We’ve been following a biotechnology company that is among the rare few at the microcap end of the spectrum that is generating revenue while developing the next generation of therapeutic products. Aptevo Therapeutics (NASDAQ: APVO) was spun out of Emergent
BioSolutions (NYSE: EBS)
in August 2016 to focus on novel oncology and hematology therapeutics so that Emergent could focus on biodefense products – including the only FDA approved anthrax vaccine.

Emergent shareholders clearly had little interest in their new Aptevo shares, and the bottom fell out of the stock in the first week of trading. Shares have drifted to the $2.00 level since then, and we believe the market may not fully appreciate the value in Aptevo. The company has four commercial products that have generated $36 million in trailing 12-month revenue through March 2017, $61 million in cash on the balance sheet as of March 2017 and a current market cap of less than $45 million.

Commercial Products

Aptevo has four commercial products in the areas of hematology and infectious diseases:

  • WinRho SDF: Immune Thrombocytopenic Purpura
    (ITP) and suppression of Rhesus (Rh)
    isoimmunization
  • HepaGam B: Prevention of hepatitis B recurrence
    following liver transplantation in HBsAg positive
    patients and post exposure
    prophylaxis after acute hepatitis B exposure
  • VARIZIG: Post-exposure prophylaxis of varicella
    zoster in high risk individuals
  • IXINITY: Intravenous recombinant
    human coagulation factor IX
    therapeutic for use in patients
    with Hemophilia B

The first three immunological products above are mature, well established products serving niche or ultra niche markets. They represent a stable, dependable revenue base of $25-$30 million annually, throwing off $10 million in annual cash flow. The IXINITY product for hemophilia B patients represents a growth market for the company.

Development Pipeline

Aptevo’s core technology is the ADAPTIR modular protein technology platform, a novel approach for the generation of immunotherapeutics. The company is developing immunooncology candidates that focus on redirected T-cell cytotoxicity (RTCC). ADAPTIR modular nature can be used to generate immunotherapeutics with unique mechanisms of action including targeted cytokine delivery, targeting two cell surface receptors or neutralization of multiple soluble proteins.

Source: Aptevo Therapeutics Investor Overview, May 2017

In pre-clinical studies, ADAPTIR candidates have been shown to possess:

  • High potency, inducing target-dependent cytotoxicity at low concentrations
  • Extended serum half-life that enables less frequent administration
  • Reliable antibody-like manufacturing processes

Aptevo is currently in clinical trials with its ADAPTIR candidates for chronic lymphocytic leukemia (CLL) in combination with complementary drugs and for metastatic castration resistant prostate cancer (mCRPC).

Source: Aptevo Therapeutics Investor Overview, May 2017

Aptevo’s commercial revenue helps support its R&D efforts and, together with the cash on the balance sheet, provides runway into 2018. Investors should anticipate additional capital being raised by then, but the current valuation still seems attractive. At less than $45 million in market cap, you’re almost getting a free call on the entire clinical and preclinical portfolio.

Please email us at [email protected] if you are a Public Company and would like to see our Case Studies or Testimonials.

Please click here if you would like information on our new trading platform.

Please click here if you’re an investor and would like to see our weekly newsletter.