Today’s Daily Alert features an unusual, high-potential investment from John McCamant’s Medical Technology Stock Letter. This company is seeking to harness the power of “good bacteria” to treat serious medical conditions including Crohn’s disease and multiple sclerosis.
“With a proprietary and unique approach for developing drugs for blockbuster pharmaceutical markets such as autoimmune disease and cancer, we are recommending Coronado Biosciences, Inc. (CNDO) with a $20 target price for the next 12-18 months.
“Coronado’s lead drug development candidate is CNDO-201, a pharmaceutical formulation of beneficial porcine parasites (a.k.a., the whipworms) for the treatment of human autoimmune disease. This unconventional therapy aims to re-create the historical natural relationship that humans have had with intestinal parasites until the significant improvement in public health in the last century.
“CNDO-201 has already showed encouraging efficacy in Crohn’s disease and ulcerative colitis, and there has also been some exciting early data in multiple sclerosis (MS). We believe that Wall Street is currently overlooking Coronado due to the unfamiliarity of using beneficial parasites in traditional medicine plus the fact that the company went public just five months ago using a reverse merger. As a result, there is very little research on CNDO and it is under-owned by institutional investors.
“CNDO-109 is the second asset that Coronado Biosciences is developing. CNDO-109 is a method of activating Natural Killer (NK) cells for the treatment of cancer. This drug development candidate is in early development, and we expect CNDO-201 to be the primary driver of value for CNDO over the next year. ...
The Opportunity
“In our opinion, the current drugs that treat MS, Crohn’s disease and ulcerative colitis are far from silver bullets. Specifically, the portion of patients that actually receive a benefit is generally less than 50%. In addition, compliance is always a problem in many of these indications since some patients do not like injecting themselves on a regular basis. Additionally, all pharmaceutical treatments for these autoimmune conditions carry significant risk of side effects, particularly the MS drugs. The commercial markets for these diseases are sizable and we believe that CNDO-201 has multi-billion dollar potential as it would literally be a major game changer for the treatment of autoimmune disease.
“Based on successful open label and placebo controlled trials, CNDO has started a Phase II study in Crohn’s disease [and] is preparing to begin a Phase II MS study with CNDO-201 for later this year. When this trial starts enrolling, there will be 18 studies of this probiotic therapy, involving close to 1,000 patients, either completed, enrolling patients, or in preparation by the end of this year. ...
Investment Conclusion
“Over the next 12-18 months, we believe CNDO shares will reach at least $20 per share. This is based on our expectation of the clinical success of CNDO-201 in Crohn’s disease alone. Additional autoimmune trial success can multiply this target price. We anticipate investors to primarily focus on CNDO-201 since additional data exists for this compound to treat other immune disorders. Results from two controlled Phase II studies should be announced in this time frame. ...
“We are quite familiar with much of CNDO’s senior management as the CEO and Chairman both come from Indevus, where they had success developing and gaining FDA approval for several pharmaceuticals. In addition, they were successful in selling Indevus in 2010 to Endo Pharmaceuticals.
“We are recommending CDNO as a buy under $8 with 12-18 month target of $20.”
- John McCamant, Medical Technology Stock Letter, April 27, 2012