AzurRx BioPharma, Inc.’s (NASDAQ: FWBI) value-proposition was excellent before. But, after its $229 million acquisition of First Wave Bio, Inc. in a stock and cash transaction, it got even better. Why? Because the deal adds significant firepower to an AZRX asset portfolio and development pipeline that was already impressive. 

In fact, the now combined assets position the merged company, First Wave BioPharma, Inc., better than ever to leverage its substantial IP and clinical-stage programs to develop novel, gut-targeted, small molecule therapies for auto-immune inflammatory bowel diseases (IBD) and other severe conditions.

The new company is off and running, trading under its new symbol, “FWBI,” as of last Thursday and moving its website channel to www.firstwavebio.com. There’s no shortage of enthusiasm about the transaction. And for investors, understanding the accretive nature of the deal shows why it’s a significant value driver.

From the onset, it immediately brings under management significant assets that expand its former GI development pipeline. It further positions the company for multiple growth opportunities in the inflammatory bowel disease therapeutic space. 

First Wave Bio assets also strengthen an already impressive portfolio by adding treatment candidates targeting new indications for several IBDs representing multi-billion dollar commercial market opportunities. In the U.S. last year, more than 850,000 ulcerative colitis diagnoses and 625,000 Crohn’s disease diagnoses were made, and these patient populations and markets are expected to grow significantly over the next decade. That growth puts FWBI in the right markets at the right time.

Remember, too, former AZRX was already advancing its proprietary formulations of niclosamide. That won’t slow down. To date, its novel anti-inflammatory mechanism of action, non-systemic absorption, and safety benefits show potential to treat significant unmet clinical needs for IBD patients, especially in the mild-to-moderate disease categories. 

By adding more intellectual firepower and IP assets to the team, that program is strengthened and puts new IBD treatment indications in play. Best of all, the combination should put FWBI in its best position ever to develop and bring to market meaningful drugs that will do more than treat substantial market needs- they can create significant shareholder value in the process.

Accretive First Wave Bio Acquisition

The coming weeks and months could prove that point, with expectations for FWBI to leverage its proprietary formulations of niclosamide to bring best-in-class treatment to patients. Updates could be imminent.

That program utilizes this small molecule drug, which has anti-viral and anti-inflammatory properties, to target multiple GI conditions. The better news from a valuation perspective is the robust intellectual property (IP) portfolio that is added to the mix. FWBI owns the method of use and delivery of these formulations as treatments for various auto-immune, inflammatory, and viral conditions. It can be a powerful asset with respect to licensing and partnerships.

It also accelerates a prior deal made when AzurRx in-licensed from First Wave Bio the exclusive global rights to develop two niclosamide therapeutic indications – for COVID-19-related GI infections and for immune checkpoint inhibitor-associated colitis and diarrhea (ICI-AC) in advanced-stage cancer patients. But now, with the two acting as one, the internal development pipeline includes three new clinical IBD indications in ulcerative proctitis (UP) and ulcerative proctosigmoiditis (UPS), ulcerative colitis (UC), and Crohn’s disease (CD).

The company is also leveraging its new wealth of data supporting the anti-viral and anti-inflammatory capabilities of niclosamide. Recently, data from First Wave Bio in ulcerative proctitis supported the broader potential for niclosamide in multiple inflammatory bowel diseases, where the company expects its niclosamide formulations to offer significant advantages over other currently available treatments. And that includes comparisons to steroids, 5-ASAs, and biologics – especially in the mild-to-moderate disease stage. 

Better still, its niclosamide formulations are orally delivered, are targeted specifically to the areas of the GI tract where the disease-causing inflammation occurs, and they avoid the risk of steroid-related immunosuppressant complications. Additionally, the manufacturing process for its niclosamide products can be scaled up to supply large populations quickly. Hence, there’s a lot to like. 

In fact, its expanded interest that includes the IBD therapeutic space adds to a pipeline that spans six indications and includes several clinical-stage programs. These programs are all built around its two proprietary technologies — niclosamide, and adrulipase (FW-EPI), which continue to show promise in treating exocrine pancreatic insufficiency (EPI), a life-threatening digestive disorder seen in patients with cystic fibrosis and chronic pancreatitis. 

Also, with multiple clinical trials advancing and others expected to start soon, along with a strong portfolio of long-lasting patents protecting niclosamide’s use for COVID-19 GI infections, ICI-AC, and the IBDs, the next several years should be rich in milestones. Better yet, catalysts. 

Keep in mind, AZRX was already strong. But going forward, its value-proposition increased substantially.

Clinical-Stage Trials With Market Firepower

The company previously announced that the independent Data Monitoring Committee (DMC) approved initiating patient enrollment in Part 2 of its ongoing RESERVOIR clinical trial evaluating micronized niclosamide as a treatment for COVID-19-related gastrointestinal (GI) infections. FW-COV is a proprietary, oral tablet formulation of micronized niclosamide developed to remove SARS-CoV-2 (SARS2), the virus that causes COVID-19, from the GI tract.

That recommendation comes after the DMC review of safety data collected from 9 patients enrolled in Part 1 of its RESERVOIR trial. Part 2 of the trial will get significantly bigger, enrolling up to 150 patients at clinical trial sites in the U.S., Ukraine, and India intending to demonstrate the efficacy of niclosamide in clearing the COVID virus from the GI tract and expanding previous safety observations. 

Topline study data is expected during the first quarter of 2022 and could show that relief is near for the millions of COVID-19 patients fighting the debilitating discomforting gastrointestinal symptoms caused by the virus that often continue even after the initial impact of the virus is cleared.

And beyond a confirmation of safety and promise to patients worldwide, the DMC recommendation puts a potentially massive catalyst in play in the coming weeks as the relatively short-term trial could indicate whether niclosamide treatment has the potential to improve “long haul” COVID-19 symptoms. If so, FWBI could be positioned to deliver a blockbuster drug to the market that fills an unmet need. Moreover, positive data could position them for grant funding, expedited review, and potential fast-track approval designations.

While news from the FW-COV program puts a potential near-term catalyst in sight, FWBI has much more pipeline promise to offer. Those, too, have reached milestones.

IND For Its PASSPORT Trial In-Play

The company also announced its submission of an Investigational New Drug (IND) Application seeking permission from the U.S. Food and Drug Administration (FDA) to begin a clinical trial evaluating proprietary formulations of niclosamide for Grade 1 and Grade 2 colitis and diarrhea in oncology patients receiving treatment with immune checkpoint inhibitors (ICIs).

The planned Phase 1b/2a PASSPORT clinical trial intends to determine the safety and potential efficacy of niclosamide, also known as FW-ICI-AC, administered as an oral, immediate-release tablet and a topical rectal enema foam formulation. This study adds to FWBI advancing its proprietary formulation of micronized niclosamide in its Phase 2 RESERVOIR trial noted above. It also puts a second shot on treatment and revenue-generating goals by leveraging the expected power of niclosamide as a front-line drug to treat multiple conditions.

Moreover, the clinical development of FW-ICI-AC as a safe, effective, and non-systemic treatment addressing immune checkpoint inhibitor-associated colitis (ICI-AC) could tap into another unmet medical need. And with checkpoint inhibitors more mainstream in treating cancers, a drug to treat the potentially dangerous side effects involving immune checkpoint inhibitors could benefit from a substantial market need. Further, the study is timely.

FWBI targets a market where up to 30% of patients treated with checkpoint inhibitors develop diarrhea that can develop into colitis. This condition can be debilitating and even life-threatening due to the compromised health of the patient. Targeting that population, FWBI is positioned to create niclosamide as the first drug specifically designed to treat ICI-AC. Thus, like its other prospects, it, too, can fill a substantial need by becoming a critical component to the treatment regimen for cancer patients receiving immune checkpoint inhibitors.

Still, in addition to the promise of the trials above, FWBI’s ongoing Phase 2b study could be the near-term value driver that adds substantial shareholder value.

Adrulipase Targets EPI In Patients With Cystic Fibrosis

The company’s lead program, adrulipase (FW-EPI), is moving forward quickly, supported by compelling data to support this candidate delivering significant value to the company. In August, the company published topline Phase 2a trial results that were nothing short of exceptional. That study evaluated adrulipase in combination with the current standard of care, porcine-derived pancreatic enzyme replacement therapy (PERT), to treat severe exocrine pancreatic insufficiency (EPI) in patients with cystic fibrosis (CF). The data is about as good as it can get.

FWBI reported that 100% of treated patients reached both primary and secondary endpoints. Even better, data showed clinically meaningful improvement in Coefficient of Fat Absorption (CFA) endpoints, and most importantly, showed that its combination therapy may benefit cystic fibrosis patients with severe EPI. In short, the results are a robust validation of its adrulipase platform.

Specifically, data collected from 20 patients showed that adrulipase combined with PERT led to clinically meaningful improvements in the primary efficacy endpoint, the Coefficient of Fat Absorption. In addition, the results are clinically significant, with patients showing an average gain of more than six percentage points from baseline, compared to the five-point improvement in CFA cited by the clinical literature as clinically significant. Also, data indicated positive improvements in weight gain and other secondary endpoints, which other treatments can’t definitively claim.

That efficacy profile is pushing the company to take the next steps toward marketing approval by finalizing the development of a new enteric-coated microbead formulation they believe can enable more medication to reach the small intestine and enhance its therapeutic potential. The near-term value driver here is that, like its other clinical-stage programs, this trial, too, is relatively short in treatment duration.

In fact, unlike trials and data collection that can take years to compile, FWBI expects its formulation work to be completed by the end of this year and to initiate a Phase 2b pilot trial in the 1H 2022. That combines well with an anticipated adrulipase treatment cycle that lasts roughly six weeks, with an evaluation conducted and completed during the next thirty days. Hence, multiple points of value-creating data could be shared in the coming weeks following initiation of a trial.

Multiple Shots On Goal In 2021-22

Indeed, the former AZRX, now FWBI, delivered important milestones so far in 2021. Going forward, data supports these milestones becoming catalysts. And that’s what drives shareholder value. Better yet, clinical updates could continue in Q3 and Q4, putting higher share prices in the crosshairs. And despite the stock trading lower alongside broader market weakness, the long-term value proposition has never looked better.

Undoubtedly, the entirety of the FWBI package makes its stock a compelling consideration for those that like to take ground floor positions in potentially sector-changing companies. And once analysts update their models to include expanded revenue-generating potential, the near-term upside could be substantial.

That makes investment consideration in FWBI both timely and compelling.

 

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