Last Updated on February 13, 2020 by Sultan Beardsley
Matinas Biopharma (NYSE: MNTB)
Ticker: MTNB (Last: $1.57)
Market Cap: $243M
Price Target: $2.50-3.50
Timeframe: 0-12 weeks
MTNB is a later clinical-stage biopharma company developing its lead asset MAT9001 as a prescription-only treatment for cardiovascular and metabolic conditions; if approved this opens the door to a multi-billion dollar market opportunity consisting of tens of millions of potential patients with high or severely high triglyceride levels (i.e. blockbuster potential).
MAT9001 is an omega-3 fatty acid comprised primarily of EPA (Eicosapentaenoic Acid) and DPA (Docosapentaenoic Acid). The therapeutic rationale is that regular intake of MAT9001 lowers triglycerides, non-HDL cholesterol, lipid-binding proteins (apolipoproteins), and even PCSK9 (a cholesterol regulatory protein) levels in humans in addition to other anti-inflammatory properties of omega-3 fatty acids. In turn, this reduces the risk of heart disease and stroke among other health risks.
Amarin Corp. (Nasdaq: AMRN, $19.91) is a biopharma company that has a lead asset (Vascepa®) with a similar profile to MAT9001. On 12/13/19 Vascepa became the first prescription-only omega-3 fatty acid to garner FDA approval for reducing the risk of cardiovascular disease. (A point of significance for AMRN and MTNB is that an FDA advisory committee voted 16-0 in favor of approval. This indicates acceptance by key medical leaders of prescription omega-3 FAs. Additionally, omega-3 fatty acids have found their way into the major medical guidelines from the ADA, AHA and others – this is what typically drives physician prescribing behavior). Subsequently, AMRN updated its 2020 revenue guidance to $650-700M. In our view, this is reflective of the enormous market opportunity for drugs like Vascepa and MAT9001.
So, why buy MTNB?
1) MAT9001 appears superior, 2) MTNB’s valuation is not commensurate with its intrinsic value, 3) MTNB is backed by credible Institutional investors including Baker Bros, Boxer Capital, and Vivo Opportunity (all three also invested in AMRN). Below I will elaborate on each point.
1) In 2015 MTNB released data from a head-to-head comparator study of MAT9001 vs. Vascepa in 42 patients with high triglyceride levels. MAT9001 demonstrated clear superiority in reducing triglycerides, non-HDL cholesterol, apolipoproteins, as well as PCSK9 levels (figure 1). Moreover, MAT9001 was shown to have substantially higher blood concentrations of EPA omega-3 fatty acids compared to Vascepa without raising LDL levels (figure 2). This combination of enhanced bioavailability and potency is thought to be the core driver of MAT9001’s superior efficacy.
2) Given MAT9001’s unique composition of free fatty acids (EPA and DPA), higher blood concentrations of EPA vs. Vascepa, and robust clinical data demonstrating superiority at reducing triglycerides and other lipids, following a relatively straightforward and well defined regulatory pathway to approval for the reduction of triglycerides in patients suffering from severe hypertriglyceridemia (≥500mg/dL), which could bring MAT9001 to market by 2023, MTNB’s market capitalization is misaligned with its intrinsic value. According to BTIG analysts, MTNB’s net present value is $4.50, a 200% upside.
3) A core factor in our investment/trading strategy is to buy companies with high institutional ownership. The bigger the stakes and the more credible the institutions the better. As of 1/20/20, we know Baker Brothers, Vivo Opportunity, and Boxer Capital all have positions. Total institutional and insider ownership per the latest filings is 22% and 8.5%, respectfully. Moreover, MTNB’s insiders have positions ranging from 600K to 4M shares and purchased shares in the open market as recent as 11/25/19 at prices ranging from $.68-$1.22.
It appears that MTNB had a successful experience at the J.P Morgan health conference last week. Friday’s trading action was reflective of institutional accumulation. I imagine that in the coming weeks Form 13Gs will be filed revealing sizable stakes in MTNB by the aforementioned institutions as well as others. In our view, by mid-2020 institutional ownership should approach 50%+.
Other assets: Aside from MAT9001, MTNB is leveraging its Lipid Nano-Crystal (LNC) delivery platform to develop MAT2203 and MAT2501. Through this novel platform, MTNB aims to improve drug delivery systems.
Institutional accumulation over the next few weeks should push the stock price up. A second growth driver should be the completion of enrollment and initiation of the second head-to-head study of MAT9001 vs. Vascepa in 1Q20. Additional potential catalysts include Vascepa script growth during 2020 (indicative of market adoption of prescription-only omega-3 fatty acids), the advancement of MTNB’s LNC-programs, and eventually in 4Q20 top-line data of phase 2 head-to-head study
52-week range: $.58-2.49
Avg 10-day vol: 5.22M
Shares Outstanding: 163M
Short Interest (as of 12/31/19): 5%
200 day SMA: $1.52
First support: $1.30
Chart Made On TradingView
Like with all stocks we trade nothing is guaranteed. Complications and or delays could arise in the head-to-head study of MAT9001 vs. Vascepa. While we believe MAT9001 should prove superior, it’s possible that MAT9001 will perform non-inferior or inferior. Although the market conditions are favorable right now that could change quickly with the numerous geopolitical issues domestic and abroad. This is not a comprehensive list of all the possible risks.
(Assuming $1.50 entry)
Reward (exit price):
MS Money Moves and its affiliates are long MTNB and will be adding on any dips.
Let’s get this bread!!!