Upcoming FDA Catalyst and Disruptive Drug Candidate Indicate Big Near-Term Upside For This Unknown Healthcare Stock

June 25, 2018 -


- Dry Eye Syndrome is a huge market in the U.S., where Allergan's (AGN) Restasis has over $1.4 billion in sales annually. Shire's Xiidra was approved in late 2016 and already has over $250 million in yearly sales

- Investors haven't noticed, but a newly public Wize Pharma (WIZP) has an alternative drug that has been approved and used in parts of Europe for years. WIZP has U.S. rights to the drug and is running two clinical trials with results from the first to be released in the coming months

- WIZP's timing is great, as Restasis is expected to lose patent protection sometime in 2018, leaving a gaping hole in the market for a new drug. With two catalysts coming, this stock could be set for a big 2018

Just when things couldn't be getting much worse for Allergan's (AGN) $1,400 million dry eye franchise, a small biotech upstart could be on its way to stepping in on those sales with an effective drug already approved and used in Europe.

Allergan's blockbuster dry eye drug Restasis is likely to lose patent protection this year, and as one of the only FDA Approved prescription eye drops to help increase the eyes' natural ability to produce tears, the drug has been a huge success for the large pharmaceutical company. Restasis had sales of $400.3 million in the fourth quarter of 2017 alone.

Recently public Wize Pharma's (WIZP) lead drug could challenge that, and the timing is perfect for this drug to land on the drug development scene. The drug, LO2A, is an eye drop that's been approved and used in parts of Europe for years. WIZP smartly picked up licensing rights in the United States, Israel, Ukraine, and China. Amazingly, they've already locked up an exclusive distribution agreement with HPGC Medical Co. for distribution in China that's expected to bring in up to $40 million in revenue over 5 years. For a development-stage company, it's a huge win.

Two human clinical studies are underway, and Wize will report their first data analysis in the coming months...that could be the catalyst to send WIZP from zero to hero.

Not Enough Great Dry Eye Drugs In The U.S., AGN's Restasis Losing Patents

Dry Eye Syndrome (DES) is an eye disorder characterized by eye dryness, irritation, and sometimes blurred vision. On your eyes, a layer of mucous, water and oil forms a thin protective barrier across the surface of the eye. This keeps the eye moist and nurtured, and it prevents injury and infection from pathogens or debris. DES is caused by either decreased tear production or rapid tear film evaporation.

Patients usually try to treat their DES with over-the-counter artificial tears, like Visine, but this does not treat the underlying cause. For patients with severe enough dry eye, Restasis (cyclosporine 5%) is one of the only United States FDA approved drugs to help increase the eyes' natural ability to produce tears, rather than just add more liquid to the eye surface.

Restasis had $1,412 MILLION in sales during 2017, in the United States only. Shire's (SHPG) Xiidra was launched in the summer of 2016 and already attracted $260 million in sales in 2017.

According to Market Scope, about 350 million people globally suffered from various levels of DES in 2017, and the market for treatments totals $3.7 billion, to reach $5 billion in 5 years. This is a big market opportunity.

Restasis is expected to lose their patent exclusivity by the end of 2018. In fact, they made a last-ditch bid to save the franchise for another few years by transferring rights and then re-licensing the drug from the Saint Regis Mohawk Tribe. It's not clear how that will play out exactly, but the move attracted quite a bit of bad press in 2017. The desperate move, however, shows just how keen Allergan is to maintain a lock on this market in the U.S.

Allergan's Loss Could Be WIZP's Gain

Then there's Wize Pharma (WIZP) which has exclusive U.S. rights to a product called LO2A. This is a sterile, preservative-free, single-dose preparation containing 0.015% sodium hyaluronate (a salt of hyaluronic acid). It has been developed as a substitute for natural tears, in order to lubricate and protect the ocular surface tissues. It has a high molecular weight, allowing it to be effective at low solutions, and it includes no preservatives, which have been a major barrier for other drugs in Europe.

In that region, LO2A has been approved and in use in Switzerland, Hungary, Germany, and the Netherlands with an estimated 1.53 million packages sold in 2017! It's been tested in six Phase II studies over the last few years, with good evidence of efficacy.

Now, it could be coming to the U.S. at a perfect time. Wize Pharma is running two Phase II clinical trials, with results coming soon. They could even be generating sales sooner, however.

China Just Bought In, In a Big Way

In a deal announced this June, Wize is already on its way to monetizing LO2A. The company signed an exclusive distribution agreement with HPGC Medical Co., Ltd. (HPGC) for the distribution in China by HPGC of LO2A. HPGC is a division of Harbin Pharmaceutical Group Co. Ltd., one of China's largest healthcare companies.

Most importantly, the agreement includes minimum quantities of LO2A to be purchased by HPGC from Wize, after obtaining the necessary regulatory approvals in China. Based on quantities outlined in the agreement, Wize expects between $22.5 million and $40 million in sales in China over a five-year term following the receipt of the necessary regulatory approvals in China.

This is a great agreement for a small-cap company to secure, and it suggests this mega pharmaceutical company believes in the drug. Additionally, the company plans to begin selling LO2A in Israel, where it's already approved, soon. That could also bring in some cash now when it's needed for further drug development.

More Study Data Coming In a Few Months Could Be Game-Changing

Wize is running two studies right now, with a goal of bringing LO2A to market in the near future.

Both are in subtypes of DES. In some cases, dry eye can be caused by underlying autoimmune issues that can cause inflammatory issues in the body. Sjögren's is one of these, an autoimmune process in which patients suffer from mouth and eye dryness. Conjunctivochalasis (CCH) is another subtype of DES that affects mostly older people, when their inner eyelid, known as the conjunctiva has excess folds of loose tissue that can obstruct and disrupt the eye's natural tear film.

Wize is running a Phase II study in 62 patients with CCH, and enrollment in this study was completed in April with results to be released in the coming months. This is a placebo-controlled study that could completely change the game for WIZP.

Their other study is a Phase IV trial in Sjögren's comparing LO2A to Systane (an over the counter lubricating eye drop) in Israel, and it could be completed by the end of 2018.

Both of these could be hugely important for WIZP as they move towards marketing LO2A in enormous markets in a few countries around the world. The release could offer substantial validation of this drug to U.S. investors, if successful.

WIZP Could Fly As Investors Realize Dry Eye Potential And Catalysts Are Coming

Amazingly, WIZP is still flying under the radar of U.S. investors after listing publicly. The stock had its first moment of notice with their June HPGC deal, but the company is still valued at a paltry $30 million in market capitalization. Things can change fast in the world of biotech, as demonstrated by companies like Xenetic Biosciences (NASDAQ: XBIO) and Galmed Pharmaceuticals (NASDAQ: GLMD) recently.

Wize Pharma should be considered a high-risk high-reward biotech stock, as they still have to get through clinical development. Restasis losing patent protection could be good or bad for the company, as new cheaper versions will probably enter the market in the coming years. The company will need substantial financing to get through Phase III clinical trials, which will take more time. If their trials fail, WIZP could be worth nothing.

GLMD ripped over 200% with unexpected results from their lead drug recently, going from unknown to mainstream in days - could WIZP pull a similar move with their first unanticipated trial event this year? Compared to the potential for a few hundred million, or more, in sales, this appears to be a highly attractive stock in 2018 as their two human trials continue. Shire is only one year into selling Xiidra and they're already doing almost $300 million in revenue.

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