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CFRX: Data from Phase 2 Trial of CF-301 in 4Q18…

08/13/2018
By David Bautz, PhD

NASDAQ:CFRX

READ THE FULL CFRX RESEARCH REPORT

Business Update

ContraFect Corp. (NASDAQ:CFRX) is currently conducting a Phase 2 clinical trial of CF-301, the company’s lead lysin product candidate, in patients with bacteremia, including those with endocarditis, which is caused by both methicillin-resistant (MRSA) and methicillin-sensitive (MSSA) strains of Staphylococcus aureus. The trial is an international, multicenter, randomized, double blind, placebo controlled study with a superiority comparison between CF-301 or placebo combined with the standard of care antibiotics. The study is expected to enroll 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.

Based on a review of safety data examined after approximately 75% of target enrollment was reached in the Phase 2 trial, there have been no serious adverse events related to study drug. Since CF-301 is the first lysin to be tested in humans it is important to show that it can be safety administered, thus we are encouraged by the fact that no safety issues have been reported thus far. ContraFect previously conducted a Phase 1 clinical trial of CF-301 in healthy volunteers, with no adverse safety signals reported, and the encouraging safety data from the Phase 2 trial adds to our confidence in the ability of CF-301 to be used safely to treat patients.

Additional Lysin Development Products

CF-301 Variant: ContraFect is working on developing variants of CF-301 that have improved characteristics regarding biofilm destruction on “non-natural” surfaces (e.g., prosthetic joints, central lines, etc.). The company has a lead variant, CF-296, which it believes has properties that will make it amenable to better treating certain S. aureus infections. The compound is currently being evaluated in animal models.

Gram-negative Program: The company has a discovery program dedicated to discovering lysin’s effective against Gram-negative bacteria, particularly those strains that are serious threats to global health (as denoted by the CDC) or critical priorities (as denoted by the WHO). The company has identified a development candidate that has activity against Psuedomonas aeruginosa that is able to penetrate the lipopolysaccharide outer membrane (which is common to all Gram-negative bacteria), representing a breakthrough in the field. The company recently presented data on the P. aeruginosa lysin program and for an overview of the data please see our previous report.

CF-404 Update

CF-404 is a product designed to treat influenza and is composed of a mixture of three monoclonal antibodies (mAbs) directed against the three principal strains of the influenza virus (H1, H3, and B). The mAbs target conserved regions on the virus, which do not mutate from season to season (which is the reason that a new influenza vaccine needs to be formulated each year). The company is developing CF-404 as an inhaled therapy, which is likely to result in a lower dose than would be required with a systemic therapy and will allow it to more directly target the virus as it resides in the respiratory tract. ContraFect is currently finalizing the inhaled formulation of the drug. The following figure shows that inhaled CF-404 is active in a mouse H1N1 influenza model (as judged by maintenance of body weight).



View Exhibit I

Financial Update

On August 9, 2018, ContraFect announced financial results for the second quarter of 2018. As expected, the company did not report any revenues for the quarter. Net loss for the second quarter of 2018 was $20.1 million, or $0.27 per share, compared to a net loss of $2.8 million, or $0.07 per share in the second quarter of 2017. The majority of this net loss was due to a $16 million increase in non-cash expense due to the change in fair value of warrant liabilities. R&D expenses for the second quarter of 2018 were $5.3 million compared to $3.8 million for the second quarter of 2017. The increase was primarily due to increased spending on the Phase 2 clinical trial of CF-301. G&A expenses in the second quarter of 2018 were $2.2 million compared to $2.3 million in the second quarter of 2017. The decrease was due to decreased costs for financial filing fees.

As of June 30, 2018, ContraFect had approximately $33.3 million in cash, cash equivalents, and marketable securities. Subsequent to the end of the quarter, ContraFect raised approximately $10.4 million in net proceeds from a public offering of 5.75 million shares of common stock at $2.00 per share, which included the fully exercised overallotment option granted to the underwriters. We anticipate the company currently has sufficient capital to fund operations through 2019. As of August 7, 2018, the company had approximately 79.4 million common shares outstanding and when factoring in stock options and warrants a fully diluted share count of approximately 118.4 million.

Conclusion

We are looking forward to the topline data from the Phase 2 trial of CF-301 in the fourth quarter of 2018. We believe the lack of any safety issues thus far (with approximately 75% of the expected number of patients enrolled) is a very encouraging sign. The company is now well capitalized to get through the data readout and continue development of the rest of the lysin pipeline and CF-404. Our valuation currently stands at $6 and we believe investors would be well served to take a closer look at the company in the lead up to the Phase 2 data.

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