$VIRI FDA Approval On The Horizon?
Up 230% since its Q4 earnings in March, Virios Therapeutics, Inc. (NASDAQ: VIRI) showed tremendous progress in its Q1 earnings in May. The company not only reported an EPS loss less than half of estimates, successfully reducing its cash burn by almost 60% QoQ, but reported significant progress in preparing its IMC-1 treatment for Phase 3 trials. As a development-stage biotechnology company, VIRI stock primarily moves on binary events like clinical trials and FDA approval. With this in mind, investors should watch for FDA approval of its Phase 3 trials and the top line results of its exploratory Long-COVID study in June.
VIRI Fundamentals
Earlier this month, VIRI announced that it submitted its last toxicology report to the FDA for its IMC-1 fibromyalgia treatment candidate as part of its Phase 3 proposal.
Since the regulatory agency already communicated that the proposed Phase 3 program is acceptable, if the toxicology reports support IMC-1’s progression to Phase 3 trials then it will likely be approved. The company’s CEO, Greg Duncan, shared that VIRI “will report material FDA feedback on our Phase 3 proposal promptly, as we receive it.” Depending on the FDA’s timeline for review, VIRI stock could be one of the stocks to watch since Phase 3 approval would be an important catalyst for the company.
Fibromyalgia Market
As is the FDA has not approved any new pharmaceutical treatments to treat Fibromyalgia over the past decade. This may be due to the mysterious origins of fibromyalgia which make it difficult to diagnose and treat in some cases. Yet the global fibromyalgia market was valued at $3.14 billion in 2022 and is expected to reach $4.07 billion by 2030. Right now, there are only three FDA approved drugs for treating fibromyalgia: Lyrica form Pfizer, Cymbalta from Eli Lilly, and Savella from Forest Labs.
If IMC-1 is FDA approved it will have an edge over many treatments which are not specifically approved for fibromyalgia but are prescribed by doctors through off-label use. FDA approval would allow VIRI to promote IMC-1 as a treatment for fibromyalgia which can immediately improve its sales outlook and help it gain market share.
According to an associate analyst with market research firm Decision Resources, this could add $200 to $300 million in sales. While this estimate was made in 2007 when the fibromyalgia market was largely untapped, the market has grown considerably since then and with only 3 approved treatments, it is not very crowded.
However its important to note that FDA approval of Phase 3 trials is by no means guaranteed. If the FDA does not approve IMC-1 for trials it could be a major blow for VIRI stock which fell 93% in September 2022 after the company’s Phase 2b results missed expectations.
At the time, its trial results failed to achieve statistical significance for its primary endpoint of daily self-reported average pain severity scores which is critical in determining its efficacy in treating fibromyalgia. Despite this, VIRI has continued to explore IMC-1’s potential to become a treatment option for fibromyalgia.
FDA Fast Track
While the results of its 2b trial may have been disappointing, the company secured a fast-track designation for IMC-1 in 2016 which indicates that the treatment is still promising. Because IMC-1 demonstrated the potential to address an unmet medical need it was granted this designation and as a result VIRI has greater access to the FDA throughout the review and development process. Most notably, VIRI is also allowed to submit New Drug Applications on a rolling basis and could receive accelerated approval and priority review.
The company held its “End of Phase 2” meeting with the FDA in March to discuss its progression to Phase 3 and has submitted its toxicology reports in May as part of the FDA’s overall review of the it’s Phase 3 proposal. Once the FDA’s review of the chronic toxicology reports is complete, the company may provide a timeline for the initiation of its Phase 3 trials. Thanks to its priority review process, the FDA will finish its inspections and compliance review within 6 months of receiving the priority application.
Long COVID Treatment
While IMC-1 is also in trials for the treatment of IBS, VIRI’s exploratory trials for its IMC-2 treatment is expected to yield top line results in June. Although its potential treatment for Long-COVID may not receive as much attention as its trials for fibromyalgia, this could be another catalyst for VIRI stock in the near-term.
Risks
As with almost all biotechnology companies developing new treatments, VIRI may present a dilution risk to investors. The company stated that it has enough capital to fund it into Q2 2024, however if IMC-1 is approved for Phase 3 trials it will likely require additional funding or resources. This is to be expected when the company is generating no revenue and must fund expensive research and development programs to bring a new treatment to market.
Considering that VIRI spent $11 million last year and has $5.3 million in cash as of Q1 2023 the company will either need to continue cutting operating expenses to conserve capital or raise funds in the future.
Institutional Ownership
Despite these risks, there has been some activity from institutional investors like Vanguard Group Inc., UBS Group, and Susquehanna International Group, all of which increased their positions in VIRI during Q1.
As institutional ownership increases, it helps lock down VIRI’s already low free float of 15.3 million shares. Increasing institutional ownership is also a vote of confidence for the stock which received a delisting notice from the NASDAQ in November 2022 after falling below the minimum bid requirement. Since then VIRI was granted until October 30th 2023 to regain compliance with the minimum bid price requirement, but since VIRI stock has traded above $1.00 for the last few days soon it may no longer be in danger of delisting.
VIRI Financials
Looking at its Q1 2023 report, VIRI’s assets decreased by 8% QoQ from $8.3 to $6.5 million, and its cash and cash equivalents decreased by almost 25% QoQ from $7 million to $5.3 million.
VIRI’s total liabilities decreased by almost 50% QoQ from $1 million to $0.5 million. Operating losses decreased by nearly 60% QoQ from $4 million to $1.5 million, including an 80% QoQ decline in research expenses from $2.8 million to $0.49 million, which amounted to a net loss of $1.5 million – a 60% decrease QoQ.
Technical Analysis
Currently trading in an upward channel, VIRI stock is trading above the 200 MA indicating that its trend is bullish. Now trading below the 21 and 50 MA, VIRI has dropped 14% since testing its $1.22 resistance on earnings. It rebounded off of the 200 MA and is holding the lower trendline which is a bullish sign.
Looking at the indicators, the 50 and 200 MAs formed a golden cross in January signaling a trend shift. Since then the stock has been climbing steadily. The MACD is bullish and the RSI is neutral at 52, leaving room for the stock to continue trading in this upwards channel.
Fundamentally, VIRI has a catalyst in June which is when the top line results of its Long-Covid trials are expected to be released. Considering that the company is expected to release updates on any material communication with the FDA regarding its Phase 3 trials, bullish investors could take a position in this low float biotech stock for a swing.
However, VIRI stock has demonstrated its volatility on positive and negative catalysts before which is why investors should be mindful that the results of its exploratory trials may be negative.
VIRI Forecast
Despite the blow VIRI stock took in 2022, the company is showing a strong performance in 2023. Right now, the company is taking important steps to conserve capital and reduce its burn rate, however if it receives FDA approval for its Phase 3 trials it is likely the company will likely need to raise funds.
At this pivotal point in its research efforts, VIRI could receive FDA approval for its phase 3 proposal – a very important catalyst for this low float stock. Currently trading above $1, VIRI may soon avert any risk of being delisted for the time being.
Considering institutional investors’ recent activity, its FDA Fast Track designation, its plans to submit an updated IMC-1 Phase 3 program proposal following FDA guidance, and the upcoming topline results of its Long-Covid study, VIRI stock could be one to watch.
VIRI Fundamentals
Earlier this month, VIRI announced that it submitted its last toxicology report to the FDA for its IMC-1 fibromyalgia treatment candidate as part of its Phase 3 proposal.
Since the regulatory agency already communicated that the proposed Phase 3 program is acceptable, if the toxicology reports support IMC-1’s progression to Phase 3 trials then it will likely be approved. The company’s CEO, Greg Duncan, shared that VIRI “will report material FDA feedback on our Phase 3 proposal promptly, as we receive it.” Depending on the FDA’s timeline for review, VIRI stock could be one of the stocks to watch since Phase 3 approval would be an important catalyst for the company.
Fibromyalgia Market
As is the FDA has not approved any new pharmaceutical treatments to treat Fibromyalgia over the past decade. This may be due to the mysterious origins of fibromyalgia which make it difficult to diagnose and treat in some cases. Yet the global fibromyalgia market was valued at $3.14 billion in 2022 and is expected to reach $4.07 billion by 2030. Right now, there are only three FDA approved drugs for treating fibromyalgia: Lyrica form Pfizer, Cymbalta from Eli Lilly, and Savella from Forest Labs.
If IMC-1 is FDA approved it will have an edge over many treatments which are not specifically approved for fibromyalgia but are prescribed by doctors through off-label use. FDA approval would allow VIRI to promote IMC-1 as a treatment for fibromyalgia which can immediately improve its sales outlook and help it gain market share.
According to an associate analyst with market research firm Decision Resources, this could add $200 to $300 million in sales. While this estimate was made in 2007 when the fibromyalgia market was largely untapped, the market has grown considerably since then and with only 3 approved treatments, it is not very crowded.
However its important to note that FDA approval of Phase 3 trials is by no means guaranteed. If the FDA does not approve IMC-1 for trials it could be a major blow for VIRI stock which fell 93% in September 2022 after the company’s Phase 2b results missed expectations.
At the time, its trial results failed to achieve statistical significance for its primary endpoint of daily self-reported average pain severity scores which is critical in determining its efficacy in treating fibromyalgia. Despite this, VIRI has continued to explore IMC-1’s potential to become a treatment option for fibromyalgia.
FDA Fast Track
While the results of its 2b trial may have been disappointing, the company secured a fast-track designation for IMC-1 in 2016 which indicates that the treatment is still promising. Because IMC-1 demonstrated the potential to address an unmet medical need it was granted this designation and as a result VIRI has greater access to the FDA throughout the review and development process. Most notably, VIRI is also allowed to submit New Drug Applications on a rolling basis and could receive accelerated approval and priority review.
The company held its “End of Phase 2” meeting with the FDA in March to discuss its progression to Phase 3 and has submitted its toxicology reports in May as part of the FDA’s overall review of the it’s Phase 3 proposal. Once the FDA’s review of the chronic toxicology reports is complete, the company may provide a timeline for the initiation of its Phase 3 trials. Thanks to its priority review process, the FDA will finish its inspections and compliance review within 6 months of receiving the priority application.
Long COVID Treatment
While IMC-1 is also in trials for the treatment of IBS, VIRI’s exploratory trials for its IMC-2 treatment is expected to yield top line results in June. Although its potential treatment for Long-COVID may not receive as much attention as its trials for fibromyalgia, this could be another catalyst for VIRI stock in the near-term.
Risks
As with almost all biotechnology companies developing new treatments, VIRI may present a dilution risk to investors. The company stated that it has enough capital to fund it into Q2 2024, however if IMC-1 is approved for Phase 3 trials it will likely require additional funding or resources. This is to be expected when the company is generating no revenue and must fund expensive research and development programs to bring a new treatment to market.
Considering that VIRI spent $11 million last year and has $5.3 million in cash as of Q1 2023 the company will either need to continue cutting operating expenses to conserve capital or raise funds in the future.
Institutional Ownership
Despite these risks, there has been some activity from institutional investors like Vanguard Group Inc., UBS Group, and Susquehanna International Group, all of which increased their positions in VIRI during Q1.
As institutional ownership increases, it helps lock down VIRI’s already low free float of 15.3 million shares. Increasing institutional ownership is also a vote of confidence for the stock which received a delisting notice from the NASDAQ in November 2022 after falling below the minimum bid requirement. Since then VIRI was granted until October 30th 2023 to regain compliance with the minimum bid price requirement, but since VIRI stock has traded above $1.00 for the last few days soon it may no longer be in danger of delisting.
VIRI Financials
Looking at its Q1 2023 report, VIRI’s assets decreased by 8% QoQ from $8.3 to $6.5 million, and its cash and cash equivalents decreased by almost 25% QoQ from $7 million to $5.3 million.
VIRI’s total liabilities decreased by almost 50% QoQ from $1 million to $0.5 million. Operating losses decreased by nearly 60% QoQ from $4 million to $1.5 million, including an 80% QoQ decline in research expenses from $2.8 million to $0.49 million, which amounted to a net loss of $1.5 million – a 60% decrease QoQ.
Technical Analysis
Currently trading in an upward channel, VIRI stock is trading above the 200 MA indicating that its trend is bullish. Now trading below the 21 and 50 MA, VIRI has dropped 14% since testing its $1.22 resistance on earnings. It rebounded off of the 200 MA and is holding the lower trendline which is a bullish sign.
Looking at the indicators, the 50 and 200 MAs formed a golden cross in January signaling a trend shift. Since then the stock has been climbing steadily. The MACD is bullish and the RSI is neutral at 52, leaving room for the stock to continue trading in this upwards channel.
Fundamentally, VIRI has a catalyst in June which is when the top line results of its Long-Covid trials are expected to be released. Considering that the company is expected to release updates on any material communication with the FDA regarding its Phase 3 trials, bullish investors could take a position in this low float biotech stock for a swing.
However, VIRI stock has demonstrated its volatility on positive and negative catalysts before which is why investors should be mindful that the results of its exploratory trials may be negative.
VIRI Forecast
Despite the blow VIRI stock took in 2022, the company is showing a strong performance in 2023. Right now, the company is taking important steps to conserve capital and reduce its burn rate, however if it receives FDA approval for its Phase 3 trials it is likely the company will likely need to raise funds.
At this pivotal point in its research efforts, VIRI could receive FDA approval for its phase 3 proposal – a very important catalyst for this low float stock. Currently trading above $1, VIRI may soon avert any risk of being delisted for the time being.
Considering institutional investors’ recent activity, its FDA Fast Track designation, its plans to submit an updated IMC-1 Phase 3 program proposal following FDA guidance, and the upcoming topline results of its Long-Covid study, VIRI stock could be one to watch.