Aerpio Pharmaceuticals: Eye Spy An Opportunity


  • Recent “failure” of lead compound opens up new windows.
  • Let’s talk about the pipeline; new methods of attack, first-in-class.
  • Existing partnership could generate 10x current market cap in milestones and royalties, not to mention a portion of sales proceeds.
  • Other comforting facts. (A dozen more reasons why I think now is the time to invest).

According to Aerpio Pharmaceuticals (ARPO) website, they are a bio pharmaceutical company focused on advancing first-in-class treatments for ocular diseases.

Personally, I think the description is far too narrow and base my opinion on both the company’s recent strong secondary readouts from a “failed” drug trial and its partnership with Gossamer Bio (GOSS).

While it was the initial one-day 71% haircut on March 18, 2019, that first put this company on my radar (ultimately bottoming out at $.88 on March 29), it was the value proposition the drop created that had me buying in.

Here’s the company’s current pipeline:

ARPO pipeline

Figure 1: Product Pipeline (Source: ARPO website) with annotations by author

Now, let’s talk about above pipeline.

I. Drug: AKB-9778

AKB-9778 is a small molecule inhibitor of VE-PTP, the most critical negative regulator of Tie2 in diseased blood vessels. AKB-9778 binds to and inhibits the intracellular catalytic domain of VE-PTP that inactivates Tie2. Inhibition of VE-PTP has shown the ability to activate the Tie2 receptor irrespective of extracellular levels of its binding ligands, angiopoietin-1 (agonist) or angiopoietin-2 (antagonist), and may represent the most efficient pharmacologic approach to restoring Tie2 activation.

The Tie2 pathway was discovered 20 years ago. Since that time, considerable scientific evidence has established active Tie2 as a key regulator of vascular stability.

AKB-9778 restores Tie2 activationFigure 2: Inhibiting VE-PTP with AKB-9778 restores Tie2 activation and endothelial cell stability even in absence of Ang1 (Source: ARPO Corporate Presentation dated April 10, 2019) with annotations by author

When one window closes (“A”), others open (“B” and “C”)

A) AKB-9778 for Non-Proliferative Diabetic Retinopathy (“NPDR”) Status: CANCELLED

On March 18, 2019, the company revealed its TIME-2b trial for the treatment of NPDR had failed to meet its primary endpoint: To improve underlying Diabetic Retinopathy by 2 or more steps on the ETDRS Diabetic Retinopathy

Disclosure: I am/we are long ARPO. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

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