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On April 20th, ContraVir Pharmaceuticals (NASDAQ:CTRV) presented at the European Association for the Study of the Liver (EASL) in Amsterdam, the Netherlands. By the time the market closed on the 20th, CTRV had dropped nearly 7% to $1.50. Needless to say, what CTRV presented was not what the market was looking for. However, that does not mean that what was presented was bad.

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The phase 2a trial was designed to evaluate the effectiveness of TXL compared to TDF (Viread); it was a multiple ascending dose proof-of-concept trial. It was a 28-day trial with six cohorts (originally four) involving 12 HBV infected patients with a randomized 10:2 TXL-Viread drug distribution. It has so far presented data from the four original cohorts at the EASL; all six were expected by the market. The trial has so far shown that a 100mg dose of TXL has a mean viral load of (Log10 IU/mL, 3.63 + 1.68) (mean + SD) while a 300mg dose of Viread only has a mean viral load of (Log10 IU/mL, 3.75 + 1.17) after 21 days of treatment.

In our original article on CTRV, we talked about EASL and what investors were expecting from it. CEO James Sapirstein said in an interview that the company was hoping to present new data from the latest cohorts at the EASL. So far, we have not received any information on the new cohorts. It is possible that the data from the new cohorts from the phase 2a trial will be released during the other two presentations on the 22nd. However, since the new cohort data did not come today during the presentation about the phase 2 trial, it is very unlikely the company will release it during the other two presentations.

No new data was in the P/R; all we know is that the company says the data is positive and that more information is to be presented at the EASL. We also know that the company has the data it needs from the trial to prove that a 25mg-100mg dose of TXL has a similar viral load reduction to the standard 300mg dose of Viread. The drug proved it worked in the trial better than Viread.

“The data demonstrated that TXL™, at all doses tested, resulted in substantially lower systemic circulating levels of tenofovir in the blood compared to Viread®. These results demonstrate the potential for TXL™ to reduce the risk of bone- and kidney-related toxicities associated with Viread®.” – ContraVir’s most recent press release

So far there has not been a lot of information presented about the phase 2a trial during the EASL. Out of the six cohorts, we only got four of them; the other two are still either being tested or have not been presented yet during the EASL. CTRV is not done yet; it is still going to be presenting two poster presentations, one about CRV431 and the other one about CRV431 combined with TXL. The presentation will go from 2AM to 12PM Eastern Time and will be presented by Robert Foster, the chief scientific officer. These are still positive catalysts with potential to lighten the current underwhelming information we have got.

Currently, CTRV has just over $6 million in cash and equivalents as of its latest 10-Q. Also, the company has a cash burn rate of around $4 million a quarter. In my opinion, this points to a very high chance of dilution as the company will need to raise money somehow eventually. On January 9th, James Sapirstein said this during an interview:

“We raised some money through NATM late last year so we do have enough cash on hand to get us through the milestones which I’m about to mention. We’re going to conclude our phase 2a study with TXL and then we’re going to do a couple of other smaller studies.”

If we believe the CEO, the company will not dilute until after the phase 2a trial is completed. The phase 2a trial has not been completed yet since we are still waiting on the two new cohorts, but the cash situation for CTRV is looking very grim, and it is in serious need of funding. I personally do not trust the CEO anymore since he has so far not been able to present data from the two new cohorts when he said he would present during the EASL. The risk of dilution is very real according to the numbers.

While it is true that CTRV is in a bad cash situation and the market was disappointed overall by what was presented on the 20th, there is still hope that the company will present positive news on the 22nd to offset this light news.

Disclosure: I/we have no positions in any stocks mentioned, but may initiate a long position in CTRV over the next 72 hours.

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.

Editor’s Note: This article covers one or more stocks trading at less than $1 per share and/or with less than a $100 million market cap. Please be aware of the risks associated with these stocks.

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