Azitra, Inc. (NYSE: AZTR) is a clinical-stage biopharmaceutical company at the forefront of precision dermatology. The company's innovative approach leverages its proprietary microbial library and genetic engineering capabilities to develop novel therapeutics targeting a range of skin conditions. With a robust pipeline and strategic partnerships, Azitra is poised to transform the treatment landscape in dermatology.

Business Overview

Azitra was founded in 2014 with the mission of discovering and developing innovative therapies for precision dermatology. The company has built a proprietary platform that includes a microbial library comprising approximately 1,500 unique bacterial strains, which are screened for their therapeutic potential. Azitra's platform also utilizes artificial intelligence and machine learning technologies to analyze, predict, and aid in the screening of these microbial strains for drug-like molecules.

The company's lead product candidate, ATR-12, is a genetically modified strain of Staphylococcus epidermidis (S. epidermidis) designed to treat Netherton syndrome (NS), a rare and debilitating genetic skin disorder. ATR-12 is engineered to secrete an active fragment of the lympho-epithelial Kazal-type-related inhibitor (LEKTI) protein, which is deficient in NS patients. This approach aims to restore the balance of proteases in the skin, thereby mitigating the symptoms associated with the disease.

In December 2022, Azitra submitted an investigational new drug (IND) application for a Phase 1b clinical trial of ATR-12 in Netherton syndrome patients. The company received notification from the FDA in January 2023 that the "study may proceed" with the proposed trial. Azitra expects to report initial safety results from this study in the second half of 2024, with full results anticipated in 2025.

Beyond ATR-12, Azitra's pipeline includes ATR-04, a genetically modified S. epidermidis strain for the treatment of the papulopustular rash experienced by cancer patients undergoing epidermal growth factor receptor inhibitor (EGFRi) targeted therapy. The company plans to submit an IND for a Phase 1b clinical trial of ATR-04 in certain cancer patients undergoing EGFRi therapy by mid-2024, with the trial expected to commence in the fourth quarter of 2024.

The third candidate in Azitra's pipeline is ATR-01, an engineered S. epidermidis strain that expresses a recombinant human filaggrin protein for the treatment of ichthyosis vulgaris, a chronic, dry, and scaly skin condition. Azitra is planning to complete lead optimization and IND-enabling studies for ATR-01 in 2024 to support an IND filing targeted for the second half of 2025.

In addition to its internal pipeline, Azitra has established a strategic partnership with Bayer Consumer Care AG, the consumer products division of Bayer AG. Under a Joint Development Agreement (JDA) signed in 2019, Azitra is responsible for testing its library of microbial strains and their natural products for key preclinical properties, and Bayer holds an exclusive option to license the patent rights to any selected strains. This collaboration has already identified two promising strains that are advancing into further development.

Financials

Azitra's financial performance reflects its focus on research and development. For the fiscal year ended December 31, 2023, the company reported annual revenue of $686,000, primarily from the Bayer JDA, and a net loss of $11,283,781. The company's annual operating cash flow was -$7,362,375, and its annual free cash flow was -$7,680,634.

In the first quarter of 2024, Azitra generated no service revenue, compared to $113,300 in the same period of 2023. The decrease was attributable to a reduction in reimbursable development costs under the Bayer JDA. During the first quarter of 2024, the company's general and administrative expenses increased by 77% to $1,488,527, primarily due to higher payroll and related costs, legal fees, and other overhead expenses. Research and development expenses also increased by 78% to $1,472,970, driven by costs associated with advancing the Netherton syndrome and CTAR programs.

Liquidity

Azitra's liquidity position as of March 31, 2024, included $3.0 million in cash and cash equivalents. Management has expressed substantial doubt about the company's ability to continue as a going concern, as it will require significant additional funding to complete the development of its product candidates and support ongoing operations.

To address its funding needs, Azitra has taken several steps. In June 2023, the company completed an initial public offering, raising $7.5 million. This was followed by a successful $5.0 million follow-on public offering in February 2024 and a $10 million capital raise completed last week. The company may also qualify for milestone payments from its partnership with Bayer, which could further support its research and development activities.

Outlook

Azitra's strategy is to rapidly advance its current pipeline of live biotherapeutic candidates while actively developing additional product candidates. The company's goal is to build a sustainable precision dermatology company with a broad portfolio of product candidates. To this end, Azitra plans to leverage its academic partnerships, explore strategic collaborations, and selectively in-license technologies or product candidates to expand the reach of its platform.

The market opportunity for Azitra's lead candidate, ATR-12, is significant, despite the rare nature of Netherton syndrome. The disease affects fewer than 5,000 individuals in the United States and approximately 20,000 globally. However, rare diseases may benefit from expedited regulatory pathways, financial incentives, and access to patient registries, which can facilitate clinical development and commercialization.

Conclusion

In conclusion, Azitra is a pioneering biopharmaceutical company at the forefront of precision dermatology. With its innovative approach, robust pipeline, and strategic partnerships, the company is well-positioned to address unmet needs in the treatment of various skin conditions. As Azitra continues to advance its lead candidate, ATR-12, for Netherton syndrome and expands its pipeline, it presents an intriguing investment opportunity for investors seeking exposure to the rapidly evolving field of precision dermatology.