Can-Fite BioPharma: A Cut Above Small-Cap Drug Manufacturers

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The enthusiasm that accompanied bull market conditions through the first half of 2013 has by now been tempered by a wide array of variables: uncertain global economic conditions, the apparent near-breakdown of the Washington political system, a meandering job market, and of course, the Federal Reserve’s as-yet unknown time-frame for cutting back on a stimulus program that has largely been credited with the impressive gains for equities this year in the first place. Any investor worth her or his shares must be prepared for the possibility of the sort of sudden, momentous changes that can follow from these larger forces.

While a healthy defensive posture is a vital reflex in times of transition, uncertainty, and downturn, however, it does not cancel out the pursuit of growth opportunities and returns, as these can often be found given the right amount of patience and persistence.

Take equities in the biopharmaceutical space, for instance. Small-caps drug-manufacturers may not be as elegant or camera-friendly as are social media companies with their pricey and spectacular IPOs, but they have quietly been enjoying having a banner year all the same. This has a great deal to do with changes to the way business is done in the pharmaceutical industry, where the emphasis is shifting to leaner, more efficient, and more narrowly targeted testing and marketing for more specific and challenging diseases.

Israel’s Can-Fite BioPharma Ltd. (CANF) is a great example of the type of small-caps that have been driving this trend. The company currently has a number of drugs in various stages of testing for inflammation, oncology, and ophthalmology indications. In particular, the company’s CF101 treatment for psoriasis and rheumatoid arthritis is nearing completion, and CF102, a treatment for liver cancer, is not far behind. While Can-Fite is not the only company to be developing such treatments, its products boast of safety and efficacy profiles that are superior to those of its competitors, and are also more practical as they have been designed for oral ingestion.

Unless one is up for a trip to the Tel-Aviv Stock Exchange, Can-Fite’s shares are currently trading in the US on the pink sheets, where a Sep 10 52-week low of $3.30 more than doubled to a 52-week high of $7 per share by Oct 18, before paring back modestly to just over $6. The company is confident that the all of the interest it has recently attracted as a result of CF101 will lift the stock onto the NYSE in the very near future. sat down with Can-Fite CEO Pnina Fishman to ask her about the company’s upcoming transition to the US market, licensing deals in Japan and South Korea, the growing interest of big pharma, and perhaps most importantly, how it all originates in the biology of muscle tissue.


EQ: Could you provide us with a brief overview of Can-Fite and its operations?

Pnina Fishman: Can-Fite is an Israeli biopharmaceutical company listed on the Tel Aviv stock exchange.

The company develops small-molecule orally available drugs for the treatment of inflammatory and  oncological diseases. We are targeting a specific receptor, the A3 adenosine receptor. Interestingly, this target is very highly expressed in inflammatory diseases, where there is very low or no expression in normal body cells. This is the reason for the differential effect of the drug on the diseased cells and the normal body cells, and I have to say very proudly that after having dosed more than 1,500 patients, the safety profile of the drug is excellent. We have very good data which came from phase 2 clinical studies showing proof of concept, and showing it quite efficacious in a couple of diseases that we have looked at including rheumatoid arthritis.

Currently we are in a very exciting time, as we are about to release data from two advanced clinical studies, before the end of the year. This is in general where we are.

The corporate management of the company, as well as the labs and the clinical studies are all in Israel, while we maintain a small office in the United States where our medical director and director of development stay on top of all the pre-clinical/clinical development programs, and are also our interface with the FDA.

EQ: Currently, the highlight of Can-Fite’s pipeline is the CF101 treatment for arthristis and psoriasis. What is the estimated size of the market for this drug?

Fishman: The Rheumatoid arthritis market is expected to grow to $18 billion by 2020. In 2010, it was around $12 billion. Psoriasis is also a huge market, currently $3.3 billion, and expected to increase to over $6 billion by 2018.

EQ: Given the relatively large number of pharmaceutical companies who are working on anti-inflammatory treatments, what would you say distinguishes Can-Fite’s pipeline from those of its competitors?

Fishman: Many of the anti-inflammatory drugs on the market are effective, but also very likely to induce severe adverse events such as lymphoma, and even tuberculosis, which had just disappeared from the world, but has reappeared as a side effect of these biological drugs. The cost of -- is very very high, and the drug price is also very high, around $20k per year, per patient. Furthermore, the method of administration for these types of drugs is very impractical, and typically involves visits to the hospital or outpatient clinic, for two hours or more of intravenous infusions.

The treatment we are working on, by contrast, is a small-molecule drug that patients can take orally once in the morning and once in the evening, in the comfort of their homes. It has an excellent safety profile and based on the clinical studies, the efficacy is also excellent. So we think we will be able to position the treatment in such a way as to take a considerable share of the market.

There are a few competitors that have treatments under development, like Celgene ($CELG). You may also have heard about the drug that Pfizer (PFE) has recently launched, but that it is currently registered in the US and not Europe since the efficacy and safety are so poor.


EQ: Would you mind telling our readers a little bit about your background?

Fishman: I did my Ph.D. at Israel’s prestigious Bar Ilan University, and then I went to the US to do post-Ph.D. work. When I came back to Israel, I began to work with some successful companies, and I began to develop the ideas on which Can-Fite was originally started. The whole company, the technology on which it is based, started from a very interesting question: why tumors very rarely metastasize into muscle tissue.

Considering the fact that muscle tissue constitutes about 66 percent of our body weight, it is a very interesting phenomenon. We worked on it for about 8 years, getting in to the knowledge. Muscle cells release more molecules that have robust anti-cancer and anti-inflammatory properties, and we were capable in cooperation with a medical chemist from the National Institute of Health to mimic and synthesize molecules very similar to those released by the muscle cells, and these are today the molecules that are in our pipeline.

We see our mission as follow: nature has already proved why there is no cancer or inflammation in muscle tissue, and we are simply taking our cue, in order to help patients. That’s how I started, when I realized how important this technology could become, I decided to leave my academic position. We raised money for Can-Fite, first from investors in Israel, and then we went public on the Tel Aviv Stock exchange, and now as you know we are making this transition to the US. We raised over $60 million and have brought the drug to quite an advanced stage of development. We brought an additional $8 million to the company from our licensing agreement with the Japan government, as part of a down payment based on milestones. The overall down payment is $21 million, and we have a comparable agreement with South Korea.

So far we’ve invested about $68 million in development.

EQ: The company just announced the execution of confidentiality agreements with 10 different pharmaceutical companies, towards the eventual commercialization of CF 101. Are there any other highlights or achievements in the pipeline that you would like to discuss?

Fishman: A very good question. We have a second drug candidate, CF102, which were are currently developing for oncology indications, the first one of which is liver cancer. The drug has a very specific and interesting profile. Since it is a very stable drug, we thought that it would be a very good idea to develop it for liver indications. Typically, the liver degrades everything that passes through it, but we think that the stability of CF102 will allow it to hold up better than other similar treatments.

The second reason we decided on liver cancer is that has to do with the disease’s resistance to chemotherapy. Our drug induces apoptosis in liver cancer cells, in other words it causes them to fail, so we started the development in the US under an Investigational New Drug (IND) application. We did our phase I clinical study, and then we moved back to Israel for our phase I/II study, which has concluded very successfully, and published it in a top-ranked scientific journal, and now we are embarking on a phase II clinical study that will involve 130 patients. It will be conducted in the US, Europe, and Israel, so we do think that with the second candidate, CF102, we have a very exciting drug, and we hope to see some nice profits once we conclude the Phase II trials.

I should also tell you that there has been a lot of interest and hype about this development, and we’ve been approached by a number of pharmaceutical companies who would like to look at the drug at the molecular level to see if there are any licensing possibilities there.

Additional developments include our CF106 drug candidate, which we look at as our next-generation drug since it is an allosteric modulator, and we’ve earmarked it for sexual dysfunction based on anecdotal findings that we have seen in Phase II and III of our clinical studies. But that will be for further down road, as we are just now initiating the pre-clinical study, and only after that will we be able to move on to a Phase I trial.

The company is also looking to start trading shares on the NYSE soon, and we hope to capitalize on some of the hype we’ve been receiving in the US. As it is, shares have been trading on robust volume. We hope that will pick up, and eventually be reflected in the share price and market cap of the company.

As for North America and Europe, we hope that we will be able to upgrade any possible deal by waiting until the results of the phase II and III studies are released, which will be shortly. With the data from the clinical studies, we feel as though we should be able to get a much better deal.

DISCLOSURE: The views and opinions expressed in this article are those of the authors, and do not represent the views of Readers should not consider statements made by the author as formal recommendations and should consult their financial advisor before making any investment decisions. To read our full disclosure, please go to:


Symbol Name Price Change % Volume
AWRY Allegheny & Western Railway Co. 95.00 0.00 0.00 0
CANF Can-Fite Biopharma Ltd Sponsored ADR (Israel) 2.33 -0.02 -0.85 47,836
CELG Celgene Corporation 98.41 0.78 0.80 5,015,945
PFE Pfizer Inc. 32.40 0.12 0.37 17,102,660


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