How Contrave May Change The Landscape of Obesity

As Orexigen Pharmaceuticals (NASDAQ: OREX  ) once again prepares to face the FDA over its weight loss drug Contrave, we must take a look at how this may change the landscape for the weight loss drug market. Adding another competitor is not necessarily good news for the two companies who are already on the market, Vivus  (NASDAQ: VVUS  ) andArena Pharmaceuticals (NASDAQ: ARNA  ) . Orexigen will directly compete with both companies. So far both Arena and Vivus have had trouble generating meaningful amounts of revenue from their products. Arena and its partner Eisai Pharmaceuticals generated a measly $8.4 million. While this represented a substantial increase in revenue, it is nowhere near where Arena will need to be for profitability (in fact Arena lost $25.3 million last quarter). This is nowhere near profitability for Arena. The numbers for Vivus are only slightly better, with Vivus recognizing $9.1 million in net product revenue . Even though revenue increased, the amount of prescriptions written for Qsymia actually dropped when compared to the fourth quarter of 2013.

However another competitor entering the marketplace could spell trouble for both Vivus and Arena. Contrave seems to be between Belviq and Qsymia in terms of effectiveness, and should it receive FDA approval it could pose a serious problem for Arena patients who are not seeing enough weight loss or for Qsymia patients who are worried about some of the potential side effects of the drug. According to the FDA, Qsymia in clinical trials was shown to have side effects including complications during pregnancy and increased heart rate. Qsymia is also, notably, not recommended for patients who have heart disease . Should Orexigen be able to avoid label issues like these, Contrave could have a leg-up in the competitive landscape. Orexigen also has a marketing partner in Takeda, which is a notable improvement over Vivus. Orexigen and its partner are making a huge bet on the drug, as Takeda plans to market Contrave through 900 sales representatives upon approval. With this in mind they could potentially capture a large share of the market if the drug is ultimately approved. Given Orexigen's intent to grab business away from Arena and Vivus, let's take a look at the opportunities.

Clinical data
Orexigen has more extensive safety data around their product, due to the additional trials conducted after receiving a CRL on Contrave. The trials focused on the incidence of heart attack and stroke. In the cardiovascular outcomes study, an interim analysis showed that Contrave did not meaningfully increase the incidence of heart attack and stroke. Notably, both Arena and Vivus have not yet conducted their own cardiovascular outcome studies. The positive safety profile should later help Orexigen as a marketing tool as side-effects are a concern with current therapies and the cardiovascular effects of these weight loss drugs has been a concern for the FDA. While there have not been any notable cardiovascular problems with either Qsymia or Belviq, Orexigen being the only company with cardiovascular outcomes data could have an advantage in the marketplace.

EfficacyIt is important to note as Orexigen once again goes in front of the FDA that the efficacy of Contrave is largely not in doubt. While the three drugs cannot be easily compared to each other given difference in study design, all three showed effectiveness, in terms of the amount of people who lose 5% or more of their body weight. With this in mind, Contrave will be an effective option in terms of the efficacy/side-effect balance that doctors will have to do. Now, it is important to note that Contrave potentially may have a more worrisome safety profile than Belviq (regarding side effects: Contrave patients reported dizziness and increased blood pressure, while Belviq patients reported dizziness and dry mouth).

Final thoughtsOrexigen is prepared to make a significant investment in Contrave. Orexigen entering the market should help to shake up the weight loss market, as the company and its drug could gain traction assuming approval. I think the cardiovascular outcomes data could help make a crucial difference here, as will the large sales force that Takeda is prepared to deploy for this drug. Time will tell.

Disclosure: The author holds a position in Orexigen, and no position in any other stock mentioned. 

Is There Any Hope Left For Dendreon

Dendreon Corporation  (NASDAQ: DNDN  )  shareholders have been on a rollercoaster over the past few years. Dendreon got their lead product Provenge approved for use in metastatic castration-resistant prostate cancer, but has been unable to profitably produce and market the drug, reporting net losses every year that Provenge was on the market. With this in mind, we need to ask ourselves whether this is the end of the line for Dendreon.

Dendreon's debt situation
The biggest indicator of success moving forward will be whether or not Dendreon will be able to meet its rather substantial debt obligations. Dendreon recently announced the payment of its 2014 notes, but these notes are just a tiny fraction of what they will have to pay in 2016.

The 2016 notes represent a large catalyst for shareholders, with $620 million due -- significantly more than the $155 million Dendreon has in cash. Dendreon’s cash position continues to worsen, as cash burn was around $30 million last quarter; management estimates a similar burn this coming quarter. And Provenge sales haven’t impressed – last quarter, company revenue was $68.8 million, roughly in line with revenue over the past five quarters.

Investors who still hang onto hope regarding Dendreon will point to the opening of the European market. They hope to see significant new sales in Europe, which will begin to ramp up in the fourth quarter of this year. But those sales will require infrastructure, production, and sales force investments that may further strain Dendreon’s resources.

What about other options?
The recent departure of Dendreon’s CEO John Johnson has left investors hoping for a buyout. But I don’t see an unprofitable drug and a large debt pile as attractive to a potential acquirer. Even if another company stepped in to buy Dendreon, I don’t think it would necessarily be for any sort of premium -- after all, the company doesn’t appear to have many options given its financial straits. And given Dendreon’s current market cap of under $400 million, share dilution sufficient to pay off the debt seems like an unattractive alternative for shareholders.

Bottom line
Dendreon will have a hard time meeting its 2016 debt obligations. With continuing losses and no immediate hope to turn them around, I’m not sure that Dendreon will have the cash needed to keep operating. While some investors might see this as a turnaround opportunity, I don’t see the oncoming barriers as surmountable, and I think that biotech investors have better places to park their money.

Will FDA Labeling Be Mannkind's Downfall

MannKind Corporation   ( NASDAQ: MNKD    ) Investors were finally successful, after multiple Attempts horse in obtaining FDA approval for Afrezz. There have been many different articles recently about the potential for partnerships for MannKind. However, I believe that importante These authors are missing the point - the hinderances to a partnership. The FDA  labeling  of Afrezz restricted mayer have a partnership, and may hobble to the launch of Afrezz before it even started.

Post-approval requirements are troubling One of the most notable parts about it was that the FDA label Explicitly told doctors to prescribe notes Afrezz tour Hasta with respiratory issues. The FDA went even further, requiring doctors to have to Afrezz spirometry tests before prescribing, and every six months thereafter. Looking forward to long term effects, as a  post approval commitment  MannKind is required to educate doctors about this risk and to conduct additional post approval studies Evaluating the long term effect of Afrezz on lung function and cardiovascular risk, as well as safety and efficacy in children. These post approval studies will likely cost millions of dollars, any partner, and years in terms of the time needed to monitor all of the Patients in the trial. And if the data comes back negative cardiovascular and lung function in the study, it could give reason to withdraw the FDA for marketing approval or slap it with a stronger warnings to Afrezz.

Other warnings The FDA was also concerned about the Increased risk of lung cancer. This could be a hidden dagger for MannKind to Afrezz should be shown to the increased risk of lung cancer in the post-approval studies. This would be a substantial risk to any site, as it would mean huge marketing give this down the toilet. Even more Importantly, it is a red flag for doctors. Even though the label notes that "in Patients with a history of lung cancer or at risk for lung cancer, the benefit should outweigh this potential risk of Afrezz user," why take the risk? With a myriad of other treatment options available, I would expect doctors to turn to what they know works. Exubera encountered similar problems with its label, which helped me to Contribute to its downfall.

The FDA even MannKind required to include in their labeling a risk of hypoglycemia. All insulin, carry this warning, however, the issue is that for MannKind, without labeling reflecting enhanced control of hypoglycemia, the risk / reward proposition may be further complicated for doctors. And again, there is the overhang of those post-marketing trials.

How partnerships are affected MannKind is planning on bringing in a partner to market to Afrezz. However, the less than favorable label and the fact that it lacks the financial resources MannKind likely to launch the drug itself will likely weaken in partnership Negotiations MannKind's hand. I also wonder if a partner Difficulty getting Insurers will have to go along with some recommending to Afrezz. Regardless, the fact that a partner would likely have to pay millions of dollars to fund trials of thes What Appears to be upfront and also accept a Potentially risky hurt the partnership will launch discussions, MannKind Potentially leaving in a weak position.

Bottom line in The labeling of Afrezz could make it tough to convince doctors to prescribe the product, and will make it hard for a partner MannKind to attracti. Even though the FDA's approval was welcome news for Investors MannKind, I wonder if they'll find the label to be a serious block for uptake and, by extension, in partnership discussions.

Interesting Ideas for CVR

I was searching around the other day and found an interesting Contingent Value Rights play. For those of you who are unaware of what that is, when a company is bought out sometimes the acquiring company will issue CVRs to the shareholders (these can be traded like any stock) which entitles the holder to receive a cash payment if certain criteria are met.

In this case, the CVR that I came across and personally really like is GCVRZ. This deals with Sanofi's acquisition of Genzyme and specifically Genzyme's drug Lemtrada. If Lemtrada meets certain sales milestones worldwide and via specific regions then shareholders will be eligible to receive cash payments. I am a big fan of this CVR because although the FDA made the bonehead move of rejecting Lemtrada, I believe in the potential for the drug. Also, with the CVRs trading at 40 cents, it might be a nice time to buy considering that should Lemtrada hit its milestones that the minimum payout would be around $1 per right.

For more information I recommend looking at a very interesting article on Lemtrada. 

VRNG: An impressive run so far.

Vringo (VRNG) has been the fortunate recipient of some very interesting news over the past few days. First the judge ruled that Google's workaround is not really a workaround and that they still owe Vringo royalties. The second and possibly bigger ruling came when the judge even enhanced the royalty rate to 6.5% of the royalty base of Google's US revenues. This could be an interesting stock to watch and expect a Seeking Alpha article out later on Vringo's recent developments. 

Worlds Responds to Motion for Summary Judgement

Worlds (WDDD.OB) investors saw a rather substantial decrease in share price drop over the last few weeks. The main events that occurred were a motion for invalidity filed by Activision (ATVI), as well as a press release announcing that a crucial markman hearing has been postponed through the fault of neither party. Neither of these issues are material in affecting World's chances to prevail in its lawsuit.

The Drop in Price

The aforementioned motion helped to cause a substantial drop in share price, as investors began to panic over the possibility that the judge would dismiss the patent suit outright. This motion mentioned the problem that the priority date of the parent patent do not extend to all of the patents in suit due to the fact that the patents in suit did not contain a specific reference to the earlier filed application. This is a problem due to the fact that World's own inventions would have then counted as prior art and subsequently served as a basis to invalidate the rest of the patents. The priority date, November 13, 1995, of the parent patent helps to invalidate these concerns as its priority date is within a year of the inventions being available to the public.

If it were found by the court that these patents did not have the required specification, it was possible that the court would essentially destroy Worlds case. The court would have been able to declare the patents invalid. However, I do not believe that this will be the case and I believe that the court will deny Activision's motion.

The Response

Worlds (WDDD) attorneys come out firing in regards to Activision Blizzard's motion. Obviously, Worlds does not see the issue in nearly the same way and declares that the omission was a scriveners error, and therefore is an error that should be overlooked by and corrected by the court. There are a few very important points raised by Worlds in their response. These points can be broken down as follows: 1. The scriveners' error should be overlooked by the court, and should be corrected by the court. 2. The US Patent and Trademark Office (USPTO) in their public system recognizes the priority date of November 13, 1995. 3. Worlds is seeking a certification of the mistake from the USPTO and is asking the USPTO to correct the error. 4. Activision Blizzard misstates the legal precedent and the legal provisions surrounding the scenario.

It is important to note that in a motion for summary judgment the burden will lie with Activision to prove through clear and convincing evidence that the patents are invalid. The evidence must be viewed in a light that is most favorable to the plaintiff in this scenario. Therefore, Activision would have to surpass a significant hurdle in order to actually have their motion granted. So now without further ado we will look at each of the afforementioned defenses.

1. Scriveners' error

From page 6 of the motion:

"First, the patents-in-suit are entitled to a November 13, 1995 priority date because Worlds properly claimed entitlement to that effective filng date during prosecution of the '045 and '690 patents, Under 35 U.S.C. $$ 119(e) andl20,and37 C.F.R. $ 1.78, apatentee may claim priority to an earlier-filed application by including priorityinformation in its patent application. See E.I. du Pont de Nemours & Co. v. MacDermidPrinting, 525 F.3d 1353 (Fed. Cir. 2008). By referring to Worlds' 1995 provisionalapplication in data sheets filed during prosecution of the '045 and '690 patents, Worldssatisfied this requirement and is entitled to the November 13,1995 effective filing date."

Essentially, Worlds did everything right in regards to the data sheet when it was filing for the subsequent patents. Worlds argues that it should not be harmed by a scriveners' error at the USPTO. This argument is rather convincing, and there is a large amount of caselaw to support the position that Worlds did nothing wrong in regards to the patents.

Another interesting quote from the response was:

"Under Federal Circuit law, "[a]bsent evidence of culpability or intent to deceiveby delaying formal correction, a patent should not be invalidated based on an obviousadministrative error." Hoffer v, Microsoft Corp.,405 F.3d 1326,1331 (Fed. Cir. 2005).Indeed, "[w]hen a harmless error in apatent is not subject to reasonable debate, it can becorrected by the court . . . ." Id. Here, there can be no dispute that (1) any effors in the'045 and '690 patents were harmless and administrative; (2) setting aside any administrative error, the correct effective priority date of the patents-in-suit is November13, 1995; (3) the PTO has already recognized the correct November 13, 1995 effectivefiling date on its PAIR database and website; and (4) there is no evidence of culpabilityor intent on the part of Worlds to delay formal correction. Accordingly, the Court has nobasis to invalidate any of Worlds' patents.:

In the motion filed by Activision, they failed to assert any wrongdoing by Worlds that would prove the intent to decive. The fact that Actavision failed to make an allegation that Worlds intended to deceive also points to the fact that it was a harmless administrative error that is causing the holdup. Interestingly, the court has the opportunity to even correct the error and dismiss Activision's motion. I expect for the court to decide to just correct what is very clearly an administrative error. Worlds was correct in the way it filed for the patent, because the USPTO messed up when they issued the patent that is not the fault of Worlds and Worlds should not be liable.

2. The USPTO recognizes the effective date of November 13,1995

Activision's argument loses even more steam when we come to the fact that even the USPTO recognizes the effective date of November 13, 1995. The USPTO, according to Worlds, accepts this on both their PAIR database and website. The fact that even the USPTO recognizes Worlds claim will help Worlds in its argument that there was simply an administrative error in regards to the patents in suit.

3. Worlds is in the process of seeking an acknowledgment of the mistake

On July 5th of this year, Worlds filed for a Certificate of Correction in regards to the '045 patent and the '690 patent. This would of course constitute a formal acknowledgement by the USPTO that the effective date should be November 13, 1995 as Worlds claims. This would of course render Activision's argument moot before the court as the issue will have been deemed for all intents and purposes to be corrected. Note that this is an extra step for Worlds, they have the judge who has the possibility to rectify the mistake and now the USPTO who could simply issue the Certificate of Correction which would render the argument moot.

4. Activision Blizzard misstates the law

Even more compelling in its argument is the fact that Activision Blizzard relied on an old interpretation which has recently been updated. In its argument, Activision Blizzard asserted that the 1996 version of 37 C.F.R. 1.7 applied. This is, as Worlds points out, simply wrong and contrary to the policies in place at the USPTO. Activision Blizzard needed to rely upon the 2000 updated version of the policy. Although the patent had an effective date of November 13, 1995 the USPTO regulations for applications filed before November 29, 2000 the 2000 revision is the one that should be used. In the case of both of the patents in question, the dates that the applications were filed precedes the November 29, 2000 cutoff date and as such Activision Blizzard even used the wrong version of the procedures as a focal point of its memorandum.

Conclusion

This motion should help to ease investor concerns that the patents will end up being invalidated. It appears as though Activision's motion will be denied by the judge. Worlds raised many good points that Activision will have to disprove through clear and convincing evidence. In this instance, Worlds has the evidence on its side. As such Worlds should easily win this motion, and investors should see an increase in share price due to the fact that the patents are not even close to being invalidated before the Markman hearing. The next important catalyst to watch for Worlds will be the Markman hearing, in which the court will rule on a few claim construction issues.

Anthera Pharmaceuticals: A Great Long Term Risk/Reward

With Anthera Pharmaceuticals (ANTH) trading at near a 52 week low, investors are left wondering whether or not this is the start of a new trend? While Anthera may drop further based on an impending Nasdaq delisting, however, it appears as though investors are set up for strong upside potential over the long term. In the pharmaceutical sector few things are certain, and things can happen at any time that drastically change a stock price. Investing in the pharmaceutical sector is not for the risk adverse investor. If you are interested in the pharmaceutical sector, Anthera is definitely a company to consider based on its strong risk/reward profile.

Pipeline

Any investor taking an interest in investing in the long term should look at the clinical pipeline of a company. Anthera has a promising pipeline, which should help to drive the long term growth potential of the company.

(click to enlarge)

As you can see from the graphic above, Anthera has pipeline that is rather advanced. With the orphan designation in IgA Nephropathy and Phase III enrolling in Systemic Lupus Erythematosus it is easy to see why there is a large amount of long term potential at Anthera.

Blisibimod

Blisibimod is the most advanced compound in Anthera's pipeline. It represents much of the long term future for Anthera, and should it be successful in clinical trials it represents a large amount of upside potential for investors. Just like with any drug trial anything can happen, however, it appears as though Blisibimod has set itself up to be very successful in upcoming clinical trials.

Systematic Lupus Erythematosus

Blisibimod is entering phase III trials in Systematic Lupus Erythematosus. The phase III trial design is very important for Anthera, indeed phase III trial design can sometimes be the difference between an FDA acceptance and an FDA Complete Response Letter (CRL). In the case of Anthera, there will be two Phase III clinical trials conducted. These trials will be named CHABLIS-SC1 and CHABLIS-SC2. Anthera recently announced the initiation of CHABLIS-SC1. According to the press release:

"The Phase 3 CHABLIS-SC1 study is a multicenter, placebo-controlled, randomized, double-blind study designed to evaluate the efficacy, safety, tolerability and immunogenicity of blisibimod in patients with clinically active SLE (SELENA-SLEDAI > 10) who have not achieved optimal resolution of their disease with corticosteroid use. The study will enroll patients from Latin America, Asia Pacific and Commonwealth of Independent States who will be randomized to receive blisibimod or placebo for 52 weeks after which they will have the option to receive blisibimod therapy in an open-label, long-term, follow-up safety study. The study will enroll approximately 400 patients and the primary endpoint will be a Systemic Lupus Erythematosus Response Index-8 (SRI-8). "

The relatively low enrollment of four hundred patients should be easily obtainable for Anthera. The trial protocol was developed based on discussions with the FDA, however, it is important to note that there is not a Special Protocol Assessment (SPA) in place in regards to the trials, which makes it possible that the FDA will later object to trial design and the endpoints. While I do believe that scenario to be unlikely, it is a factor that any informed investor would have to take into account before investing. Furthermore, Anthera's phase II study demonstrated that Blisibimod was successful in patients who had previously failed corticosteroid use. This conclusion was based on a subgroup analysis that was conducted by Anthera.

This leads us perfectly into talking about the subgroup analysis. Usually I am skeptical of any subgroup analysis in order to design a phase III trial, simply because there are many times where what happened in a subgroup in a phase II trial will not be repeated in a much larger phase III trial. In this case, however, it does appear as though the drug is destined to phase III failure because of the subgroup analysis.

Systematic Lupus Erythematosus already has a drug on the market. The distinction between Anthera's drug (should it ultimately be successful) and the current drug on the market will help to drive long term value towards Anthera. The other drug on the market is Benlysta, currently marketed by GlaxoSmithKline (GSK), and was developed based on a collaboration with Human Genome Sciences (which was later bought out by GSK for $3 billion).Benlysta has not been selling all that well, in 2012 the drug achieved sales of $106 million, which was a disappointment for investors based upon all of the hype surrounding Benlysta's launch. Benlysta sales have been hampered, primarily due to the pricing of the drug. This is especially prevelant in some European countries including Britain and Germany.

In order to succeed where Glaxo has so far been unable to succeed, Anthera is going to need to accomplish a few key things. First of all it is going to have to be successful in obtaining a label that helps to distinguish Blisibimod from Benlysta. Anthera is well aware of the need to have a distinguishing label, saying in their most recent conference call that:

"In parallel, we have conducted in-depth analysis of our own blisibimod PEARL-SC Phase II results. These combined analyses have proven to be very helpful in teasing out opportunities and guiding our own Phase III CHABLIS-SC1 trial design. Based on this analysis, eventual success of the CHABLIS-SC1 study could lead to an improved product label , better patient identification for initial product trials at launch and better success in penetrating and growing the SLE market."

Knowing about the need for unique labeling is important for long term oriented investors, as the company will need to stand out to really have a chance. It is also important for investors to note that Anthera has been conducting an analysis of Benlysta's phase III program in order to develop the CHABLIS-SC1 trial. While this would immediately sound encouraging to investors, it should be taken with a grain of salt given the idea that we do not know how much of an influence the Benlysta studies had upon Anthera's own study design.

Also, it is likely that Anthera will have to attract a large pharmaceutical partner in order to successfully market the drug in SLE. The problem is that it is possible that there would be less interest from large pharmaceutical companies, simply based on what has happened up to this point in regards to Benlysta.This actually sets Anthera up for an interesting position, in which it wants Benlysta to do well and to meet its projected sales expectations. Companies would then observe the market penetration of Benlysta and if Anthera's compound is successful in clinical trials, they might partner with Anthera in order to take a stab at the growing SLE market and to take on Benlysta. If Anthera were going to partner the drug, they would probably do it after the receipt of the Phase III data. This would be a long term oriented catalyst, given that the Phase III study has an estimated primary completion date of December 2015.

As CHABLIS-SC2 starts to come on line, according to the company they plan on meeting with the FDA next quarter in order to discuss the path forward. From the conference call, you can see that the CHABLIS-SC2 study is going to differ from the SC1 study.

Moving on to the status for the second lupus study. We hope to capitalize on the growing body of clinical evidence that blisibimod will provide significant benefit to lupus patients who have high levels of renal involvement, including patients with stable lupus nephritis/glomerulonephritis.

The CHABLIS-SC2 study could be what helps to separate Blisibimod from Benlysta. This study could provide Blisibimod with a broader label than Benlysta, and as such help to improve the market potential of the product.

The market potential for Blisibimod is very hard to predict, simply because it would depend upon the clinical results and the labeling for Blisibimod. While sales potential is hard to predict, it is definitely much more than Anthera's current $80.43 million market cap. The SLE market represents a very enticing market for long term oriented investors, should Anthera be successful in phase III testing, and obtaining FDA approval.

The following table is a rough sketch of the pending long term catalyst in regards to Blisibimod for the treatment of SLE.

Long term catalysts for Blisibimod in SLE

Catalyst	Estimated Time Frame
CHABLIS-SC1 Completion	December 2015
CHABLIS-SC2 Completion	1Q 2016 (this is a guess based on how far behind CHABLIS-SC2 is in terms of initiating a clinical trial)
Partnership	Hard to predict, either before the NDA or after FDA acceptance
NDA Filing	3Q 2016 (this is conservative)
PDUFA	3Q 2017 (assuming standard review)

This table was illustrative in regards to a couple of ideas. First of all, investors are not clear on how far behind CHABLIS-SC2 is, and exactly what the design specifications are. It is possible for SC2 to catch up to SC1 based on patient enrollment amongst other factors.

I am not, however, saying that these are the only catalysts in regards to Blisibimod and that investors should simply lock up their money until 2015 based on the hope that Blisibimod works. Blisibimod is also being pursued in other indications, which have the potential to be financially lucrative for Anthera, as well as has the potential to create some more catalysts for long term oriented investors.

IgA nephropathy (IgAN)

Anthera is also pursuing Blisibimod in a potential indication for IgA nephropathy. IgA nephropathy is a chronic immune renal disease that is typically characterized by proteinura and can sometimes progress to end stage renal disease. Blisibimod would have a relatively large market, should it be approved for the indication.

Anthera recently announced that it initiated a phase II trial called BRIGHT-SC for Blisibimod in IgA nephropathy. This clinical trial has the ability to provide near term catalysts for shareholders, as the trial progresses towards its completion. According to the press release (cited above), this trial appears as though it will be shorter:

"BRIGHT-SC is a multicenter, placebo-controlled, double-blind, Phase 2 clinical study that is expected to enroll at least 48 patients from Asia Pacific geographies. Patients will be randomized into one active treatment arm or one placebo arm. The primary endpoint of the study will be a reduction in proteinuria at 32 weeks. The Company plans to conduct an interim analysis of proteinuria after patients have completed 8 weeks of therapy. Secondary endpoints will include the effects of blisibimod on estimated Glomerular Filtration Rate (eGFR), plasma B cells, and other biomarkers of kidney disease."

The interim analysis at 8 weeks should help to provide a closer catalyst for shareholders. Also, it should not take all that long for Anthera to enroll at least 48 patients in the phase II trial. However, if Anthera increases the enrollment before seeing any of the data, it could be positive for shareholders as the more subjects in the Phase II trial would help to give shareholders more confidence in the Phase III development program. This trial was designed after a May meeting with the FDA. Anthera hopes to present interim data early next year.

The market opportunity for IgAN could be quite large for Anthera. Anthera estimates that there are 40,000 people in the United States affected by IgAN This number could actually be low because it seems as though IgAN is underdiagnosed due to the fact that it requires a biopsy, which is not normally completed for patients who have mild urinary abnormalities. The clinical development of Blisibimod in IgAN represents a significant catalyst for shareholders, and could help to drive long term shareprice growth. Significantly, according to the conference call Anthera estimates that there could be millions of people affected by IgAN in Asia, where the prevalence of the disease is much higher.

Another significant idea about the development of Blisibimod in IgAN is the fact that the disease is an orphan disease. What this means is that due to the fact that there are so few patients who have the disease, if the FDA grants orphan drug designation, the recipient will have market exclusivity for a certain time period as well as other benefits. Typically, orphan drugs can be quite profitable, as companies will substantially increase the price of the drug in the orphan indication, because they are the only drug on the market. This further increases the commercial potential of the IgAN indication for Anthera.

Risks

In order to provide readers with a full view of what the risk/reward is for this stock, it becomes necessary to address some of the risks associated with Anthera. If Blisibimod is found to not work in any of the indications above, the company would not be worth very much money at all. The company has taken a risk by having Blisibimod being the only drug in their pipeline, and if this drug is not successful Anthera would have to develop another pipeline essentially from scratch. Another risk associated with Anthera is that it could be harder for them to raise money given the fact that they might be delisted from the NASDAQ soon.

Financial Position

It appears as though Anthera has a rather stable financial position. At the end of March 31,2013 Anthera had $54.4 million in cash. The company mentioned that the amount of cash is "sufficient to deliver on a number of milestones over the next 12 to 18 months." I would expect this to be correct, as from operating activities, Anthera had a negative cash flow of approximately $10.63 million. This means that Anthera's cash pile should last roughly through the next five quarters assuming that the expenditures roughly stay the same, and assuming no unexpected revenue.

While it is concerning for any company to be cash flow negative, in the case of Anthera I am not overly concerned. Many development stage pharmaceutical companies operate at net losses until their first drug gets on the market (unfortunately, some companies never end up being positive). With this in mind, it is not unusual for Anthera to have a negative cash flow and a net negative in terms of operating expenses. With a cash pile of $54.4 million, the company has removed the immediate risk of dilution for shareholders who take a position. By the time that Anthera would have to raise more cash, it should be at much higher prices due to drug development, we should have Phase II results in IgAN in that time and have a pretty good idea about whether or not the phase III enrollment is on track in SLE.

Conclusion

Anthera is a very interesting long term proposition. While there may still be some short term downside in Anthera's shareprice, with Anthera trading near its 52 week low it appears as though this is a fantastic risk/reward opportunity for investors. Anthera's holdings have also been relatively stable, with institutional ownership of 48.93%, it appears as though Anthera will be a good long term investment. As Anthera progresses Blisibimod through the requisite clinical pipeline, there should be an appreciation in share price. Anthera appears to be a small cap stock with asymmetric long term upside potential.