Summary
Clementia’s key drug development, Palovarotene, is a RARy being tested for the treatment of FOP and is set to finish phase 3 trials at the end of 2020.
As past trials have proven effective to reduce heterotopic bone formations, I believe the company’s probability of an FDA approval in 2020 exceeds 50%.
Alongside the practical uses of this revolutionary, breakthrough therapy designated product, an analysis of disease prevalence and similar rarity drug pricing, I believe the company is well undervalued.
Even as risk is high, given the FDA is yet to approve the drug for commercial use, current market patterns call for either an independent operating environment or an easy takeover target yielding high upside potential for patient investors.
Introductory article with valuation metrics for future revenue streams.
Clementia Pharmaceuticals (NASDAQ:CMTA) is a pharmaceutical company that focuses on the development of Palovarotene, for which it acquired the full rights from Roche Pharmaceuticals (OTCQX:RHHBY) back in 2014 with help from venture capital firms.
Business Overview
The company’s primary drug development is called Palovarotene, which is a Retinoic Acid Receptor Gamma (RARy). This reduces BMP signaling, inhibiting SMAD degradation for people suffering from Fibrodysplasia Ossificans Progressiva, or FOP – a disease that creates heterotopic bone formations where healthy tissue should be, severely limiting overall movement and ultimately leading to an early death.
The company is currently running an 80 person phase 3 trial which it began late last year and which is expected to end in September of 2020. The trial runs through 5mg doses of once daily Palovarotene for 24 months and then increased to 10mg daily for another 6 months, depending on treatment for chronic FOP of flare ups, according to the participant’s classification.
The company’s drug is also being tested for the treatment of multiple osteochondromas and Dry Eye Disease, affecting 1 in 50,000 people and 8% of the population, respectively. As the drug’s effects were proven positive in previous trials, they’ve received a breakthrough therapy designation
