Frequency Therapeutics — Hearing Loss Regeneration

I would really like people's thoughts on the chances that this drug is going to hit the market.

If yes, give me a winner rating, if no give me a funny rating and make a short post giving your reasoning. A proper poll would be good of course with different options.

Feeling pessimistic today

 

That's very interesting. Are we reading the numbers in reverse like the audiogram? The higher the dB, the worse your hearing? What's your source so we can read more about this? Thank you.

 

The dips towards the bottom indicate that the cochlea is more sensitive to that frequency.

I can't remember the exact thing I googled a while ago (and saved this image from) but there were a ton of sources on it. Something like "selective frequency sensitivity of the cochlea" but I can't remember exactly what it was.

Here is another source:

http://hyperphysics.phy-astr.gsu.edu/hbase/Sound/maxsens.html

 

Considering that there are no solutions to hearing loss at this moment (except for hearing aids which don't tackle the root cause), I am pretty optimistic that we will see the drug on the market. Even a small improvement in hearing is better than the current (lack of) treatment.

Also looking forward to Otonomy's trial, I believe phase 1 of their hidden hearing loss product will be finished in Q4 2020, which should already give us an indication of the efficacy.

 

I think that something really bad would have to happen for FX-322 to not hit the market. I think it is not a matter of if but when.

There is proof it can provide benefit and that it is safe. The only reason it might fail is due to either an unknown adverse safety outcome or the fact that it doesn’t provide enough benefit, but neither of these is likely to happen.

 

It all comes down to safety. This drug is revolutionary, even if the first few iterations show some issues (such as circulating it through the oval window into the entire cochlea). There could eventually be an improved drug that gets all of the credit, but this is a serious advancement.

 

If the clinical trial results are positive in any way, then I am sure it will get approved. I am fairly positive about the treatment that FX-322 will provide and the benefit that it will give us.

The Otonomy drug is interesting and I really hope it will provide positive benefit too as it treats the area which FX-322 doesn’t.

The thing that will interest me the most is if both drugs are successful, how will they interact with each other. Like will we see better outcomes because now we are hearing not only with more volume but with much more ease in a cafe.

I am also interested to see whether FX-322 provides benefit in speech in noise and whether Otonomy provides any benefit to hearing volume, too.

 

Thanks everyone, feeling a little more optimistic.

I just hope you aren't all delusional

 

The pink octopus clinging to the ceiling says I'm fine.

 

I was talking to my friend who knows a few things about buying shares. He said from researching Frequency Therapeutics that people in the company are buying up shares... I assume that shows confidence in the upcoming results of the trial?

 

You can see for yourself:

https://www.gurufocus.com/stock/FREQ/insider

The people in the company seems to be selling at $21-$22 per share while buying at $18 per share as a trend. I have no experience in stocks trading. Make your own judgments.

 

You cannot really read too much into that for two reasons.

Firstly, they may have sold initially and rebought later to make a short term cash profit on the price.

Secondly, they need to comply with the requirements of disclosure regarding insider trading.

Thus one could view such moves as positive, however I would wait until the publication of the results before definitively making any claims.

 

If the Phase 2a clinical trial results end up being positive, how much do you reckon the share price of Frequency Therapeutics would be?

 

Depends on how screwed the overall economy is and even the IBB/biotech sector as well.

Pure speculation but I could see it going $40-45 on the low side assuming a good market on the whole (or at least a non disastrous one). But i think people would keep adding into phase 3 and beyond at that point.

 

I was thinking around that amount too. I think the Phase 3 clinical trial results will cause a big increase in Frequency Therapeutics share price if they are successful.

I can see the share price reaching $100 per share or more.

 

I think that is fair, although another reasonable angle is people will pay premiums for potentially valuable commodities regardless of the economic situation. Australian mining stocks simply boomed during the 2008-09 global financial crisis because of the terrific demand for minerals coming from China.

 

Right, the whole biotech sector would have to outperform the economy (since a number of shares are owned across biotech index funds) not just Frequency, but that's possible. I'm not following the sector as closely as I once did.

 

Would FX-322 help someone who has hearing loss from diabetes?

 

It depends on how successful Phase 2a is. For fun, let's imagine the best case scenario.

Fast tracked drugs often go to market after Phase 2 [1]. Years ago when I was apart of a study for a cholesterol drug, one of the nurses told me something similar. When asked about skipping Phase III in the Tinnitus Talk Podcast, Carl LeBel was very careful with his words:

So, the designation of getting fast-track status really allows us to have more interactions with FDA, which is important especially at an early phase. And we’ve talked publically about, on the basis of the Phase IIa results, if those results were positive, we have every intention to file a request for break-through designation. So what that in general allows one to do is again continue to have more and more interaction with this division of FDA, and there can be a situation where, again depending on what the data looks like, depending on the safety, one can kind of speed the process along even faster. At this time we can’t make any comments about whether there would be a concession for not having to go through a certain phase. Right now, our plans are, you know, we’re in kind of in the middle phase of development, which is Phase II. We are assuming we’re going to have to go through a pivotal phase, which would be Phase III. And that would be the next phase we want to go to, and as I said, we’re working as hard and as fast as we possibly can.​

I find this statement very interesting, especially the "at this time" part. From the WSJ article I mentioned earlier:

The U.S. Food and Drug Administration approved a record 43 new drugs last year through fast-track programs that skip or shorten major steps other drugs must pass, or 73% of total new drugs. That compares with 10 expedited drugs, or 38% of the total, approved 10 years ago.​

So the trend is to expedite. I think Carl can't legally come out and say they hope to go to market after Phase 2a, but if the data is good, I think they're going to try. Also, even if this were to happen, they'd still need to go a Phase 3. It's just that FX-322 would be available while this was happening.

We know Frequency is trying to recruit people like the "4 responders" from Phase I/II, so best case let's say that most of the patients from Phase 2a look like these people, and that additional doses give improvement, the drug reduces tinnitus, and the Extended High-Frequency Audiometry shows significant improvements.

In this case, I could see the drug getting Breakthrough Status and going to market sometime late next year (or however long it takes ramp up production). FREQ's market cap is at 724M right now. Sonova, a large hearing aid company, is worth a little over 14B. Since FX-322 would treat tinnitus as well as hearing loss, the market would be bigger and more people would be excited about it since it's improved hearing rather than something you have to wear. So the question is, would Frequency suddenly become worth more than companies like this if it showed it had a better product? Let's say FREQ's market cap would probably be higher, maybe 25B.

Assuming the stock isn't diluted, that would mean the stock rocketed up 34.5x times in value from $21.71 to a new price of $749 a share.

Now, realistically this is not going to happen. FX-322 doesn't look like it will be able to be a hearing aid replacement, and I can't find any stories on biotechs skyrocketing up 3350% in value. The market isn't going to irrationally price this stock way below what it's worth, and if Frequency thought they would be worth that much they wouldn't have cut the 42M private placement deal they did last month. At best these type of stocks seem to jump around 600% on really good results. So maybe a more realistic best case scenario would be $130 a share following really good Phase 2a results. Plus, comparing Sonova and Frequency is comparing apples to oranges, and is a pretty shallow analysis.

I think the more conservative guesses of between $40-$70 a share following moderately successful Phase 2a results are more in line with reality. And while I hope FX-322 will go to market during Phase III, my judgement may be clouded a little by hope.

Now, if the drug doesn't preform well, the stock is going to tank hard. Auris ($EARS) fell around 50% on non-statistically significant results, and then just continued to go down from there. Otonomy ($OTIC) fell 82% following bad results. I think Frequency will face a fate similar to Otonomy if their results are not good.

[1] https://www.wsj.com/articles/fast-t...ed-for-emergencies-is-now-routine-11562337924

 

Even if FX-322 only adequately treats the very high frequencies then it will be a win and result in positive share price appreciation.

I wouldn’t however simply rule that Frequency is content with the results achieved during phase 1/2. Frequency has stated that they want to treat below 8000 Hz and that they are attempting this through methods such as reformulation. Furthermore they have evidenced this can happen in their lab trials.

If that could be achieved then there will be an even more significant appreciation in the share price when compared with getting similar results to the phase 1/2 trial.

 

Given what they have said during their presentations etc with hearing loss representing an enormous unmet need I can see them ultimately developing a drug that covers lower frequencies and perfecting their delivery method etc. It definitely seems like their aim is ultimately to capture the hearing aid market.

 

I remember either late last year or early this year @FGG dug around their LinkedIn and found they had a job opening for someone to develop a better hydrogel. I wouldn't be surprised if part of the 42M was to test out a new formulation that works for the lower frequencies. I'm not sure how long such a task would take, but assuming they already have a new formulation, I wonder if they're keeping tight lipped about it until the Phase 2a results are released. It could serve as a way of hedging their bets if the results aren't that good, and if the results are good, it could simply serve as an amplifying factor (ie, this is good, and it will soon be even better).

 

I would assume that a locally-delivered drug like FX-322 would have a better chance of by-passing phase III than say, a cholesterol pharmaceutical where more safety concerns must be studied. Especially true if FX-322 delivers great news. Some FDA folks have tinnitus and hearing loss too!

 

It wasn't LinkedIn. It was a job posting for a formulations development expert with particular expertise in intratympanic formulations (so obviously not their MS drug).

 

They did have a position for reformulation. I don’t know if they found someone.

The question is whether they need to reformulate to make FX-322 cover a greater range

or

Do they need to reformulate to make a single dose much more effective.

Either way we will likely see a different dose style to what is currently being used now I assume.

 

Traders are watching EARS at the minute with one of their drugs getting positive results. I believe the CEO owns quite a lot of stock in them too (don't hold me to that, I just read it somewhere).

I don't think a lot of traders are watching FREQ at the minute.

There are many exciting biotechs about that can deliver profits quicker (if ever).

The worrying thing about FREQ is that it has just 1 compound or platform (Progenitor Cell Activation).

However if FREQ cures hearing loss, Meniere's, hypercausis, tinnitus and then goes onto curing or slowing down progressive MS, a decent amount of the shares in FREQ will make you a lot of money.

It's also difficult to put any sort of risk rating on this, we know that 1/10 drugs make it through the FDA across the industry, where some drugs such as Alzheimer's disease are even less. However with FREQ it's never been done before. How does an investor put a tolerance to risk on such a company!

 

Seems like the president has sold approx 80k shares. I didn't see him buying any... 11 stock sales with no purchases... Most recent sale was last week...

 

Frequency won't affect Meniere's except for some of the long term hair cell effects. The hydrops itself is a source of a lot of the hearing loss and tinnitus before that point. But agree with the rest of your post.

 

I have no experience in stocks but yes, I am also quite pessimistic that there are a lot of selling ever since COVID-19 lock down in the US. Could it be just COVID-19 situation or something else? Who knows...

 

I assume at this stage the reason the president sells rather than buys is because this is effectively how he gets his salary.

This is a very common practice in any start up firm.