By: Dylan Sikes - AllPennyStocks.com News

Tuesday, February 4, 2014

To some, the world is on the edge of a bacterial precipice and that we desperately need new drugs now. It’s not hard to peruse the web and find articles stretching back a number of years pounding the table for new antibiotics as bacteria continue to demonstrate resistance against standards of care today. This is more than just fear mongering, the reality is that a bacterium represents a real threat going forward if new treatments aren’t developed and approved in the near future. Over the years, many big pharmas have walked away from developing antibiotics and relied upon licensing and acquisition deals of smaller firms. This has played nicely into the hands of some smaller biotechs, like InSite Vision Inc. (OTCBB:INSV) to generate revenue as it continues to develop other products in its pipeline. InSite is in the ophthalmologic business, an area that has many areas of great unmet medical need that often flies under the radar of investors for its potential.

Not only can common conditions, such as conjunctivitis (pink eye) and keratitis, be caused by bacteria, but also, amongst other things, bacterial infections can wreak havoc for people that wear contacts for too long or people that have had eye surgery. While often times only temporary, they can involve moderate or intense pain and discomfort and sometimes cause permanent damage.

InSite’s products are centered on its DuraSite platform, creating drug delivery systems that extend the length of time that drugs are retained on the surface of the eye. This is an important quality because it can improve the efficacy of a drug and help with patient compliance. One of the big contributors to antibiotic drug resistance is patients not completing a full course of therapy, allowing the bacteria to linger in the body and mutate into different strains that today’s drugs cannot kill. If you’ve ever wondered why your physician says to take your medicine until it is gone, no matter how healthy you feel; completely destroying the bacteria is the reason.

By creating drugs that are more efficacious and require less dosing, patient compliance can likely be increased. Ultimately, developing a single-dose antibiotic is the Holy Grail because it effectively eliminates the risk of non-compliance.

Further, the eye is extremely efficient at eliminating topical medications (up to 90% of medication in an eye drop is lost within 30 seconds), highlighting the importance of InSite technologies.

The InSite platform is in the commercial marketplace. Akorn Pharmaceuticals (Nasdaq:AKRX) markets AzaSite® 1% and eye care giant Bausch & Lomb, which was acquired by Valeant Pharmaceuticals last year for $8.7 billion, markets Besivance® for pink eye. Additionally, the company is in late-stage clinical trials for AzaSite Plus™ and DexaSite™ for the treatment of eye infections and is also preparing a New Drug Application to seek regulatory approval for BromSite™ as a prophylactic for pain and inflammation associated with ocular surgery.

On Tuesday, InSite said that sales of Besivance in 2013 hit a predefined level to trigger a $1 million milestone payment from the royalty purchasers, SWK Funding LLC, a subsidiary of SWK Holdings Corp (OTCBB:SWKH), and Bess Royalty LP. That brings the total InSite has received from the licensing agreement to $16 million to date. Based upon the agreement, future sales of Besivance can result in a portion of the royalty returning to InSite and potentially the full royalty.

It’s an interesting dynamic for a small biotech to be in late-stage development with several products, have an NDA in the works and have other products already on the market, yet be trading with a $33.65 million market capitalization. Wall Street isn’t responding to the $1 million payment news today, with shares trading down by 3.5 percent at 25 cents as the day draws near to the closing bell. On the bright side, it’s been a good six months for INSV, with shares rising from around 15 cents, including hitting a multi-month high of 33 cents in December.

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