Tiziana Life Sciences (LSE:TILS | NASDAQ:TLSA)
If nothing else, the Covid stock bubble has shone a light on otherwise largely ignored AIM-listed British life sciences and biotech firms. And the steady decline of pure Covid testing plays has thrown up a set of particularly interesting opportunities.
In this ValueTheMarkets series, we have already looked at Open Orphan (LSE: ORPH), 4D Pharma (LSE: DDDD), and Scancell (LSE: SCLP). And now, we are turning the spotlight on monoclonal antibody therapy specialist Tiziana Life Sciences (LSE:TILS | NASDAQ:TLSA).
So, why are we talking about Tiziana now?
After the first wave of vaccines from Pfizer, Moderna, and Astrazeneca/Oxford University — all of which promise efficacy of over 90% — governments and the public at large are now realising that they are going to need different types of solutions.
It has been made patently obvious that these early vaccine candidates will only last a maximum of 6-12 months, and so innovative Covid solutions going into 2021, 2022 and 2023 will be strategically important.
This under-reported fact has been confirmed by Nature in its recent round-up of Covid research. “Sporadic accounts of coronavirus reinfection and reports of rapidly declining antibody levels have raised concerns that immunity to SARS-CoV-2 could dwindle within weeks of infection,” it wrote.
The best available research to date (not yet peer-reviewed) by the California Institute of Immunology suggests that patient immune responses vary widely, while the immune memory of SARS-CoV-2 tends only to persist for six months. This is extremely problematic for the idea that the recently-announced vaccines are the silver bullet to the crisis we currently face.
Avid news-watchers will probably have seen the Danish government slaughtering 10 million mink after discovering that Covid-19 had mutated and jumped from humans to animals. Unfortunately, this discovery potentially jeopardises the effectiveness of all future vaccination programmes.
This same strain of coronavirus has been found on farms in the Netherlands, Spain, Greece, Italy, the USA and Sweden. According to The Lancet, “the unbridled spread of an emerging virus in a new host leads to an accumulation of mutations,” with the major concern being that “viruses could be reintroduced once the circulation of SARS-CoV-2 in human is suppressed or even stopped.”
There are further worrying updates from scientific research published this week, again cited in Nature. It shows that Covid-19 remains in the human body despite antiviral treatments and can mutate swiftly. One study showed that 40 days after an immuno-compromised patient first tested positive, the virus surged back, subsiding and returning twice more before he died, five months after his first Covid-19 diagnosis.
Genomic analysis published in the New England Journal of Medicine showed that the man had not been infected multiple times. “Instead the virus had lingered and quickly mutated in his body,” the paper stated.
Covid catalyst
The very wide range of outcomes from Covid-19 is of particular interest to companies like Tiziana.
TILS began accelerating the development of its Covid-19 treatment in early March 2020.
But rather than a vaccine, it is offering a hand-held nebulizer inhaler — much like a common asthma inhaler — to deliver its TZLS-501 drug along with antiviral drugs like remdesivir to the lungs. TILS won a US patent for TZLS-501, a monoclonal antibody, in August this year.
In order to truly understand the opportunity presented by TILS, we have to try understand what is happening at a slightly deeper level. Using layman’s terms for ease, we all know that the vast majority of individuals who are infected by SARS- COV-2 overcome the illness themselves by virtue of their own immune system.
However, for a small minority, this immune response is so violent that it attacks not only the virus but the body’s own organs. It is most likely to cause serious damage to lung tissue and then progress to a respiratory failure – known as a cytokine storm. This is the real problem, and the reason health systems are being overwhelmed. Central to this idea is that is not the virus itself that is the threat, but the immune response in certain people.
This is where the TILS solution comes into its own. TZLS-501 is designed to prevent the life-threatening cytokine storm by inhibiting the release of the signals that initiate the process.
In essence the theory is that simple.
If it is proved that TZLS-501 can inhibit the cytokine storm, then the whole approach to this pandemic could change overnight.
TILS is targeting a Q2 2021 launch of its monoclonal antibody. And while the main stream media and financial markets have been in hysteria over news of possible short-term vaccines, a few discerning investors are waiting with baited breath for the results of TILS trials in Brazil.
These morale of these investors has been boosted by the recent news that Regeneron has won Emergency Use Authorisation from the US Food and Drug Administration regulator to distribute its own monoclonal antibody cocktail, with a federal government contract signed to distribute 300,000 doses.
Regeneron’s monoclonal antibody was the one given to former President Donald Trump after he contracted Covid-19. As reported in The Guardian: “Officials said they hoped the antibody cocktail would help high-risk individuals, such as people who are older than 65 or obese, before they need to be hospitalised.”
Oversold
The past few months have been a time of excitement for TILS shareholders. At the beginning of November, shareholders received 1 for 1 share for the spinoff of the firm’s StemPrintER asset into NASDAQ-listed Accustem.
StemPrintER is a diagnostic tool for breast cancer. Excitingly for shareholders, it has been proven to outperform its rival by 40%. This rival, Oncotype’s owner Genomic Health was bought out by Exact Sciences for $2.8 billion in November 2019.
However, since this demerger, and news of the vaccines pipeline, there has been a huge sell off in TILS stock.
The company’s share price has dipped to a low not seen since June 2020. So, is the party over for Tiziana? Or is interest just beginning? Are we seeing a buying opportunity to invest into a potential billion-pound company at the very beginning of its growth curve?
The last time the TILS share price fell into a single-digit RSI, in early September 2020, the next month was a riot for shareholders and traders with the share price climbing from 122p to nearly 200p.
There is considerable risk here. The company is not profitable and there remains a high level of cash burn and placings to dilute shareholders. That should be clear. But the potential rewards are certainly tempting.
It appears now, given the range of patents and treatments the company has to offer, that the outlook for Tiziana Life Sciences is stronger than it has been at any point in recent history.
With a £165m market cap, the company appears undervalued based on its outlook into 2021.