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With Full Enrollment Complete In Its Phase 2 COVID-Related GI Treatment Trial, First Wave Bio Could Earn An EUA Sooner Than Later (NASDAQ: FWBI)

Pay attention to First Wave Bio, Inc. (NASDAQ: FWBI)- and its stock. And for a good reason. On Thursday, the company announced reaching another milestone, completing enrollment evaluating niclosamide in a Phase 2 trial to treat Covid-related GI infection. As would be expected, the news sent shares higher. But, while the move on Thursday was impressive, investors could be in store for more good news and substantially higher highs in the coming weeks. In fact, by potentially filling an unmet medical need, publishing topline Phase 2 results as early as the first half of this year, and earning a potential Emergency Use Authorization (EUA) by the second quarter of 2022, that's likely. So, paying attention to FWBI is one thing; the better consideration may be to invest in its stock.

Why? Because in addition to FWBI being in its best operating position ever, it's also advancing the most ambitious clinical program in its history. And the better news is that its now fully enrolled Phase 2 oral niclosamide trial could lead to earning a EUA sooner than many think. True, it's an aggressive presumption, but it's made after seeing that Pfizer and Merck both received their orally-dosed anti-viral EUA's less than 60-days time after filing. Thus, aggressive, yes. Unrealistic, no.

And there's more potentially excellent news. Considering the outstanding safety profile and the fact that the drug has been in use successfully to treat numerous indications for more than 50 years, much of the risk of a topline miss may be mitigated. Combining facts with expectations, FWBI stock is, therefore, more than an attractive proposition; it's a compelling one.

Extending The Reach Of Niclosamide

It gets even better. The voluminous data for the drug could help fast-track regulatory approvals to make a conditionally approved oral niclosamide available this year. Moreover, it's important to note that FWBI isn't doing more of the same with the drug. They are after a new market. And by targeting an untapped market, they could own a multi-billion dollar niche market.

Indeed, interim data suggest that FWBI is navigating a novel drug development pathway exceptionally well. And to date, their data support their ambition to bring to market a treatment to cure an unmet medical need, evaluating its micronized formulation of niclosamide that allows solubility to be increased so that the local GI concentration exceeds that needed to kill SARS-CoV-2. Here's the better news. The mechanism of action of niclosamide is independent of the vaccine immune response; thus, those resistant to getting vaccinations are not excluded from the potential benefits.

Moreover, FWBI's oral niclosamide is different from the anti-viral tablets that Pfizer and Merck are bringing to the market. In fact, those two drugs have entirely different mechanisms of action to kill COVID. Hence, don't dilute the potential for FWBI's niclosamide contribution to work beyond its independent capability. Instead, know that it could also attract interest from Big Pharma as a part of combination therapy by providing additive efficacy via independent mechanisms of action. As noted, with niclosamide having 50 years of human safety data and being well established as an effective treatment, that opportunity is in play.

And while FWBI may be under the radar to most, they impressed the FDA enough to expedite a move directly to a Phase 2 trial. And deservedly so. Over the past four decades, niclosamide has been effectively used to treat millions of people, has an outstanding safety profile, and importantly from FWBI's perspective, production can be ramped quickly. Thus, historically speaking, its trial is progressing from a position of strength.

Of course, while historical data matters, so does current. And FWBI is showing a compelling set of its own. That's the most essential part of the investment consideration.

Filling A Billion-Dollar Niche Opportunity

The more excellent news is that its data to date is so far leading toward a potentially profitable endpoint. Today, the COVID anti-viral market's estimated size is about a $20 billion proposition. And that's only taking into account the respiratory side of the equation that Pfizer and Merck are targeting.

Adding in the GI indication, the opportunities get much bigger. In fact, with data showing that 18% of patients have GI infection symptoms and up to 43% have viral RNA in their stools, the treatment potential can be considerably higher in dollar terms. And if all goes according to plans and timelines, FWBI is better positioned than anyone to capture the lion's share of that niche market.

Better yet, it could do so in an environment free from competition. That's because Pfizer and Merck indicate its oral anti-virals as a respiratory drug. Thus, that leaves the treatment door wide open for FWBI to exploit its opportunity and deliver a go-to treatment for GI-related infection. Not only that, since FWBI's niclosamide formulation is absorbed directly in the GI tract, it has an inherent differentiating advantage that could make it the preferred and most logical treatment option. Remember, too, without clinical verifications, competitors may have challenges meeting a similar indication approval.

That's potentially excellent news for FWBI. Keep in mind, as much as the global population needs cures, labeling specific to an organ system, like GI, requires data showing specific effects in that organ. Since no known data suggests that the Pfizer or Merck oral anti-viral drug can effectively treat GI infection, having physicians prescribe off-label, especially in the face of a potential near-term EUA for FWBI's niclosamide, would be a stretch.

Of course, it's difficult to predict precisely what level of efficacy the FDA would require to grant a EUA. However, this pandemic has created a sense of urgency to get safe and effective drugs to market faster than ever before. Thus, statistically significant and proven safe Phase 2 data showing clearance of COVID from a patient's stool could punch an early ticket toward earning that designation. Early indications show that potential.

A Compelling History Of Effectiveness

Know this, too. Niclosamide has a long and impressive pedigree, which checks another box in the plus column for FWBI. The drug was originally developed as an anti-parasitic therapy against tapeworms. Since then, the drug has been safely used on millions of patients over the last four decades and is listed as an essential medicine by the World Health Organization. Its effectiveness has also led to more therapeutic indications due to its potent anti-viral and anti-inflammatory properties.

By the way, FWBI isn't ignoring those opportunities. In addition to evaluating niclosamide use to treat long-haul COVID GI infection symptoms where it's believed that long-term infection symptoms may result from a viral reservoir or an inflammatory response to the initial infection, they are advancing a robust clinical trial pipeline that could deliver more catalysts by year-end.

Results from its Phase 2 anti-inflammatory trial in ulcerative proctitis-ulcerative colitis and IBD, in fact, could add appreciably to shareholder value in 2022 as well. Therefore, while its treatment of COVID- related GI-tract infection is earning the spotlight today, additional potentially value-enhancing trial results expected later this year shouldn't be ignored. Knowing what's in the queue makes the valuation disconnect even more compelling, especially to investors who like to seize opportunities before clinical updates get posted. Incidentally, with niclosamide proven safe and effective over decades in many treatment indications, it's a fair assumption that the risk of not meeting trial endpoints may be considerably mitigated.

And considering that all regulatory hands are at work to make sure patients are getting the best, current, and most advanced treatments available, FWBI, at this stage of its drug development cycle, is ideally positioned to be a beneficiary of well-placed global regulatory intentions.

Meeting Patient Resistance With Alternatives

At the same time, expect a boost in media attention toward novel drug formulations like FWBI is developing. That could be a value driver as well. Actually, Merck started that ball rolling, making headlines last year that its anti-viral oral drug candidate Molnupiravir kept Covid patients out of the hospital. Unfortunately, follow-on data took some of that drug's initial appeal away. Still, the takeaway is that investors responded well to Merck providing an alternative to a vaccine, which is still resisted by a significant part of the global population. And it also showed that despite the potential of patients taking a regimen of pills, even one involving taking multiple tablets over several days, it's an option that could win over anti-vaxxers who are refusing intravenously delivered anti-viral Covid-19 treatments.

Notably, that market is more than accessible; it can be quickly addressable. And FWBI has already noted it can ramp the production of oral niclosamide to meet the potentially enormous need and demand. Perhaps the better news is that Merck helped expose that the FDA is amenable to new therapies and is willing to expedite approvals. That's timely for FWBI.

In addition, positive topline results in this trial could help accelerate approvals for other pipeline candidates. Success tends to breed success. If so, FWBI and its investors may do well through additional clinical-stage programs expected to reach new milestones and generate multiple catalysts this year. There, FWBI's clinical ambitions are supported with intellectual firepower and IP assets that could embellish and protect potentially best-in-class treatment options for patients with IBD and ICI-AC. Like its Covid-GI treatment candidate, those two indications present billion-dollar market opportunities.

Perhaps the most excellent part of the FWBI story is that with multiple clinical trials advancing, topline data within two quarters, and a strong portfolio of long-lasting patents protecting niclosamide use for COVID-19 GI infections, ICI-AC, and the IBDs, the next few weeks and quarters should be milestone rich. Thus, unlike most wait-and-see biotech investments that don't deliver results for years, FWBI presents a near-term proposition with a valuation disconnect getting too big to ignore.

With that being the case...the best consideration, simply put, - don't.



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