Aquinox Pharmaceuticals, Inc., a clinical stage pharmaceutical company, engages in developing novel therapeutics for chronic urological conditions by inflammation and pain. The company focuses on a library of novel compounds that activate SH2-containing inositol-5'-phosphatase 1 (SHIP1) to develop therapeutics for application in inflammation, inflammatory pain, and blood cancers. Its lead product candidate is Rosiptor (Leadership 301), a small molecule activator of SHIP1 that is in Phase III clinical trials for treatment in interstitial cystitis/bladder pain syndrome. The company was formerly known as Aquinox Pharmaceuticals (USA) Inc. and changed its name to Aquinox Pharmaceuticals, Inc. in January 2014. Aquinox Pharmaceuticals, Inc. was founded in 2003 and is headquartered in Vancouver, Canada.
(Summary) (Company) (Chart)
30 April 2018
1yr Target $25.25
Payout Ratio 0.00%
1yr Cap Gain 107.13%
1yr Tot Return 107.13%
EPS (ttm) $-2.24
EPS next yr $-2.10
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Market Cap $304.38 Mil
Earnings $-52.50 Mil
Profit Margin ---
Quick Ratio 9.90
Current Ratio 9.90
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IC/BPS is a debilitating condition marked by chronic bladder pain and urinary symptoms. Patients may experience recurring pain, pressure, and/or discomfort perceived to be related to the urinary bladder as well as urinary frequency, urgency, and/or nocturia. The pain often worsens upon bladder filling and may be relieved upon bladder emptying. Many patients living with IC/BPS report that it takes a physical, emotional, and psychological toll, greatly impacting employment and social and intimate relationships. There are currently few FDA approved and/or effective treatment options for IC/BPS. Only about 1 million of the 5.5 million adults in the United States with symptoms of IC/BPS have been diagnosed or are receiving treatment.
SHIP1 and the P13K Pathway
The PI3K pathway is a cellular signaling pathway that has been linked to a diverse group of cellular functions and biological processes such as cell activation and migration, which are related to inflammation, and cell growth, proliferation and survival, which are related to cancer. As a result, the PI3K pathway is being evaluated by the academic community as well as by pharmaceutical and biotechnology companies in the areas of immune disorders and oncology.
In the PI3K pathway, the key messenger molecule is phosphatidylinositiol-3,4,5-trisphosphate, or PIP3, which initiates the signaling pathway. In cells derived from bone marrow tissues (e.g. immune cells), key enzymes that control levels of PIP3 are the PI3 kinase, or PI3K, and the phosphatases, phosphatase and tensin homolog, or PTEN, and SH2-containing inositol-5’-phosphatase 1, or SHIP1. PI3K generates PIP3, thus initiating the signaling pathway. This signaling is reduced by degradation of PIP3 by PTEN and SHIP1. PTEN is generally considered to be constantly working in the pathway to control basal activity, whereas SHIP1 is engaged when the cell is stimulated. In preclinical studies, PTEN has been shown to suppress cancer by controlling cell proliferation, whereas SHIP1, has been demonstrated to control inflammation by reducing cell migration and activation.
If the PI3K pathway is overactive, immune cells can produce an abundance of pro-inflammatory signaling molecules and migrate to and concentrate in tissues, resulting in excessive or chronic inflammation. SHIP1 is predominantly expressed in cells derived from bone marrow tissues, which are mainly immune cells. Consequently, drugs that activate SHIP1 can reduce the function and migration of immune cells and have an anti-inflammatory effect.
SHIP1 as a Drug Target
Aquinox believes that inflammation can be reduced by activation of SHIP1, taking advantage of the natural modulation of the PI3K pathway. When activated, SHIP1 redirects signaling in immune cells to reduce their activation and migration, thereby reducing inflammation while still allowing these cells to maintain cell growth and survival. The Company's scientific founders, based at the University of British Columbia, were the first to discover SHIP1 and show that small molecules could activate it, thereby making it a potential target for a new class of anti-inflammatory drugs. Additionally, other academic scientists have shown that certain immune cell cancers have suppressed levels of SHIP1, making such cancers also potential targets for SHIP1 activators. SHIP1 is predominantly present in immune cells. Therefore, SHIP1 activators target immune cells to cause an anti-inflammatory effect while minimizing effects in other tissues.
Rosiptor is a SHIP1 activator that has demonstrated preliminary safety, broad anti-inflammatory potential and favorable drug properties in multiple preclinical studies. The Company has also completed eight clinical trials, exposing over 395 subjects to once daily oral administration of rosiptor. These trials have demonstrated that rosiptor is generally well-tolerated, with over 200 subjects receiving rosiptor in two Phase 2 trials for periods of 12 weeks. Aquinox believes rosiptor is the only SHIP1 activator currently in clinical trials and that no SHIP1 activator has yet received marketing approval as a treatment for disease in humans.
Rosiptor has Desirable Pharmaceutical Properties
In addition to demonstrating strong in vitro and in vivo activity, rosiptor was also selected as a lead candidate based on its many desirable pharmaceutical properties. It is highly water-soluble and does not require complex formulation for oral administration. Rosiptor has low plasma protein binding, is not appreciably metabolized in vitro and is excreted primarily as parent compound in both urine and feces. In humans, rosiptor has shown pharmacokinetic properties suitable for once-a-day oral dosing. In addition, the absorption of the drug candidate is equivalent whether taken with or without food.
Interstitial Cystitis/Bladder Pain Syndrome
IC/BPS is a chronic urinary bladder disease characterized by erosion of the interior bladder lining and chronic inflammation of the bladder wall, bladder and pelvic pain and increased urinary urgency and/or frequency. Stress or a change in diet has been known to trigger IC/BPS symptoms. IC/BPS affects men and women of all ages. Only approximately one million of the five and a half million adults in the United States with symptoms of IC/BPS have been diagnosed or are receiving treatment. IC/BPS is considered to be one of the most challenging urological conditions without effective therapy.
Chronic inflammation within the bladder wall can lead to damage and fibrotic changes in the bladder. There have been several studies linking allergic sensitivity to worsening IC/BPS symptoms. Furthermore, the inflammation leads to the release of mediators that irritate and trigger surrounding nerve tissue and causes radiating pain. For many IC/BPS sufferers, their symptoms of pain and urinary frequency are severe and adversely affect all major aspects of their lives, including overall physical and emotional health, employment, social and intimate relationships, and leisure activities.
The diagnosis of IC/BPS is often challenging and is based on exclusion of other diseases, including bladder cancer, kidney stones, vaginitis, endometriosis, sexually transmitted diseases and prostate infections. Currently, IC/BPS is more commonly diagnosed in women than men. Sometimes patients have to see a number of doctors and specialists over a period of several years to obtain a correct diagnosis. The reported diagnosis rate for IC/BPS is significantly lower than the number of people estimated to suffer from IC/BPS.
IC/BPS Current Therapies
There is no known cure for IC/BPS, although a number of therapies have been reported to relieve symptoms. The only FDA approved oral therapy is an agent, pentosan polysulfate sodium (PPS) (Elmiron), first approved in 1996, which may help to temporarily restore the bladder lining but can take up to six months before any benefit is noted. Recent placebo controlled studies of PPS however have failed to demonstrate benefit. Other oral therapies used off-label include antihistamines, anticholinergics, antispasmodics, anti-infectives, analgesics and low dose antidepressants to block neurogenic pain. Many IC/BPS patients continue to suffer this debilitating condition, despite treatment with existing therapies.
In addition to oral therapies, direct instillation of drugs into the bladder via catheter (intravesical therapy) has been shown to provide temporary relief of symptoms. Dimethylsulfoxide (DMSO; RIMSO-50) is the only drug approved by the FDA for bladder instillation for IC/BPS. It offers anti-inflammatory, muscle relaxant and analgesic effects. DMSO is used alone or in combination with heparin, corticosteroids, bicarbonate and a local anesthetic (lidocaine) for intravesical administration. Instillations and cystoscopy with hydrodistension along with analgesics and pain medications are treatments used in Japan and certain European countries.
Instillation therapies are invasive and can be inconvenient. Oral therapies can offer significant potential advantages for IC/BPS patients. However, despite precedents for IC/BPS anti-inflammatory therapies, there are no satisfactory oral therapies currently available. We believe there is a significant medical need for new and innovative treatments that target the underlying inflammatory disease process.
My Path Forward
As with all clinical stage pharmaceutical companies, an investment in stock is an investment in the companies ability to complete successfully the clinical trials and the commercialization of a product. That process entails a lot of risk so these shares should be accumulated with funds that may fall in value. But if successful, investors will rush to the shares of the company propelling it higher. Therein lies the reward.
My strategy will be to accumulate shares of this company while simultaneously selling covered calls. This obviously caps my potential gain at the benefit of lowering my costs. It's a tradeoff I'm willing to make to reduce the risk involved in owning these shares. The risk has also expanded the option premiums so selling OTM calls well above the current price will allow price appreciation while at the same time still reducing the current investment.
My expectation is that the shares will be at or below the strike price at expiration yet sufficiently high enough that my investment was maintained or increased. Hopefully these shares will meet these expectations.