Prima Biomed: This Former Runner Could Repeat Its Epic...

Prima Biomed: This Former Runner Could Repeat Its Epic Performance

Oct. 9, 2017 7:02 AM ET
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2 comments
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About: Prima BioMed Ltd (PBMD)


Jonathan Faison

Long only, biotech, event-driven

(5,027 followers)
Summary

The stock is a former runner that I am very familiar with, having traded it the first time it ran up a few years back.
Data for the company´s LAG-3 candidate may have been somewhat derisked due to validation from much larger competitor Bristol-Myers Squibb.
Their June financing appears to have taken dilution risk off the table, for now.
There are several important catalysts coming up in the near and medium term which could cause history to repeat itself.
Shares of Prima BioMed (PBMD) have fallen 20% year to date. The stock first popped on my radar for a trade back in 2015 when it skyrocketed above $9 and was a favorite of daytraders and momentum traders alike.
PBMD data by YCharts
When following the ROTY strategy, it helps to keep track of stocks that have run up significantly in the past and the factors that led them to do so. Often after enough time has passed, these stocks can put on a repeat performance.
Back in June the company reported data from a mid-stage randomized, double-blind study of clinical candidate IMP321 in metastatic breast cáncer. The study enrolled hormone receptor-positive MBC patients who then received the study drug or placebo in addition to first-line weekly chemotherapy (paclitaxel). Both dose levels of IMP321 (6 mg and 30 mg) were observed to be safe and well tolerated, while the latter dose resulted in a stronger immune response and was chosen as the recommended dose for the randomized portion in 226 patients. Safety run-in data showed a disease control rate of 87% for IMP321 in combination with paclitaxel, leading to a sustainable increase and activation of antigen presenting cells which in turn led to an increase in CD8 T-cell and killer cell numbers.

Figure 2: LAG-3 Centered Pipeline (source: corporate website)
Later in June the Company announced a $5 million direct offering of American Depositary Shares with pricing at $1.90 per ADS. Additionally, warrants were issued to buy up to 1,973,451 of their ADSs, with an exercise price of $2.50 per ADS. Warrants can be exercised immediately (no lock-up period) and will expire 5 and a half years from their issue date. Together with a $1 million milestone payment from Novartis (NYSE:NVS), management believes they have a cash runway into the fourth quarter of next year.
There are several important catalysts coming up. Patient recruitment for the randomized portion of the phase 2 study in metastatic breast cancer should finish up in the first half of 2018, but in the meantime we can expect final safety run in data in the fourth quarter this year. Also, data from the first and second cohorts of the TACTI-mel phase 1 Australian study in metastatic melanoma evaluating IMP321 in combination with Keytruda will be presented prior to year end at major medical conferences. Data from all three cohorts will be presented in the first half of next year.
The company will be presenting on October 31st at the World Immunotherapy Congress and also in the beginning of November at the Society for the Immunotherapy of Cancer Annual Meeting.
Cash balance as of June 30th was A$12.3 million, which again management has guided to be sufficient to last into the last quarter of next year.
I´d also point out that in June Bristol-Myers Squibb announced promising data for its anti-LAG-3 candidate BMS-986016 in combination with Opdivo in heavily pretreated advanced melanoma patients who were relapsed or refractory on anti-PD-1/PD-L1 therapy. Patients with LAG-3 expression (n=25) in at least 1 percent of tumor-associated immune cells within the tumor margin had three times more improvement in ORR as compared to those with less than 1% LAG-3 expression (20 percent versus 7.1 percent, respectively).

Prima Biomed is a Buy.
Readers who are interested in the story and have done their due diligence could initiate their pilot position in the near term and adopt a ¨buy the dips¨ strategy.
PBMD data by YCharts
One risk is negative data for ongoing trials involving IMP321, especially with readouts in the fourth quarter. Data from competitor Bristol-Myers Squibb has provided validation for targeting LAG-3, but there is still the possibility of disappointing results. While management has guided for an operational runway into the fourth quarter of next year, I believe the risk of dilution is still substantial and a secondary offering could occur in the first half of 2018. Another risk could be setbacks with enrollment involving current studies.
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