Purple Biotech Stock: Should I invest?

By Kirsteen Mackay

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Oncology stock Purple Biotech (NASDAQ: PPBT) is developing cancer treatments that address the tumor, along with the tumor microenvironment to improve patient outcomes.

The PPBT stock price has been rising this summer, giving hope to those invested. 2022 is a pivotal year for Purple Biotech’s lead assets, CM24 and NT219, so could this be a good opportunity to buy shares in this cancer company?

What is Purple Biotech?

Purple Biotech (NASDAQ: PPBT) is a clinical-stage company developing potential cancer therapies. It investigates the tumor microenvironment (TME) to overcome drug resistance and improve treatment outcomes for cancer patients.

PPBT currently has two first-in-class clinical-stage drugs in development. These are CM24 and NT219.

  • CM24 has the potential to treat multiple cancers, including pancreatic.

  • NT219 is a novel small molecule targeting drug resistance pathways in many hard-to-treat cancers, including head and neck.

The company has multiple Phase II studies ongoing and planned.

Short History of Purple Biotech 

The company was incorporated in Israel as a private company in August 1968, founded by John Paul Waymack, and has been listed for trading on the Tel Aviv Stock Exchange since September 1978. 

In October 2012, the company disposed of all its previous operations, and in July 2013, the company acquired shares of Kitov Pharma Ltd. from its shareholders in exchange for shares. In December 2020, the company changed its name from Kitov Pharma Ltd to Purple Biotech Ltd.

Shares in the company’s securities were listed for trading on the NASDAQ stock exchange in November 2015.

Purple Biotech operated through two segments: Oncology and Pain & Hypertension. The Oncology segment includes NT219, a therapeutic candidate currently in the late pre-clinical stage of development.

The Pain & Hypertension segment included Consensi, a combination drug for the simultaneous treatment of two clinical conditions, pain caused by osteoarthritis and hypertension (high blood pressure).

Consensi® is an FDA-approved fixed-dose combination of celecoxib and amlodipine esylate for the simultaneous treatment of osteoarthritis pain and hypertension that the FDA approved for marketing in the United States.

COVID-19 adversely impacted the launch of Consensi in the United States. In October 2021, Purple Biotech agreed, together with its then US distributor for Consensi, Coeptis Pharmaceuticals Inc., to terminate the distribution agreement.

Despite efforts to identify an alternative distributor for Consensi in the US., the company concluded that the commercialization of Consensi was not likely to generate significant revenue and achieve profitability in the near term. Therefore, it opted to discontinue Consensi activities and allocate the funds to its core oncology activities. 

Purple Biotech serves customers globally and is headquartered in Rehovot, Israel.

PPBT Q2 Financial Results

  • R&D Expenses: $2m (equal Y/Y)

  • Selling, General and Admin Expenses: $1.5m (equal Y/Y)

  • Operating Loss: $3.6m (equal Y/Y)

  • On a non-IFRS basis, Adjusted Operating Loss: $3m (up $0.1m Y/Y)

  • Net Loss: $3.6m,

  • Adjusted Net Loss: $2.9m (equal Y/Y) 

Gil Efron, CEO of Purple Biotech, said:

This is the first report of Purple Biotech financial results since my appointment as Chief Executive Officer, 

It is an opportunity for me to emphasize our main objectives. Purple Biotech has two exciting and innovative lead assets in development. We are focused on performing robust studies aiming to achieve meaningful clinical data and are continuing to explore opportunities to expand our current clinical programs to additional indications, while maintaining our cash runway, currently through the end of 2024. 

We are seeking opportunities for additional assets and collaborations to increase our footprint, through accretive transactions. I believe that together with strong science and by leveraging on our capabilities we can achieve these objectives and solidify Purple Biotech as a significant player within the oncology field. 

Recent Company Updates 

NT219

In June, Purple Biotech presented Phase 1 interim monotherapy data of the ongoing Phase 1/2 clinical trial of NT219 at the 2022 American Society of Clinical Oncology (ASCO) Annual Meeting. Here it demonstrated an encouraging safety & efficacy profile, including one confirmed partial response in gastroesophageal junction cancer patients and stable disease in 75% of patients with mutated-KRAS colorectal cancer.

Gil Efron, CEO of Purple Biotech, commented:

The recent clinical data for NT219 together with previously published preclinical results have shown the potential of NT219 on solid tumors harboring KRAS mutation and we are looking into the development of NT219 for treatment of mutated KRAS patients.

CM24

Purple Biotech initiated Phase 2 of its ongoing study of CM24. This is an open-label, multicenter study in patients with metastatic pancreatic cancer (PDAC). Phase 2 will evaluate the safety and tolerability of CM24 in combination with the PD-1 inhibitor Opdivo® (nivolumab) and chemotherapy. The primary study endpoint is to assess preliminary efficacy in 2nd line PDAC.

Last year, Purple Biotech built on its collaborations and partnerships. It has maintained a partnership with Bristol Myers-Squibb (NYSE: BMY) to advance CM24 in combination with nivolumab, targeting expansion into NSCLC and pancreatic cancer.

The company also expanded its research agreement with The University of Texas MD Anderson Cancer Center to evaluate the potential efficacy of the combination of NT219 and immune-oncology drugs. This is an essential step in potentially advancing NT219 in the clinic to treat advanced solid tumors.

How Does Purple Biotech Make Money?

Purple Biotech does not generate revenues currently. Being a clinical-stage company, it relies on share sales to raise funds.

It aims to generate revenue and achieve profitability by successfully developing and obtaining the required regulatory approvals for its NT219 and CM24 therapeutic candidates in the United States and various other territories. It will then look to commercialize them. However, this is a long process, and the company may never be profitable.

Meanwhile, the company can raise cash via the sale of American Depositary Shares (ADSs), with each ADS representing ten ordinary PPBT shares.

At this time, Purple Biotech can legally offer and sell ADSs worth up to $21,221,340 under its Sales Agreement. This is in addition to the ADSs that Purple Biotech has sold before March 2022, per its Sales Agreement under its Prior Prospectus.

Nevertheless, the company entered 2022 with $47.5m in cash reserves and 17.8 million ADS outstanding.

Purple Biotech closed Q2 with $38.7m in cash, cash equivalent short-term and long-term deposits and a cash runway well into 2024.

PPBT Stock Financials

  • PPBT stock has a price-to-book-value (P/BV) of 0.8. It does not offer a shareholder dividend.

  • Purple Biotech has a market cap hovering around $153m.

  • Over the past year, Purple Biotech ADR (PPBT) has traded between $2.10 and $5.20. Today it sells for around $2.50. Year-to-date, PPBT stock is down by -38.83%, while the S&P 500 is down -14.05% over the same period.

PPBT Growth Potential

PPBT stock may rise in response to positive trial outcomes and company newsflow. However, the road to commercialization is long, and the economic environment for biotech stocks is bearish.

According to Cancer Research UK, there were 17 million new cases of cancer worldwide in 2018.

This is expected to grow, as confirmed by the Facts & Figures annual report, a scientific paper published in the American Cancer Society journal.

In 2022, an estimated 1.9 million new cancer cases will be diagnosed and 609,360 cancer deaths in the United States. 

It is believed that the Covid-19 pandemic has reduced access to healthcare services and early cancer detection, leading to many more potentially fatal cases.

According to McKinsey, treatments for cancer with continued poor patient outcomes are the holy grail of oncology R&D. These are characterized by a five-year survival rate below 15% and substantial patient populations (more than 30,000 new patients each year in the United States).

Key indications include colorectal cancer, hepatic cell carcinoma, pancreatic cancer, and non-ALK- and non-EGFR-driven NSCLC.

McKinsey suggested that “any effective therapy would represent an opportunity to transform standard-of-care, reshape cancer at a therapeutic-area level, and be very attractive from a commercial perspective.” 

Therefore, Purple Biotech’s therapeutics could prove lucrative if successful.

PPBT Stock Risks

  • Purple Biotech is a pharmaceutical company with a history of operating losses. PPBT expects to incur significant additional losses and may never be profitable.

  • The company already abandoned its commercialized drug Consensi, disappointing shareholders.

  • Global and local economic and geopolitical conditions may make it more difficult for Purple Biotech to raise needed capital or secure a future development or commercialization partner, which may impact its liquidity.

Should You Invest in Purple Biotech Stock?

PPBT stock could turn out to be a good investment if Purple Biotech’s trials prove successful. The company is developing therapeutics for a highly specialized area of oncology that would welcome positive outcomes and potentially attract funding. 

Nevertheless, PPBT stock is a highly speculative investment that comes with shareholder risk. If the company opts to sell more shares to raise cash for R&D, this could dilute the value of the stock.

If you enjoyed our Purple Biotech stock overview, you might be interested in the schizophrenia biotech company Karuna Therapeutics. Read our KRTX stock coverage.

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Topics:
Biotechnology
Industries:
Healthcare
Companies:
Purple Biotech

Author: Kirsteen Mackay

This article does not provide any financial advice and is not a recommendation to deal in any securities or product. Investments may fall in value and an investor may lose some or all of their investment. Past performance is not an indicator of future performance.

Kirsteen Mackay does not hold any position in the stock(s) and/or financial instrument(s) mentioned in the above article.

Kirsteen Mackay has not been paid to produce this piece by the company or companies mentioned above.

Digitonic Ltd, the owner of ValueTheMarkets.com, does not hold a position or positions in the stock(s) and/or financial instrument(s) mentioned in the above article.

Digitonic Ltd, the owner of ValueTheMarkets.com, has not been paid for the production of this piece by the company or companies mentioned above.

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