A Small Cap Play That Solves Pfizer’s Cold Storage Problem

TFF PHARMACEUTICALS—TFFP-NASD:
A (POTENTIAL) SIDE PLAY
ON THE PFIZER COVID VACCINE
GETTING AROUND COLD STORAGE

 
The Market got very excited this week—right before market open on Monday—as global drug giant Pfizer (PFE – NYSE) and their partner BioNtech (BNTX – NASDAQ) announced their mRNA vaccine was 90% effective in preventing COVID-19.

But there are a still a few hurdles before we are back to regularly scheduled life.   Pfizer needs to continue the trial and request emergency use authorization from the FDA. 

But Pfizer is also aware of a potential stumbling block:  The vaccine’s cold-chain storage requirements.

A small cap NASDAQ stock—TFF Pharmaceuticals—TFFP-NASD—may have a solution for that.  And there are indications at least they may already be working together.

 

Pfizer’s vaccine only has a shelf life of a few days at typical freezer temperatures.  To keep the vaccine from spoiling it needs to be kept at extremely low temperatures – minus 70 degrees Celsius.

This could limit distribution.  It opens the door for competing vaccines (it has been reported that the Johnson & Johnson and Novovax candidates do not have this problem) to leapfrog Pfizer and takeaway their head start.

Rural distribution will be a particular problem, as hospitals do not have the resources or equipment for long-term storage.  Even in the big cities, hospitals will have to purchase ultra-cold freezers.  While freezer costs – ($10k-$15k) – are not insurmountable for a large institution, manufacturing those freezers fast enough may be a problem.

Pfizer is already looking at alternatives.  Two days after the vaccine was announced, FiercePharma.com, a biotech focused news site, reported that Pfizer is already at work on a next-gen formula that will alleviate the storage issues.

According to FiercePharma, Pfizer chief scientist Mikael Dolsten said:
“for the COVID-19 disease, I think we’ll roll out next year a vaccine in powder format”

The powder form of the vaccine would be stored at typical refrigeration temperatures.

One question that could be asked is–where Pfizer is going for the technology to powder-form their vaccine?

We don’t know the answer to that yet.  But TFF Pharmaceuticals (TFFP – NASDAQ), with their proprietary process called Thin Film Freezing, could satisfy Pfizer’s need for a powder that gets around ultra-low temperatures.

Their thin film freezing technology encapsulates a drug in a “brittle matrix powder”. 

This powder has a few advantages. 

First, the technology improves solubility in the body.  Solubility is a technical term that simple means how much of the drug is absorbed at the place it is needed. 

Poor solubility is often a show-stopper for what otherwise might be promising drug candidates.

Second and most importantly for the Pfizer scenario, the dry powder from the technology is well-suited for long-term storage without the need for cold chain storage.

Vaccines have been on TFF’s radar as potential product candidates.

In their 10-K, TFF boasts that their platform is a potential solution for vaccines that require much less stringent cold-chains than Pfizer does (2-8 degrees Celsius)

Now let me be clear: so far there is no direct evidence that Pfizer is working with TFF to solve their cold-chain problem.  All we can do is try to connect the dots. 

We know that Pfizer is working on a powder solution for their vaccine.  We know that a powder solution is what the TFF platform delivers. 

And we have some recent comments from TFF that make you wonder whether those dots connect.

It starts with the TFF third quarter conference call. 

Dr. Bill Williams, the inventor of the TFF technology, spoke on the call.  Williams works out of the University of Texas in Austin, as head of the Molecular Pharmaceutics and Drug Delivery department.  Williams is also a consultant for TFF.

The TFF technology was licensed out of the University of Texas at Austin. 

On the call Williams began by listing off several biologics that TFF is currently working on.   mRNA and vaccines were among them. 

Williams then went on to talk more specifically about COVID-19 vaccines that require cold storage, saying:
Cold chain refers to the requirement that a therapeutic product must be maintained at cold temperatures during its storage and distribution, all the way to the point of administration to a patient. 

A relevant example of a biologic product that requires cold chain storage is the mRNA liquid vaccines currently in Phase 3 testing for COVID-19.

He went on to describe how the TFF technology can solve the problem for these vaccines by converting them “into dry powder forms that are stable at room temperature and thus do not require such cold chain storage”.

Nothing was said specifically about Pfizer.  We are left to speculate whether Williams just decided to speak hypothetically about an unrelated case?

Later in the call TFF’s Chief Operating Officer Chris Cano gave more color on projects that TFF has in development.

In particular, Cano highlighted work with a “top-5 pharma company”.  This company sent TFF their “proprietary compound” and “was so pleased with the TFF technology and the work being performed” that they sent TFF a second compound.

The top-5 pharma companies include Pfizer.  Also on the list are Merck (MRK – NYSE), Roche (RO – SWX), Johnson & Johnson (JNJ – NYSE) and Novartis (NOVN – SWX).  GlaxoSmithKline (GSK – LON) comes in a close sixth.

I scraped the newswires and filings for mentions from any of these companies that they were evaluating a powder technology for any of their drugs. 

The only recent hits were from Pfizer and their vaccine candidate.

TFF also noted their pharma partner in a presentation slide that described internal potential programs (see the New Chemical Entities box to the far right):
 
 

Source: TFF Pharmaceuticals Investor Relations

There is also a connection at UT-Austin.  As I said earlier, Williams comes out of UT Austin. On the call Cano made note that the business development efforts, including that of the top-5 pharma company, are supported by their UT Austin partners.

The University of Texas in Austin just happens to be where the team of scientists that co-invented the spike protein being used in the Pfizer trial are from.

Finally, there is the matter of expanded manufacturing.  At the end of October TFF announced that they had “expanded their engagement” with one of their contract manufacturing organizations (CRO), Experic, in Cranbury NJ. 

The expansion will give TFF “the capability and capacity to develop and produce additional products currently in assessment with pharmaceutical company partners” – so the expansion is for one of their new engagements.

Of course, none of this “scuttle” gives investors a definitive answer to whether TFF is the technology of choice for Pfizer’s powder solution.  Even if it is, just how profitable that ends up being to TFF is a whole other question without a good answer. 

As well, Pfizer may not end up with the preferred vaccine, or the trials for a powder solution may just not work.

But if there is indeed a connection here, it would be a validation of the thin film freezing platform.  It would lend support to the very optimistic assessment of CEO Glen Mattes at the end of the third quarter conference call (my highlight):

“We have a remarkable technology that allows us to rapidly investigate, prototype, and develop a wide variety of compounds. The market and potential partners are recognizing our unique capacity and capabilities. And this is creating a world of opportunities for us.”
 
Disclosure: I’m long 1000 shares at $17.50, with a stop loss in at $15.