Summary
- Novel manufacturing process leads to increased safety and effectiveness of pulmonary therapies.
- The company is making the most of the 505(B)(2) pathway to reduce development costs and time.
- Recently gained $25 million in institutional funding, which is estimated to be necessary for the development of their first two products.
- I estimate that the company is currently undervalued and that short-term upside is potentially 180%.
Lowered Risk Leads to Long-term Gains
TFF Pharmaceuticals (TFFP) is a small biotech company that focuses on a novel small molecule/biosimilar aerosolization technique. I find this company to be a necessary asset in a biotech portfolio as it provides an ingenious manufacturing procedure that leads to a lower risk scenario. As initial data has indicated, the safety and efficacy of the technology is positive as of an initial phase I trial. Correspondingly, the range and diversity of potential therapies is an important factor for future growth because the company is looking to license out the technology. At the moment, TFFP has acquired sufficient funding to provide enough cash flow for two initial approvals, and due to utilizing already approved therapeutics, requires a reduced overall cost compared to original drugs. As such, the company continues to provide ample room for stock price success, and I continue to add on declines.
Introduction to Thin Film Freezing
The thin film freezing technique relies on an alternative production method that allows for therapeutics to be directly applied to lung tissue in an ultrafine powder state rather than through oral ingestion or IV. While many therapies aim to cure lung based illnesses, the compounds targeted by TFFP have yet to be aerosolized with the traditional methods. The company claims that this method will increase the efficacy of lung-targeting therapeutics and decrease side effects due to the need for lower dosing. Value can be defined by analyzing patient and clinical results to determine whether this innovative manufacturing process increases the effectiveness and safety of lung based therapeutics. Further, value definitions and growth potential can be determined using the current market for the targeted therapeutic applications and the potential growth of viable therapies.
Until this innovation was created, the ability to reduce therapeutic drugs to a convenient powder was limited to already small particles because of traditional freezing or isolating techniques. These former methods cannot create fine powder forms of proteins or other biosimilar molecules because as the molecules get larger, the bonding properties between each molecule increases. As such, TFFP realised that it was necessary to develop a novel manufacturing technique to target this inadequacy. The University of Texas at Austin developed and patented the novel mode for aerosolization, and any patents regarding this technology are thereby leased to TFFP. Although, I do not expect any long-term conflicts because of this situation.
Image 1: Source. Company provided description of the thin film freezing process, with images comparing results. The brittle matrix powders are the final product of the technique.
