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CFRX: Additional Data on CF-301 Presented at ID Week 2017

11/27/2017
By David Bautz, PhD

NASDAQ:CFRX

Financial Update

On November 9, 2017, ContraFect Corp. (NASDAQ:CFRX) announced financial results for the third quarter of 2017. As expected, the company did not report any revenues. The net loss for the quarter was $1.6 million, or $0.02 per share, and consisted of $4.9 million in R&D expenses and $1.8 million in G&A expenses. R&D expenses for the quarter were decreased by $1.0 million compared to the same time period in 2016 as a result of a decrease in spending on CF-404 partially offset by an increase in spending on CF-301 for the ongoing Phase 2 clinical trial. G&A expenses were decreased by $0.1 million compared to the same time period in 2016 as a result of a decrease in expenditures on the office and laboratory facilities due to the reduction in square footage effective Aug. 1, 2017. Other income was $5.2 million for the second quarter of 2017, compared with other expenses of $2.6 million for the third quarter of 2016. The increase relates to a non-cash gain resulting from the change in fair value of the company’s warrant liabilities.  

Total cash burn for the quarter was approximately $6.2 million, and the company had approximately $52.6 million in cash, cash equivalents, and marketable securities as of Sep. 30, 2017. In July 2017, the company completed an underwritten public offering of 32 million shares of common stock along with warrants to purchase 16 million shares of common stock at an exercise price of $1.55. The public offering price was $1.25 per share of common stock and accompanying warrant, which resulted in net proceeds to the company of approximately $36.9 million. We believe this will be sufficient to fund operations into the first half of 2019, thus the company should be fully funded through the end of the Phase 2 trial of CF-301, with results from that trial expected in the fourth quarter of 2018.

As of November 9, 2017, the company had approximately 73.7 million shares outstanding. In addition, there are approximately 6.0 million stock options and 36.3 million warrants for a fully diluted share count of approximately 116.0 million. 

Business Update


CF-301


ContraFect’s lead lysin product is CF-301. A lysin is a naturally occurring anti-bacterial hydrolytic enzyme that is produced by bacteriophages, which are virus’ that infect and kill bacteria. Lysins are highly evolved enzymes that are able to target one of the five bonds in peptidoglycan (murein), the main component of bacterial cell walls. A typical lysin, such as CF-301, comprises two domains separated by a short linker region. The N-terminal domain catalyzes the hydrolysis of peptidoglycan whereas the C-terminal domain binds to the cell wall substrate, often a carbohydrate, which confers a great specificity and decreases the chance for bacterial resistance. Due to this, the use of lysins as antibacterial agents is designed to combat drug resistance to currently used antibiotics.

CF-301 will initially be targeted for the treatment of bacteremia, or infections of the bloodstream. Most studies estimate the incidence of S. aureus bacteremia (SAB) ranging from 20-50 cases/100,000 population (Klevens et al., 2007; Benfield et al., 2006; El Atrouni et al., 2009). Prior to the advent of antibiotics, the mortality rate from SAB was close to 80% (Mendell, 1939). The introduction of antibiotics, coupled with greater standards of care, has reduced the mortality rate, which appears to have stabilized at approximately 20% (Turnidge et al., 2009). SAB can frequently lead to infective endocarditis (IE), an infection of the endocardial surface of the heart (Fowler et al., 2005). The prevalence of IE is estimated to be anywhere from 11 to 50% of patients with SAB. Development of IE leads to an increased risk of embolic event and death (Miro et al., 2005).

Due to widespread resistance to penicillin, the current treatment of choice for S. aureus infections is semi-synthetic penicillin molecules. This resistance is due to the activity of the enzyme penicillinase, which cleaves the β-lactam ring of the penicillin molecule. Penicillinase-resistant β-lactam antibiotics include methicillin, oxacillin, and flucoxacillin. S. aureus strains that have acquired resistance to methicillin have an altered penicillin-binding protein (PBP2a) that has lower affinity for binding β-lactam antibiotics, thus rendering them ineffective. Strains that have acquired this resistance are referred to as methicillin-resistant S. aureus (MRSA). The current gold standard for treatment of MRSA is vancomycin. However, vancomycin is far from ideal due to poor tissue penetration, slow bactericidal activity, and a number of side effects (Gould, 2008). Additional antibiotics utilized include teicoplanin, tegecyline, linezolid, daptomycin, and televancin. Each of those medications has their own shortcomings, including the development of resistance, thus there exists a significant unmet medical need for newer therapies, particularly those that are not susceptible to the development of resistance. Pre-clinical data shows that CF-301 synergizes with standard-of-care antibiotics, which results in a very high survival rate in mouse models of bacteremia.

Phase 2 Clinical Trial

The company has initiated a Phase 2 clinical trial of CF-301 in patients with bacteremia, including those with endocarditis, which is caused by both MRSA and methiciliin-sensitive strains of Staphylococcus aureus. The trial is an international, multicenter, randomized, double blind, placebo controlled study with a superiority comparison between CF-301 combined with the standard of care antibiotics compared to placebo with the standard of care antibiotics. The study will include 115 patients randomized 3:2 to receive a single dose of 0.25 mg/kg CF-301 administered via a two-hour infusion or placebo along with standard of care antibiotics. The primary endpoint of the study will be early clinical response. Safety, tolerability, and pharmacokinetics will also be examined along with additional exploratory clinical and health economic endpoints. We anticipate topline results in the fourth quarter of 2018. The company is not planning to perform an interim analysis.

New Data Presented on CF-301 at ID Week 2017


ContraFect recently presented two posters at the ID Week 2017 conference. The company presented additional data building upon previous reports showing CF-301’s synergy with conventional antibiotics. In addition, surveillance data was presented showing the activity of CF-301 against current S. aureus strains isolated from patients in both the U.S. and Europe.  

Poster #1: Lysin CF-301 Demonstrates In Vitro Synergy with Conventional Antibiotics against Staphylococcus aureus

This study was performed to determine the in vitro activity of CF-301 when combined with 12 antibiotics, including those considered to be the standard of care for S. aureus bacteremia (daptomycin, vancomycin, oxacillin, nafcillin, and cefazolin). Each combination was tested against 10 MSSA and 10 MRSA strains. The fractional inhibitory concentration index (FICI) was calculated for each combination. Synergy was defined as FICI ≤0.5, strongly additive was FICI >0.5 to <1, indifference was 1 to <2, and antagonism was ≥2. The following table shows that for the majority of antibiotics CF-301 was synergistic (green squares) or strongly additive (purple squares), with very few combinations being showing indifference. Particularly important is the fact that for the S. aureus bacteremia current standard of care antibiotics listed above the majority of combinations were synergistic. 


An additional way of presenting the data was also shown through the following isobolograms for a subset of combinations tested. The curve on the left shows the theoretical curve for an additive effect (dashed line), with each graph showing a robust synergism when tested against the indicated strain.


In conclusion, CF-301 acts synergistically with the majority of antibiotics of different classes that are used to treat S. aureus bacteremia, and importantly there was no antagonism observed with any combination. 

Poster #2: Activity of Antistaphylococcal Lysin CF-301 against Contemporary Staphylococcus aureus Clinical Isolates from the USA and Europe


In this study, 556 MSSA and MRSA isolates were collected from patient samples at different hospitals in the U.S., Greece, Hungary, Italy, Chile, and Columbia. Data was also presented for 149 clinical MSSA and MRSA isolates from U.S. hospital sources in 2011. Minimum inhibitory concentration (MIC) values were determined for CF-301 as well as antibiotics. The following table shows the distribution of isolates at the various MICs for CF-301 (which ranged from 0.125 μg/ml to 2 μg/ml). The data show a fairly even distribution of susceptibilities across the various geographies. 


The following table shows susceptibility profiles for CF-301 in comparison to different antibiotics when tested against various clinical MRSA isolates. As a single agent, CF-301 compares favorably to all tested antibiotics with similar, if not better, MIC values. 


The two posters presented by ContraFect at ID Week 2017 show that CF-301 has comparable efficacy to and works synergistically with standard of care antibiotics against clinical S. aureus isolates. These data lend additional support to the use of CF-301 as a treatment for S. aureus infections.  

New Chief Operating Officer

On October 5, 2017, ContraFect announced that Ms. Lisa Ricciardi was appointed as Chief Operating Officer. She has served on ContraFect’s Board of Directors since February 2017, and she will continue on in that role as well. Ms. Ricciardi has a wealth of experience from her time in various leadership positions at pharmaceutical, payer, and molecular diagnostic companies. She was previously Senior Vice President, Global Corporate & Business Development at Foundation Medicine and Senior Vice President, US and International Business Development at Medco Health Solutions, Inc. Prior to that, Ms. Ricciardi served in various senior management positions at Pfizer, where she was responsible for launching three drugs and growing franchises in cardiovascular disease, arthritis/rheumatology, and anti-infectives, including the launch of both Zithromax and Trovan. 

Conclusion and Valuation

The data recently presented by ContraFect helps to further establish the in vitro efficacy of CF-301 and its ability to increase susceptibility of S. aureus strains (including MRSA strains) to antibiotic treatment. The company has initiated the Phase 2 study of CF-301 and we look forward to evaluating the results next year, which we anticipate in 4Q18. We have constructed a probability adjusted discounted cash flow model that takes into account potential future revenues from CF-301 and the company’s influenza treatment CF-404. Our valuation currently stands at $7 per share, and we believe that all investors interested in the anti-infective space should consider taking a closer look at ContraFect.

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