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Buy Windtree Therapeutics For Its Innovative AEROSURF Technology.


Initiating coverage on Windtree Therapeutics (NASDAQ: WINT) with Buy rating and common stock price target of $ 5.34 to $20.97.

The upcoming catalyst of phase 2b results of AEROSURF in respiratory distress syndrome of the newborn might provide near-term boost to the common stock price.

Risks in the investment include risk of failure of clinical trials, rejection of the drug by regulatory agencies and lack of adoption by clinicians.

In this article, we are initiating coverage on Windtree Therapeutics (earlier known as Discovery Labs), (NASDAQ: WINT), a company that is focused on its proprietary synthetic surfactant (KL4 surfactant) that is delivered non-invasively using novel technology (AEROSURF) through CPAP machine as alternative to only CPAP therapy or CPAP failure requiring invasive mechanical ventilation in premature infants born with respiratory distress syndrome (RDS). We have a Buy rating on the common stock with a price target of $ 5.34 - $20.97

Investment Highlights

Stock price target=

Current Stock Price=

$ 5.34 - $ 20.97

$ 2.51

52-week stock price range=

$ 1.42- $18.20

Market Cap=

$ 20.56M

Enterprise Value =

$ 7.8 M

Fully diluted share count=


Average daily share volume=




Short Interest=

Short Interest, days to cover=

$ 38.7 M (till Q1,17)

$ 25 M



Click to enlarge

Figure 1: Common stock price chart for Windtree Therapeutics

Background:: RDS of the newborn is frequently seen among prematurely born infants. The surfactant is a phospholipid that lines the alveolar walls and helps to reduce the alveolar surface tension and thus, keep the lung alveoli open. The natural surfactant is expressed in the fetal lung in the third trimester of pregnancy and therefore, is not fully developed in prematurely born infants (<37 weeks), who develop respiratory complications like lung collapse. Because of the developmental regulation of surfactant production, the most common cause of surfactant deficiency is preterm delivery. In addition, mutations in the genes encoding surfactant proteins SP-B and SP-C and the ATP-binding cassette transporter A3 (ABCA3) may cause surfactant deficiency and/or dysfunction in the newborn leading to RDS.

The traditional approach to the management of RDS in newborn is antenatal administration of gluco-corticosteroids (which enhance lung maturation in the fetus), intubation of the newborn and administration of surfactant therapy through the endotracheal tube, and non-invasive positive pressure ventilation (like CPAP, continuous positive airway pressure machine that delivers high pressure in the airways through a nasal or face mask and keeps them open). In animal models, absence of surfactant has been shown to be associated with accumulation of neutrophils (inflammatory cells) in the lung and pulmonary edema (swelling of the lung parenchyma) (source). The risk of RDS increases with earlier gestational age at birth. In a report from the Safe Labor Consortium of 233,844 deliveries from 2002 and 2008, RDS was diagnosed in 10.5, 6, 2.8, 1, and 0.3 percent for infants born at 34, 35, 36, 37, and ≥38 weeks gestation, respectively (source). A study from the National Institute of Child Health and Human Development Neonatal Research Network found 93 percent incidence of RDS in a cohort of 9575 extremely preterm infants (gestational age 28 weeks or below) born between 2003 and 2007 (source).

Surfactant therapy in newborn RDS helps to shorten the clinical course, prevent complications and improve lung function. Earlier synthetic surfactant preparations lacked surfactant B activity and therefore, were found to be inferior to natural (bovine or porcine) surfactant preparations. Surfactant administration however requires intubation of the trachea and initiation of mechanical ventilation. About 90,000 prematurely born infants are treated annually with animal surfactant preparations in the U.S.

The 2014...