Citius Pharmaceuticals - Due Diligence (DD) - $CTXR

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Original post(s) can be found here

Created by /u/aenhimtm

CTXR Subreddit: here

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HypeEquity Summary:

>>A word of caution<<

Phama/Biotech stocks are highly speculative and volatile. Often times a stock can trade higher on good news but may crater quickly afterwards.

CTXR is in Phase 3 development of their product, Mino-Lok. Mino-Lok has an upcoming Phase 3 check-in to validate if they can potentially move on to FDA approval. This may not get approved, and even so, FDA approval will still be required.

>>See the authors risks section<<

Analyst content

HypeEquity: $CTXR: - Analyst content

Current Price $1.78 (as of this post)

Avg Price Target: $5

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The DD on $CTXR - MEGA EDITION

created by /u/aenhimtm

Whether you’re already invested or not in the company but you’re interested in finding out more information, I have compiled facts, questions, links, conclusions and estimates in this post to bring factual information among investors.

We are entering Q2 2021 which brings an important catalyst for this company. There is going to be a lot of hype, misinformation, and a lot of desperate people. This post is aimed towards investors who are discovering Citius Pharmaceuticals for the first time and want an unbiased deep dive into the company, so opinions and speculation are going to be kept at a minimum. For transparency’s sake, I own 1700 shares of CTXR.

I am not a financial advisor, this post is made for educational purposes only. Literally. Don’t take my word for anything that is presented in this post, do your own research, and invest solely based on the thesis that you create for yourself. Don’t get influenced by anyone.

What is Citius Pharmaceuticals?

With a name derived from the latin olympic motto “Citius, Altius, Fortius” (Faster, Higher, Stronger), Citius Pharmaceuticals (NASDAQ: CTXR) is a specialty pharmaceutical company dedicated to the development and commercialization of important new drug products for growing markets. Overview here.

What do they do?

Citius Pharmaceuticals is currently advancing four proprietary product candidates: Mino-Lok®, CITI-002 (“Halo-Lido” - halobetasol-lidocaine formulation), CITI-101 (Mino-Wrap) and CITI-401 (i-MSC) to treat Acute Respiratory Distress Syndrome (ARDS). Citius is developing therapies for unmet medical needs with cost-effective products in high growth categories with low developmental risk.

Who is in charge?

Leonard Mazur (Chairman of the Board) was the Chairman of Leonard Meron Biosciences, Inc. prior to its merger with Citius in March 2016. He is the cofounder and Vice Chairman of Akrimax Pharmaceuticals, LLC, a privately held pharmaceutical company specializing in producing cardiovascular and general pharmaceutical products. Akrimax was founded in Sep. 2008 and has successfully launched prescription drugs while acquiring drugs form major pharmaceutical companies. Mr. Mazur also co-founded and served as the Chief Operating Officer of Triax Pharmaceuticals LLC, a specialty pharmaceutical company producing prescription dermatological drugs. From 1995 to 2005 he was the founder and CEO of Genesis Pharmaceuticals, Inc. . In 2003, Mr. Mazur successfully sold Genesis to Pierre Fabre, a leading pharmaceutical company.

Myron Holubiak (President and Chief Executive Officer, Director) was co-founder, director and CEO of Leonard Meron Biosciences, Inc., prior to the 2016 merger with Citius. Mr. Holubiak was the President of Roche Laboratories, Inc., a major research-based pharmaceutical company, from Dec. 1998 to Aug. 2001. Prior to that, he held sales and marketing positions at Roche during his 19-year tenure there. As President of Roche, Mr. Holubiak helped transform Roche Labs into a leading antibiotic and biotechnology company.

Jaime Bartushak (Chief Financial Officer) is an experienced finance professional for early stage pharmaceutical companies, and has over 20 years of corporate finance, business development, restructuring, and strategic planning experience. Most recently, in 2014, Mr. Bartushak helped lead the sale of PreCision Dermatology, Inc. to Valeant Pharmaceuticals International, Inc. Mr. Bartushak is also one of the founders of Leonard-Meron Biosciences, and was instrumental in its start-up, as well as obtaining initial investment capital.

Dr. Myron S. Czuczman (Chief Medical Officer and EVP) is an experienced physician-scientist, academic oncologist and pharma executive with decades of experience in the strategic design, implementation, and oversight in the global development of novel therapeutics for hematologic malignancies. Dr. Czuczman joins Citius from Celgene where he was Vice President, Global Clinical Research and Development, Therapeutic Area Head of Lymphoma/CLL. In this role, Dr. Czuczman managed a global team of physicians and scientists responsible for cross-functional development of compounds from proof-of-principle to worldwide registration.

Citius overview on their leadership.

How is it going for them?

Mino-Lok is an antibiotic lock solution used to treat patients with catheter-related bloodstream infections (CRBSIs). Mino-Lok product is intended to salvage the CVC (central venous catheter), obviating the need to remove and replace the catheter. This is a recognized unmet medical need. The drug is currently in Phase 3 clinical studies with an independent DMC (Data Monitoring Committee) interim efficacy review coming late-April/early-May. Mino-Lok has proven 100% efficacy rate in both Phase 1 and Phase 2 trials.

Halo-Lido is being developed as a proprietary topical formulation of halobetasol and lidocaine to provide anti-inflammatory and anesthetic relief to persons suffering from hemorrhoids. Although there are numerous prescription and over-the-counter (OTC) products commonly used to treat hemorrhoids, none currently possess safety and efficacy data generated from rigorously-conducted clinical trials. Citius believes its halobetasol-lidocaine product will become an important treatment option for physicians who want to provide their patients with a therapy that has demonstrated safety and efficacy in treating hemorrhoids. Phase 2b trial will begin in Q3 2021.

Mino-Wrap is a novel approach to reducing post-operative infections associated with surgical implants. Mino-Wrap is a liquefying gel-based wrap containing minocycline and rifampin for reducing tissue expander (TE) infections following breast reconstructive surgeries. It is a laminate film comprised of porcine gelatin plasticized with glycerol. Mino-Wrap also contains the antibiotics minocycline and rifampin to reduce bacterial bio-burden on implantable devices preventing colonization over a sustained period of time. The current standard of care (SOC) can be improved upon and infection rates reduced, according to Citius Pharmaceuticals. The drug is currently in pre-clinical development.

i-MSC, or CITI-401 is being developed to treat ARDS as a cause of COVID-19. It is currently in pre-clinical stages and the IND (Investigational New Drug) application is expected, according to Citius, in the first or second quarter of 2022.

What is the major catalyst as of April 2021?

Mino-Lok, the antibiotic lock solution to salvage CVC’s demonstrated in past clinical trials an efficacy of 100% in salvaging colonized CVCs; the Mino-Lok product had no significant adverse events, compared to an 18% serious adverse event rate when infected CVCs were removed and replaced, which is the SOC as of now. A clinical data manuscript can be found here.

Currently there are no competitors in the market that Mino-Lok addresses.

Mino-Lok has also received FDA Fast Track with QIDP designation, which is defined as “an antibacterial or antifungal drug for human use intended to treat serious or life-threatening infections, including those caused by an antibacterial or antifungal resistant pathogen, including novel or emerging infectious pathogens.

FDA’s “Fast track” is a process designed to facilitate the development, and expedite the review of drugs to treat serious conditions and fill an unmet medical need. The purpose is to get important new drugs to the patient earlier. Fast Track addresses a broad range of serious conditions. A drug that receives Fast Track designation is eligible for some or all of the following:

• More frequent meetings with FDA to discuss the drug's development plan and ensure collection of appropriate data needed to support drug approval

• More frequent written communication from FDA about such things as the design of the proposed clinical trials and use of biomarkers

• Eligibility for Accelerated Approval and Priority Review, if relevant criteria are met

• Rolling Review, which means that a drug company can submit completed sections of its Biologic License Application (BLA) or New Drug Application (NDA) for review by FDA, rather than waiting until every section of the NDA is completed before the entire application can be reviewed. BLA or NDA review usually does not begin until the drug company has submitted the entire application to the FDA

The frequency of communication assures that questions and issues are resolved quickly, often leading to earlier drug approval and access by patients.

Based on Phase 2b results, Citius Pharmaceuticals believes that the Mino-Lok® product is highly effective in salvaging infected indwelling catheters and is well-tolerated, making Mino-Lok therapy an attractive alternative to removing and replacing a new CVC.

In Nov. 2020, Citius announced the results of a study that Mino-Lok eradicates S. aureus Biofilm more effectively and expeditiously than components. This is a good read.

“Staph aureus is one of the most worrisome pathogens in catheter related bloodstream infections (CRBSI). This pathogen receives special consideration even in the IDSA guidelines for treating CRBSI. We are very pleased to show that Mino-Lok appears to be more effective, and work more expeditiously, than even ethanol," commented Myron Holubiak, Chief Executive Officer of Citius.

The company is currently conducting a Phase 3, multi-center, randomized, open-label, assessor-blinded study with 144 patients. The objectives of the study are the following:

• To evaluate the efficacy of Mino-Lok along with standard of care (SOC) systemic antibiotics for salvaging the central venous catheter (CVC) in subjects with catheter-related or central line-associated bloodstream infection (CRBSI/CLABSI)

• To evaluate the safety of Mino-Lok in subjects with CRBSI/CLABSI.

According to the latest videoconferences held in March by both Leonard Mazur and Myron Holubiak, the Pivotal Phase 3 ALT Study began in Q2 2017 and is supposed to end in Q3 of 2021. The catch is that based on the comments and recommendations made by the DMC, which are further supported by the June 2020 FDA guidance document titled “Statistical Considerations for Clinical Trials During the COVID-19 Public Health Emergency”, they have amended the DMC charter to enable a “superiority” review at 65% of the expected events rather than 75% as originally planned. The final DMC meeting is going to be held in late-April/early May and is critical to the evolution of the phase 3 trial of Mino-Lok. They can say that it is unethical to keep the trial going based on the positive results and speed up the process for the FDA approval OR they can say that data is insufficient and keep the trial going for as long as it’s intended to – Q3 2021.

People are investing into a favorable decision by the DMC regarding the efficacy of Mino-Lok to stop the trial early, judging by the results of the past clinical trials.

The main risks of investing in the company are:

• Biopharmaceutical companies represent a high degree of risk because the majority of the drugs and products that they are testing fail in early trial stages.

• The company has no basic income, no revenue, no products, relying entirely on investors for funding.

• Any delay or even failure in a trial could force the company to issue more shares for funding, possibly diluting the share price.

• The DMC deciding to continue the trial for Mino-Lok as intended and prolong the Phase 3 trial to Q3 of 2021.

• Not receiving FDA approval for Mino-Lok, despite the Fast-Track QIDP designation.

Are there other positive aspects that counter these risks?

Yes.

According to fintel.io, Citius Pharmaceuticals has 10.7% insider ownership, 13,457,939 shares equating to cca. $25.5 million (at a share price of $1.90), out of 125,758,091 shares outstanding, which brings a sense of confidence among investors. In February 2021, Citius Pharmaceuticals closed a direct offering of $ 76 million, which they say is more than enough to bring their first product, Mino-Lok, to the market. In addition, CTXR has a total of 4 promising products across a span of 3-4 years, so they don’t rely on the success of a single product to survive and thrive as a company.

TL;DR: I can’t possibly sum up this much information here. Try reading the whole thing if you’re genuinely interested. I invite those interested to click the links in this post, they lead to more and more information.