A short term peak back in June aside, which saw the company rise through the $10 mark before giving back its gains and more, Innocoll Holdings PLC (NASDAQ:INNL) has traded essentially flat year to date. The company hasn’t presented as such of an opportunity for anyone over the last few months, from a volatility perspective, but volume has picked up over the last couple of weeks, and we think there’s a chance this one could be in for a big fourth quarter.
The company has two major near term catalysts, both of which have the potential to inject considerable upside momentum into its market capitalization, and we think the recent uptick in volume is representative of speculative traders loading up ahead of the catalysts hitting press.
In anticipation of any news driven gains, then, here’s what we are looking at.
For those not familiar with the company, it’s a biotech/healthcare company with a proprietary technology based on collagen. The technology basically produces a form of biodegradable collagen that Innocoll believes (and is attempting to prove with a pretty robust pipeline) can be used as a first line treatment for various types of wounds and surgery sites. The treatments that the technology creates are targeted at things like closing both puncture types and keeping the region sterile as the skin around the wound heals itself naturally, as well as antibiotic delivery, adhesion limitation, blood loss stemming, etc.
It’s also got a host of approved products, currently available in various global markets, which generated a little over $1 million during the three months ended June 30, 2016.
There’s a large unmet need for these sorts of products, and there’s also a potentially lucrative market for any that can make it to commercialization. Not only can the company that brings said product to market go after its own commercial strategy, but it has the chance of picking up a military contract. Government contracts, and especially those at the intersection of combat and healthcare, can be incredibly lucrative, and this will no doubt form a large portion of Innocoll’s perceived market potential going forward.
So, what are the catalysts?
Well, they relate to two distinct products, both of which the company has created using its proprietary collagen technology.
The two products are XARACOLL and COGENZIA. We’ll address XARACOLL first.
XARACOLL is a pain management product, which earlier this year, demonstrated strong efficacy when used as a long-acting anesthetic in the reduction of surgical pain following hernia repair. Innocoll has collected all the data from the trial, and expects to put it forward to the FDA as part of a new drug application (NDA) submitted before the close of November (early fourth quarter, as reported).
We expect this NDA submission to come before November 15 (as this would fall in line with the company’s stated early November target, and this serves as our first (although also potentially concurrent, as we’ll get to shortly) major upside catalyst.
COGENZIA is a diabetic foot ulcer target indication treatment. Diabetic foot ulcers are not pleasant afflictions. They are very serious, and if not treated quickly and effectively, nearly always lead to below the knee amputation for the patient in question. Current SOC involves cleaning, covering and both topical and systemic administration of an antibiotic regimen. These treatments work together to try and close the wound, and minimize the risk of infection (which is very high with these types of ulcers).
COGENZIA acts in conjunction with systemic antibiotics and the above discussed standard wound care to provide high concentrations of gentamicin directly to the site of the ulcer in question. Gentamicin, which sells under the brand name Garamycin and is marketed by Merck & Co., Inc. (NYSE:MRK) by way of its 2009 acquisition of Schering-Plough, is a well established standard of care antibiotic used across a host of indications. COGENZIA basically helps to seal the wound while also delivering a topical dose of the antibiotic to the patient.
The company has just wrapped up on two phase III trials for COGENZIA in this indication, and topline from both is set to hit (again) early November. This is our second major upside catalyst. If the data comes out as indicative of efficacy, Innocoll expects to submit an NDA “closely after” release, which we read as latest first quarter next year.
We may see the company announce the NDA submission and the topline as part of the same update. The next couple of weeks are key.
