GlobeImmune Inc (OTCMKTS:GBIM): Last Chance Saloon

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For the last twenty four months, Colorado based GlobeImmune Inc (OTCMKTS:GBIM) has been one of those stocks that nobody wanted to talk about holding. It fell from $15 a share back in August 2014, to lows this year somewhere in the region of $.70, losing more than 95% of its value and picking up a NASDAQ de-registration in the process. For the last few months, it seemed as if markets had given up on the stock, with volume effectively nonexistent and financial press steering well clear of any sort of analysis of what’s going on. Over the last 10 days or so, however, GlobeImmune went from being $.70 to trade at a September 26 close of $1.45, and has now settled in the $1.35 range. That’s more than 100% across the period, with no obvious fundamental or technical drivers behind the action.

We think we know what’s causing it, however, and in turn, we think we’ve uncovered an opportunity to get in a head of the wider markets on what might be a nice upside catalyst for the company during the final quarter of this year.

First, a bit of background. Back in 2011, GlobeImmune announced a deal with Gilead Sciences, Inc. (NASDAQ:GILD) that would see the two companies jointly investigate the efficacy of a combination treatment, using GlobeImmune’s GS-4774, and Gilead’s already approved Viread, in a hepatitis B indication. The latter is an established treatment for hepatitis B, but  in chronic sufferers, the finite nature of available treatments can be an issue. Patients become immune to the treatment in question, and need to shift to another option. Gilead had hoped that by mixing its currently available option with GS-4774, the company could extend the life cycle of its product as an available treatment for chronic sufferers.

The theory and science seemed sound, and the confidence expressed in support of the partnership made the deal look like a good investment thesis. Fast-forward a few years, however, and things haven’t quite gone as planned. Phase I data looked strong, but a phase II failed to meet its primary at a twenty-four-week measurement, as announced in May last year. The company collapsed on this news, and it didn’t look as though anything would come of the treatment moving forward. However, forty-eight-week data from the trial is set to hit press during this half of 2016, and we think the data might be about to be presented at an upcoming conference. If so, this is a strong indication that the data is positive (it’s rare that a company will present negative data at an established conference).

The meeting is The Liver Meeting, and it’s in Boston, MA, on November 11 – 15. Gilead has submitted (and had approved) the following oral abstract:

Safety and Efficacy of GS-4774 in Combination with TDF in Patients with Chronic Hepatitis B not on Antiviral Medication

We have to ask this question: why would Gilead get on stage and present the failure of one of its experimental collaboration candidates (GlobeImmune’s 4774) to one of the leading hepatitis B conferences on the calendar?

Data at twenty-four weeks may have missed the mark, but if the company has spotted a reversal of this result at the extended timeframe, this conference would be a great stage from which to point it out. Combine this with GlobeImmune’s expectations of this coming quarter being the company’s pre defined data release quarter, and we’ve got a pretty strong bullish thesis on our hands.

Now, it’s worth mentioning, that this is basically do or die for the company.

If this data doesn’t come out as indicative of efficacy, GlobeImmune is done:

“The Company believes it has sufficient cash to operate the company as a going concern through the middle of 2017 as it continues to evaluate strategic alternatives. If a strategic alternative is not found in the near future, we could decide to wind down the operations of the Company which will consume cash faster than currently planned as a going concern.”

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If the data comes out as a hit, however, there may be some renewed interest in the asset. Gilead might even buy the asset (likely, by way of the company) outright.

Subscribe below and we will bring you our interpretation of Gilead’s presentation as it hits press!

Disclosure: We have no position in GBIM and have not been compensated for this article.

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