The 4D Pharma (LSE:DDDD) share price surged by nearly 10% this morning after management revealed the latest data from one of its five flagship clinical trials. Given the direction of the stock, I think it’s fair to say investors are pleased. But is this just a short-lived boost, or is this the start of a long-term growth explosion? Let’s dive in.
The driver behind the 4D Pharma share price
This morning the early-stage biopharmaceutical group released new data from its Phase 1/2 MRx-4DP0004 clinical trial. This is a new drug aimed at helping patients suffering from asthma. And the results were promising, to say the least.
Some 83.3% of patients who received the drug saw an improvement, and 50% of this group reduced their use of SABA inhalers. By comparison, these numbers drop to 56.3% and 18.8% respectively, for subjects who received a placebo.
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Needless to say, it would appear the firm’s drug is working. And with no severe health side-effects detected, management has decided to proceed with the next stage of the clinical trial.
There are already plenty of asthma treatments available, which raises the barrier to commercialisation for this drug. Why? Because 4D Pharma will need to prove that its solution is better than what’s already available. It’s too soon to determine if this is the case. And we probably won’t find out until phase 3 trials begin.
However, suppose the results continue to be positive throughout the rest of development? In that case, the 4D Pharma share price jump today could be the start of an explosive long-term journey of growth. Why? Because asthma treatments have a multi-billion dollar addressable market size. And when compared to the group’s current £59m market capitalisation, the growth opportunity becomes crystal clear.
Taking a step back
As exciting as the explosive opportunity for the 4D Pharma share price is, there’s no guarantee of success. In fact, there’s already evidence of a potential problem.
All the data from clinical trials is gathered and analysed using complex statistical models that return something called a p-value. Without getting too deep into mathematics, a p-value essentially represents the probability of the results being wrong. And in the case of MRx-4DP0004, that probability is 8.8%.
Is that bad? No. Is it good enough? Also no. In most cases, medical regulators demand a p-value of less than 5%. And I don’t think it’s wise to assume 4D Pharma will be an exception. In other words, the clinical trial data from phases 2 and 3 need to be better for this treatment to have a chance of making it to market.
To buy, or not to buy?
This company is not a one-trick pony by any means. Like I said earlier, 4D Pharma has four other drugs in development that offer equally outstanding growth opportunities for its share price.
However, these other treatments are also in early-stage clinical trials. And it could be years before anything is ready to submit to regulators. That’s a long time for something to go wrong, especially since the group doesn’t generate any revenue at the moment.
Personally, I’m not going to be adding any shares to my portfolio today. But I will be keeping an eye on progress moving forward.
