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AspenBio Pharma (Nasdaq: APPY) 1-Year Chart 
AspenBio Pharma (APPY) is a small-cap diagnostic and animal health company whose main product in clinical development is AppyScore – a diagnostic screening test that detects blood markers that indicate both the presence and the severity (AppyGrade classifies results as normal through Grade 4) of appendicitis in patients who present with acute, severe abdominal pain of unknown origin. Key benefits of AppyScore include its low cost ($200 versus $1,500 to $3,000 for a CT scan), very low risk of false positive/negative results (99% combined specificity and 98% sensitivity), fast results (45 minutes versus a few hours for CT scans), and a proven ability to decrease both the number of unnecessary surgeries and CT scans.
The Company is also developing AppyScreen as a rapid screening test for appendicitis to be used by primary care physicians to help determine if further testing (e.g. AppyScore) and follow-up in an urgent care setting is required. AspenBio has modeled for AppyScore to achieve market share of 20% to 40% among 6 million patients presenting to the ER each year with abdominal pain, which equates to 1.2 to 2.4 million tests sold or $240 to $480 million in revenues. The Company estimates initial revenue from AppyScore/Screen in the US alone of $100 to $200 million, compared to a current market cap of under $200 million.
The Company also has an animal health segment, which faces fewer competitors and requires less investment of time and money in order to receive FDA approval, as compared to the market for their human counterparts. The worldwide market for animal health (including drugs and diagnostics) is expected to grow to just under $20 billion in 2008, representing 26% growth from just under $15 billion in 2003. The Company’s unique, recombinant technology for the production of hormones offers a variety of advantages over traditional, animal-derived hormones, including increased stability, no risk of disease transmission, a lower manufacturing cost, and a long duration of patent protection.
In late June, the Company initiated a clinical trial to support a 510(k) FDA application for its AppyScore appendicitis blood-based diagnostic test. Key study endpoints in the trial will be sensitivity, specificity, negative predictive value, positive predictive value, and appendicitis prevalence. Enrollment of the clinical trial was increased to about 800 patients in order to provide higher statistical power for the test. AspenBio is also in the final stages of completing the non-clinical section for the 510(k) submission package and expects the clinical trial to be completed in about four to six months with FDA clearance expected in early 2009. The Company also hopes to sign a worldwide licensing partnership or transaction prior to FDA clearance for AppyScore. AspenBio currently trades around $6 per share at a market cap of $188 million with about $24 million in cash, $3.6 million in debt, and a trailing 12-month loss of $7 million. The Company also announced a $5 million stock buyback plan in late April, and I believe the current price marks a good entry point for speculative biotech investors due to a high probability of successful results for AppyScore, which will support both FDA clearance and licensing discussions.
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APPY:
This call was made
on 07/19/08
@ $6.05
| Rating: |
$6.05 (07/19/08)
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| Closed: |
08/15/2008
@ $6.21
(+2.64%
in
27 days)
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