Lumos Pharma Inc (NASDAQ:LUMO)

Lumos is focused on the development of a drug, LUM-201, which is designed to treat a rare disease called pediatric growth hormone deficiency (PGHD). PGHD happens in kids whose pituitary glands don’t produce enough growth hormone. They don’t grow as fast (if at all) or tall as a result. The lack of GH retards sexual maturity, and also causes other symptoms like low bone density and high cholesterol.

The treatment for PGHD usually involves daily injections. Lumos, however, has developed a more convenient oral drug that promotes growth hormone secretion by the pituitary gland.

LUM-201 already has been studied in 1,200 patients both young and old and found to be generally well tolerated. LUM-201 may be more effective, too. Lumos presented at the Endocrine Society’s annual meeting this week. The data the company presented at the scientific meeting shows that its drug produces a greater GH response than standard therapies used to treat this condition.

Lumos launched a Phase 2b trial late last year and will launch an additional trial next quarter. Trials will begin to read out by the middle of next year.

The company also plans to expand beyond PGHD to include other parts of the human growth hormone market. This market is estimated to be worth as much as $3.4 billion worldwide.

The company’s market cap is $102 million after yesterday’s sell-off, and the company reports $98.7 million on its books as of its fourth-quarter filing. That figure doesn’t include the $26 million the company received in 2021 for its 60% ownership in developing an Ebola vaccine.

Upon approval, the FDA granted Lumos a priority review voucher for developing the Ebola vaccine. These vouchers allow a developer to accelerate the review period the FDA undertakes for approval. It can be very valuable for a drug company that wants to rush to market first. Lumos was then able to sell the voucher to Merck, which finished its second payment early this year.

If we include that sum, Lumos is actually trading for less than cash. This means the market is valuing its developmental pipeline and other assets at essentially zero despite the fact that the company is targeting an initial market in PGHD potentially worth over $1 billion.

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