA decision due in less than 6 months the shares are certainly worth considering. The important thing to remember with any biotech stock is they are high risk, Iclaprim does look highly likely to get approved but there is always the risk that it won’t and in that situation it’s difficult to see any value remaining for shareholders.

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