Matinas Biopharma Could Jump 10,000%

Disclaimer: This post does not constitute financial advice. Do your own due diligence before making an investment.

Or maybe more.

While writing this article I re-wrote the headline several times. It went through iterations like, “Matinas Biopharma is Ready for Liftoff” or “The Upside Potential on Matinas is Incalculable.”

In the end I went with the idea that Matinas Biopharma could jump 10,000% in the next few years. (Or maybe sooner.)

Here’s the deal.

Many drugs are administered intravenously. But I.V. drugs are annoying for multiple reasons. One, lots of people hate needles. They avoid getting shots for this reason while not admitting it.

Two, I.V. drugs are fragile. For example, some of our Covid-19 vaccines, need extreme refrigeration. This makes it tougher to deliver them to poorer parts of the world. If we want out of the pandemic, we need an equitable global vaccination initiative (as well with better therapeutics.)

Three, I.V. drugs can be dangerous. Many of them also have toxicity issues. All drugs that enter your body pass through your kidneys. Some drugs, like amphotericin B (for cryptococcal meningitis) can lead to renal toxicity.

Summary: Intravenous drugs are bad, and they should feel bad.

HOWEVER

Potentially toxic, fragile, intravenous drugs might one day become a thing of the past. (Like how doctors used to prescribe leeches.)

This is where Matinas Biopharma comes in. They’ve developed an entirely new method of administering drugs. They’re called Lipid Nano-Crystals, or LNC for short.

The LNC platform allows them to turn a fragile, toxic, intravenous drug into a safe (and potentially more effective) oral drug. This means that maybe in the future you could swallow a vaccine instead of getting it jabbed in your shoulder by a nursing student who mispronounces your name while listening to a single Air-Pod.

I think everyone would agree that pills are better than needles.

Which is why Matinas has so much potential that it’s basically incalculable.

When evaluating a biotech company, you generally look at their pipeline. These are drugs and therapies they have in development and clinical testing. You estimate the chance of success and weigh it against the market size of the problem they’re trying to solve.

From Matinas’ website: Our proprietary intracellular LNC platform is designed to safely deliver a broad range of potent medicines – including small molecules, drugs with blood level-limiting toxicities, nucleic acid polymers, proteins, peptides, vaccines, and gene editing technologies.

This is what makes Matinas unique. They aren’t developing new drugs. They’re developing a new delivery system for already existing (and proven to work) drugs. This like selling a better shovel to prospectors digging for gold (or prospectors that already found it.)

LNC technology (if it works) isn’t just going to be used on the two drugs currently being tested by Matinas. LNC could theoretically be used to improve hundreds or thousands of different drugs.

If it sounds like a miracle, that’s maybe because it is.

The trillion-dollar question is, does LNC work?

And if it does work, why hasn’t Wall Street scooped up every single share? Why hasn’t a large biotech company simply bought Matinas out? The licensing opportunities for LNC are ridiculous.

Any company that has a drug with sketchy efficacy rates and/or toxicity issues will want to run an LNC trial. Which is the unfortunate thing about a brand-new delivery system. Drug approval agencies, like the FDA, view LNC drugs as entirely new drugs. This means they need to start from scratch with testing. They need to do small-scale phase 1 tests for safety. Then they need to do larger tests for efficacy. Then they need to do a double-blinded large-scale test to make sure once-and-for-all that this new drug is safe, effective, and an improvement over existing therapies.

So, LNC is like a new and improved shovel, but each shovel is specifically designed for each prospector, and the prospectors need to field test it before taking it into the mountains.

Matinas currently has a market cap of 177 million. Depending on how you look at stocks, this is either a correct valuation, or tremendously undervalued.

I approach stocks from a speculative angle. I like to buy before the “big event” and sell later.

Large investment firms do it a bit differently. They run cash-flow projections on information they see as facts. They want hard proof that something works before they invest. They’re fine missing out on the first 50-100% of gains. Because sometimes things don’t work out. If LNC technology is a flop, then Matinas could go bankrupt. Large investment firms (especially pension funds) don’t like that level of risk. There also isn’t an option chain for Matinas. You can’t buy puts to hedge your investment. This potentially makes it too risky for many organizations to buy shares in Matinas.

But so far, LNC seems like it’s working.

Here are some facts.

1.  October 7th, 2019. Matinas receives orphan drug designation from the FDA for their oral formulation of amphotericin, designated MAT2203. [Source]

2. October 14th, 2019. Matinas launches the first phase of testing for MAT2203. [Source]

3. December 12th, 2019. Matinas enters into an agreement with Genentech (a company owned by Roche) to test LNC technology with some of their drugs. [Source]

4. August 20th, 2020. Matinas announces the publication of data from the first phase (cohort 1) of MAT2203. [Source] [Full Study]

The DSMB (Data and Safety Monitoring Board) liked the data and recommended they proceed to cohort 2.

From the Q1 2021 conference call, the CEO said: “The survival rate for patients on MAT2203 is exceeding expectations.”

He also said reiterated that they had relocated all internal resources towards to the development of LNC.

Let’s take a tiny break from the facts so I can explain what this cohort stuff is.

Here’s an image from the May 2021 investor presentation.

As you can see, in cohort 1, they gave patients intravenous amphotericin for five days, and then oral amphotericin (MAT2203) for nine days.

Study investigators are obligated to stop a study if they believe a drug doesn’t work or is harmful. In this case, they decided to proceed. (This is a good sign that LNC works.)

In cohort 2, they gave patients I.V. amphotericin for only two days, and then MAT2203 for 12 days. The safety and efficacy data from this study is due in September 2021, a.k.a. imminently.

Okay, back to facts.

5. December 7th, 2020. Matinas Biopharma announces an agreement with the National Institute of Allergy and Infectious Diseases (NIAID). The collaboration was to produce an oral form of Gilead’s remdesivir using Matinas’ LNC technology. [Source]

6. April 12th, 2021. Gilead abandons their outpatient intravenous remdesivir trial. [Source]

7. July 29th, 2021. Gilead abandons their inhaled formulation of remdesivir. [Source] Matinas’ oral formulation is now the front-runner.

8. August 10th, 2021, Matinas reports their Q2 2021 results. From the press release, “The Company and NIAID have successfully completed in vitro studies of various LNC formulations of Gilead’s antiviral drug remdesivir.” [Source]

They say their LNC formulation of remdesivir “demonstrated meaningful antiviral activity compared to free remdesivir, with a favorable toxicity profile. Based on these results, NIAID is preparing to initiate an in vivo efficacy study of the most potent LNC-remdesivir formulation. Results are expected in the fourth quarter of 2021.”

If you listen to their conference call, or read the transcript, the CEO says that the NIH moved their oral remdesivir trial to the front of the queue. They also state they are hoping that oral remdesivir can be used prophylactically. This means, if it works as we all hope, you could pop a pill before going into a Covid-19 hotspot. For example: Nurses and doctors could swallow one before they start work.

Okay, so.

What we have here is two major indicators that Matinas’ LNC technology is working as intended. The first was the results from cohort 1 of the MAT2203 trial. If LNC didn’t work, was harmful, or was obviously less effective than the intravenous drug, then the investigators would have stopped the trial and not recommended proceeding with cohort 2.

The second major indicator that LNC works is that Gilead has abandoned their in-house alternative formulations (that we know about) of remdesivir. In the test between LNC remdesivir and classic remdesivir, LNC appears to have performed better, and has a better toxicity profile. (This is huge because remdesivir can cause kidney damage.)

We have two major signs that LNC works, and zero signs it doesn’t.

Matinas is hiring a technician for clinical manufacturing. Management sounds excited on the conference calls. Gilead (one of the world’s largest biotech companies) seems to prefer Matinas’ remdesivir to their own.

All that’s missing now is the data from cohort 2 of the MAT2203 trial which will be out soon. Literally any day now. Maybe even tomorrow.

Let’s assume the data is good. What would be a fair valuation for the company?

Traditionally speaking, if you were looking at a biotech company that doesn’t have any drugs on the market yet, you examine their pipeline.

You take the number of drugs (A), multiply it by the probable rate of failure (B), then look at the size of the market and how much money the drug might capture (C).

If A times B times C, is drastically less than the company’s market cap, then it might be a good investment.

That’s why it’s almost impossible to say how much Matinas’ might be worth. They aren’t working on drugs of their own. They’re working on newer, better formulations of existing drugs. MAT2203 (amphotericin B) and MAT2501 (amikacin) have had generic options available for a long time. Matinas didn’t have to partner with anyone to test a better formulation. In fact, for MAT2501, they were even awarded up to $3.75 million from the Cystic Fibrosis Foundation to support the development of oral amikacin.

In 2020, Gilead bought Immunomedics for 21 billion. Considering Immunomedics company was trading for as little as 2.5 billion that same year, it seemed like a big price to pay for a drug that was only approved for triple negative breast cancer. But that’s not only why Gilead bought it. Immunomedics leading drug is called trodelvy. And trodelvy might be a great treatment for 5-6 other tumors. Which is why Gilead paid such a hefty price. They wanted to buy the company before other large pharmas realized how valuable trodelvy might become.

To properly evaluate the maximum upside of Matinas, you need to look at every drug available on the market and whether an LNC formulation might improve it by making it oral, shelf stable, and less toxic. Then multiply that by a licensing fee. (Good luck with that.)

In 2020, pharmaceutical companies (worldwide) had revenues of 1.27 trillion US dollars. That number will grow. Capturing even the tiniest fraction of that would transform Matinas into a billion-dollar behemoth.

Will it ever get there? It’s impossible to say for sure. Personally, if LNC technology is proven to work, I would never sell out. The recurring revenues from licensing fees could be worth trillions over the next 30 years.

On the other side, if a major biotech like Roche or Gilead were to offer Matinas shareholders $15 billion for the entire company, that might be enough for some people to vote yes on a sale/merger.

When the market cap of a company is 177 million, then $15 billion sounds like a stretch. But that’s biotech. Trilium therapeutics was trading for $0.25 cents a share in October of 2019. Three weeks ago, Pfizer bought them out for $18.50 a share. That’s a multiplier of 74 times.

It happens.

Before you get too excited, you must understand that the data from cohort 2, and the efficacy and safety of LNC technology is a binary event. If the data is bad, Matinas could drop 80% or more.

But if the data is good, Matinas could jump a hundred fold in the near future. And that’s a bet I’ll take every time.

I am currently overweight Matinas and have no plans of selling, especially if the data from cohort 2 is great. Long and strong, baby.

Long and strong.

Update. September 13th: Matinas posted positive data from cohort 2 of the MAT2022 trial. [Source]

They held a conference call at 8AM EST to discuss the details. Safety and efficacy results for oral amphotericin appear amazing. Although management seems more thrilled with the idea that the LNC platform is functioning as intended. (Which is definitely the thing to be happy about.)

If LNC works, then oral remdesivir is likely to work. LNC is a real game changer. You would need a divine entity to properly calculate the potential for this technology.

Good luck with your investments, and don’t forget to follow us on Twitter for more in-depth analysis.