As part of the ShareBuyers’ going for growth series, we take a look into the growth prospects of 4D pharma (DDDD) – the AIM-listed clinical-stage pharmaceutical company that specialises in live biotherapeutic products that has seen its share price surge by nearly 400% in the past 6 months.
With understanding growing of the benefit of live biotherapeutics in changing patient’s lives and 4D pharma being a leader in this new area – it is understandable why investor interest has soared in DDDD recently.
Find out why 4D pharma Chief Executive Officer Duncan Peyton feels the company is currently ‘significantly undervalued’ and how he’d pitch the business to legendary investor Warren Buffett as it gears up for sustainable, long-term growth.
Firstly, could please tell us a bit about 4D Pharma and its value proposition?
4D pharma is a clinical-stage pharmaceutical company specialising in Live Biotherapeutic products (LBPs). Live Biotherapeutics are a new and recognised class of drug, derived from and leveraging the effects of the human gut microbiome. We are the leader in this new and rapidly emerging field of medicine, using specific microbiome technology to target a range of conditions from oncology to COVID-19 to neurodegenerative disease.
All 4D pharma’s live biotherapeutics are non-engineered single strains of bacteria, originally isolated from the gut microbiome of healthy human donors. Our extensive library of diverse bacterial strains is screened using our MicroRx platform, to identify and select strains with particular functional characteristics relevant to the treatment of a particular disease.
Driven by our fundamental focus on understanding and exploiting functionality, 4D pharma is developing treatments for a range of diseases, from cancer to asthma to gastrointestinal diseases. Recently we have turned 4D pharma’s MicroRx technology to neurological conditions and COVID-19. In addition to 4D’s broad and deep development pipeline, the MicroRx platform has generated by far the largest IP portfolio in the microbiome space.
Live Biotherapeutics as a new class of drug have a number of advantages over traditional therapies. As living bacteria, LBPs produce multiple products, proteins and metabolites, and as a result have ‘poly-pharmacy’ effects, able to hit more than one target simultaneously. For this reason, Live Biotherapeutics may be able to address multi-component diseases where previous approaches have failed. This includes Parkinson’s disease, cancer and immune-mediated diseases.
The perfect drug is both safe and effective; Live Biotherapeutics, by definition, are expected to meet the safety criteria, and we are currently demonstrating efficacy through our clinical trials. This safety profile significantly accelerates the development pathway, allowing us to go from discovery to clinical proof of concept in as little as four years, much faster than traditional drug types.
The current climate is presenting challenge and opportunity – how has this applied to 4D pharma?
4D’s underlying mission is to bring new solutions to therapeutic challenges that have resulted in failure or limited results for other areas of medicine to date.
The COVID-19 pandemic has presented challenges across the pharmaceutical industry, for example with delays to clinical trials. 4D pharma has also considered it important to focus on these challenges and try to provide alternative solutions to this novel disease. In July we commenced a Phase II clinical trial of oral immunomodulatory Live Biotherapeutic MRx-4DP0004. Due to its immune modulating profile, we believe our LBP may be uniquely able to address the hyperinflammation associated with severe COVID-19.
The pandemic has also had an immense impact to the broader economic climate, across all sectors. 4D pharma has, due to sound, confident management decisions, weathered the storm well, completing two fundraises in February and July, raising approximately £30 million in total. In addition to existing funds, this will support ongoing clinical trials of our lead candidates, as well as continued development of the MicroRx platform, including a research collaboration with MSD in the vaccines field.
Growth catalysts are crucial to business growth – what do you believe yours are?
In the biopharma industry, the most significant growth catalysts are clinical trials and data. 4D pharma has a number of clinical trials ongoing, with different candidates across multiple therapeutic areas representing multiple ‘shots on goal’, any one of which would be a huge value catalyst.
4D pharma recently announced clinical trial results for our lead immuno-oncology asset MRx0518 in combination with MSD’s blockbuster cancer drug Keytruda. We are testing the combination in advanced, end-of-line patients resistant to checkpoint immunotherapy drugs like Keytruda – those that have, effectively, exhausted all other options. The results from Part A of the trial, while in a relatively small number of patients, massively exceeded expectations. We achieved a 42% disease control rate – patients whose tumours shrunk by 30% or more or had stable disease for 6 months or longer. For these end-of-line patients with no alternative treatment options available, this is exceptional. Highly encouraged by these results, we are rapidly moving ahead with the Part B expansion phase; we expect to announce periodic updates from this open-label study throughout 2020-21.
Also in oncology, we have two additional trials of MRx0518 ongoing. One is a monotherapy biomarker study designed to investigate the immune-mediated mechanism of action of MRx0518 in the clinical setting, by analysing tumour samples before and after monotherapy treatment. Data generated could be highly informative for the future development of MRx0518 and provide insights into relevant biomarkers for patient selection and treatment; 4D pharma expects to announce initial results later this year. The third trial of MRx0518 is in combination with radiotherapy for resectable pancreatic cancer.
In gastrointestinal disease, we expect to announce the full topline results from a Phase II trial of another Live Biotherapeutic, Blautix®, for irritable bowel syndrome (IBS) in Q3. We announced a successful interim analysis from this trial earlier this year.
Our third clinical-stage LBP is MRx-4DP0004, which has unique immune-modulating and anti-inflammatory activity. In 2019, we launched a clinical trial in asthma which is ongoing and we expect initial data in 2021, with the pan-industry potential of delays due to COVID-19. However, as the COVID-19 pandemic spread and more data emerged, we recognised the immune-modulating activity of MRx-4DP0004 may be particularly suited to address the hyperinflammation seen in more severe COVID-19 patients. We started a clinical Phase II trial in the UK in hospitalised COVID-19 patients in June.
In parallel to our active clinical development pipeline, we continue to develop new programmes, for example in neurodegenerative diseases. We have identified LBPs that have shown activity in industry standard animal models of Parkinson’s disease, and are progressing these towards the clinic.
Success in any of these would be a significant validation not just of that specific programme, but 4D pharma’s wider approach and the MicroRx drug discovery platform. However, it would also have a major impact on the wider microbiome field, which is rapidly maturing but is perceived by some as in need of robust clinical data to realise the sector’s potential.
What are the biggest headwinds you foresee to achieving growth in the coming months and years? How will you tackle them?
Historically the biggest headwind facing 4D pharma and the microbiome field is the perception of this new type of drug. However we have seen this scepticism eroding, particularly in the last year or so as we and others in the sector deliver robust clinical data.
We feel 4D, an AIM-listed company, is currently significantly undervalued in the UK compared to our peers in the US who are behind our first-moving and leading position. We are always looking to engage and educate investors, to raise awareness of the 4D story and demonstrate the near-term value in the company, and expand our investor base particularly in the US.
We have multiple clinical trials ongoing, a fantastic board, a considerable IP portfolio and a great partner in Merck (in oncology and vaccines). We are in a strong position to meet challenges head on and achieve long-term sustainable growth.
Imagine you find yourself in a lift with Warren Buffett. What would be your ‘elevator pitch’ to summarise why he should invest in your business?
Live Biotherapeutics are a paradigm shift in medicine, a whole new class of drug much like the emergence of biologics and gene therapies. It is important to emphasise that Live Biotherapeutics are not a distant goal or immature concept, they are here and now, delivering game-changing clinical data and changing patients’ lives.
4D pharma is leading this rapidly emerging field, driven by its ‘function-first’ ethos and unparalleled platform technology, MicroRx. The platform has to date generated four unique clinical-stage Live Biotherapeutic drug candidates across a range of therapeutic areas, and a suite of pre-clinical programmes in new diseases. 4D is pushing the boundaries of the field, taking the microbiome beyond the gut in fields like oncology and neuroscience.
4D is best positioned to deliver on the promise of Live Biotherapeutics as the only truly end-to-end player in this exciting field. 4D pharma’s in-house capabilities cover the drug development spectrum, from discovery through manufacturing, IP protection, regulatory and clinical development.
Together these factors clearly demonstrate there is huge near- and long-term upside in 4D pharma, both from our development candidates currently in the clinic in major diseases with significant unmet need, but also in the MicroRx platform that drives us and our collaborations.
Please note: this discussion with Duncan Peyton of 4D pharma forms part of the ShareBuyers’ going for growth series – helping companies with high growth potential to share their story. It is not a recommendation to buy or sell shares in DDDD.