TFF Pharma: Q3 Data Is Pivotal In So Many Ways (NASDAQ:TFFP)

TFF Pharmaceuticals (NASDAQ:TFFP) works with a novel method of producing dry powder formulation of known drugs. Licensed from UT Austin and initially developed by Dow, this technology has advantages over the two other known dry powder formulation technologies. Like I noted before:

There are competing and time-tested methods of producing dry powder formulations of medicines. Spray drying, which uses heat to cause evaporation, is one – however, this method does not produce adequate porosity for deep lung delivery. Lyophilization is a slower method which does, but it increases risks of molecular degradation and contamination. TFF overcomes the inadequacies of both methods, producing dry powder drugs 100x to 1000x faster than the latter method, and enables deep lung delivery of known-efficacy common drugs.

I covered TFFP thrice last year, and the stock has been something of a laggard, mainly, I suspect, due to a data desert. Today, the company has two programs in phase 2 – TFF Vori for Invasive pulmonary aspergillosis (IPA) and TFF-TAC-LAC for the prophylactic treatment of lung transplant rejection. Other programs are in earlier phases.

Both these projects completed phase 1 proof of concept trials last year. Phase 2 is ongoing; interim analysis is due in 2H 2022.

Voricanozole is already approved to treat aspergillosis in patients 12 years or older. However, the drug comes with significant side effects and loss of function due to the inefficient mode of delivery. An alternative to vori is Oral and IV amphotericin; TFF-Vori has shown 3x better survival than amphotericin in IPA. It is also able to address the disease in children as young as 2 – a result of its better safety profile, doubtless. The company states that “dosages up to 80mg twice daily showed no signs of the clinically significant hepatic or visual toxicities previously reported for the oral or intravenous forms.” As the company also says, Voricanozole comes with a long list of liver and visual toxicities:

Hepatic toxicity, including clinical hepatitis, cholestasis and fulminant hepatic failure, including fatalities

Visual disturbances, including optic neuritis and papilledema

Other research I accessed says:

Voriconazole use has increased since the drug’s introduction in 2002, and new and unique adverse effects are emerging as patients undergo prolonged therapy. Most concerning is the increased risk of cutaneous malignancies, primarily squamous cell carcinoma (SCC); this risk is duration dependent and the associated malignancies tend to be more aggressive and multifocal. Voriconazole is also associated with phototoxicity (which may be a precursor to malignancy), periostitis, hallucinations and encephalopathy, peripheral neuropathy, alopecia, nail changes, hyponatremia, and other adverse effects. Some toxicities (neuropsychiatric and gastrointestinal including hepatic) are seen in clear association with supratherapeutic serum voriconazole levels…

So it is noteworthy that treatment with TFFP’s version of voriconazole did not elicit such adverse responses in patients as of now. However, this is also a matter of concern, going forward.

As earlier research with inhaled vori has noted:

Inhaled voriconazole reduces histological manifestations of invasive aspergillosis in rodents [3] and it has been proposed that a favourable lung tissue to plasma concentration ratio is obtained through this route of administration [4]. Consequently, inhaled voriconazole may provide higher concentrations at the site of infection without increasing the risk of systemic side-effects.

The above cited research produces another cause of concern, one that I have dwelt on earlier in my TFFP coverage. The company needs to be cautious with its intellectual property. They have patents running to 2035, and they have a certain trade secret about the particular cooling temperature – these are the two competitive barriers they have available. However, inhaled vori has been used before – and although their particular method of dry powder formulation is likely novel, I suspect a successful approval will attract generic drugmakers and IP lawsuits.

Coming to TFF-TAC, the clinical development strategy is to ” differentiate inhaled tacrolimus based primarily upon improved safety and fewer drug-drug interactions compared to oral tacrolimus.” In Phase 1 POC studies, the drug was well-tolerated with no significant side effects in healthy volunteers, and a single dose provided “substantial systemic blood levels that approach levels associated with effective immunosuppression in heart, lung, kidney and liver transplant patients.” This is against oral tacrolimus, which is known to produce significant toxicities including malignancies, kidney and neurotoxicities.

The company has major collaborations for its thin film freezing technology with many companies and academic institutes. One that needs to be highlighted is the collaboration with Dr Drew Weissman, of the Perelman School of Medicine at the University of Pennsylvania. Dr Weissman is the inventor of the Pfizer/BioNTech and Moderna COVID-19 mRNA vaccines, and the collaboration aims to use TFF technology on these vaccines. Dr Weissman also sits on the scientific advisory board of TFFP.

In this regard, here’s a key text from their latest earnings call:

Both Phase II studies will produce interim analysis late in the third quarter of this year. This is a key milestone event as these data will be shared with potential pharmaceutical company partners in a licensing process. That process has been initiated working with Torreya Partners to introduce the opportunity to invite interested companies to begin diligence. We have established a comprehensive data room and already have potential partners performing diligence as a result of inbound interest.

TFFP may be planning to outlicense TFF-Vori/LAC in at least some territories, ensuring some revenue in the near term. So the interim readouts are important catalysts.

Financials

TFFP has a market cap of $162mn and a cash reserve of $26mn. For the 3 months ended March 31, 2022, research and development expenses for the company were $5.3 million while general and administrative expenses were $3.2 million. That gives them just enough time to announce interim data; then they have to look for partnerships to stay afloat. This is a seminal risk.

Bottomline

TFFP once looked promising. However, the stock hasn’t done well despite no bad news. However, Q3’2022 is a pivotal quarter for the company. If the interim data looks safe – and they acquire some new partners – TFFP will be okay. If not, investors may lose money.