Tagging some who may be interested @ddwn@Showtime@coeusthinks@mrdingo
FYI I'm not telling you to buy into anything, I'm just hoping to garner some discussion (both highlighting potential and risks) among those who have an interest in the cell therapy space because the CAR-T (cell therapy) is just starting to take off globally and will be a dominant part of cancer treatment going forward. It has the added benefit of being somewhat further down the FDA line of acceptance with 5 already approved CAR-T therapies. So all the talk about potency assays that MSB is struggling with will be less of an issue here.
Paul Hopper founded both IMU and CHM, except IMU is in oncolytic viruses and CHM is in cell therapy, and for now specifically in the CAR-T space. Both IMU and CHM are targeting solid cancers for now, but they can branch out to blood based cancers (although all 5 approved CAR-T's are in blood cancers).
Here is a high level investment case for CHM
1. Timing is everything: IMU as an example has been raising capital for years at extremely low valuations.. they have 5.3 billion shares on issue. While they are a little closer to approval, they've had to start from scratch and develop and raise capital when the CAR-T space wasn't yet validated, hence valuations were very low. CHM is a newly listed ASX entity and has 330m shares on issue fully diluted. It is starting its corporate life when the CAR-T space has already been validated and so any progress will be handsomely rewarded in valuation (IMU case in point), so any future cap raise (expected mid to late next year) will be a lot less dilutive compared to when IMU was at a similar stage. Makes a huge difference when it comes to risk/reward and return on capital and can easily be demonstrated by looking at the difference in market caps of IMU being A$2bn, and CHM being barely over A$100m. With CHM holding assets which are just as, if not more compelling than IMU and are targeting a much larger market than IMU, and from a trial perspective.. CHM is not that far behind. So if these phase 1 read-out demonstrate any efficacy.. there is a lot of capacity to increase CHM's market cap in a very short space of time.
2. Assets are compelling: CLTX (2nd gen) is the asset (CAR-T) CHM was founded on. To appreciate what it can do, you need to look at the rest of the CAR-T field. In summary, all other CAR-T's use a receptor to target one or two targets on a tumor. This works well for blood cancers which have these targets well distributed across all their tumor cells i.e. they are homogenous. Solid cancers, and in particular glioblastoma are extremely heterogenous i.e. highly diverse cancer cells, adaptive and able to mutate. Glioblastoma (GBM) is a brain tumor which has an average life expectancy after treatment & relapse of approximately 6 months. So far, nothing has worked in the CAR-T or any other space because they only target one or two targets, so what happens is after those cancer cells who have those targets die.. the others who don't have it just grow back and your treatment is then useless (called antigen escape). CLTX is the first in kind in that it uses Chlorotoxin (derived from scorpion venom) as it's targeting receptor. What's special about Chlorotoxin is that it has been extensively used as a staining agent to help GBM show up on scans, and surgeons to operate etc. This is because Chlorotoxin has a natural ability to bind to a large proportion of GBM cells extremely well, and is extremely safe to use in the brain and elsewhere in the body. So the City of Hope thought to take Chlorotoxin and attach it to a CAR-T as the element to bind onto GBM (using its natural ability) and thus allow the immune system to recognise and then destroy it. Pre-clinical studies have shown CLTX to eliminate GBM cells completely. That's unheard of. They are going to start a new phase 1 next year exploring a few more solid tumors that CLTX has shown to bind very well too (I'll talk about this later).
The other asset is newly acquired and is a 3rd gen CAR-T, so slightly more advanced in make-up. This is targeting a single antigen called CDH17 which is highly expressed on solid tumors such as gastrointestinal, colorectal, pancreatic and gastric cancer. CDH17 is hidden in healthy cells, but once tumors break through healthy tissue, this CAR-T targets the CDH-17 on the tumor cells. So safety should be very good given the CAR-T can't find CDH17 on healthy tissues, as such cannot damage / attack them. What the pre-clinical data has found is that this third gen CAR-T totally eliminated the cancer cells with no relapse (see the green line below).
Again unheard of.
See the below slide to see the market opportunity just for this newly acquired asset.
3. Near market opportunity:So far there are 5 FDA approved CAR-T therapies since 2017 and all are in blood based cancers which are easier to tackle. 4 of which were given accelerated approval after a phase 2 trial (ranging from 63 - 128 patients), and one in a phase 1 trial (268 patients). The reason for this is because CAR-T therapy offered a genuine paradigm shift in clinical treatment for cancer patients. Survival and remission rates using CAR-T's were so much better than conventional treatments such as Chemo, that the FDA will provide accelerated approval. So while CHM's pipeline looks immature, the pivotal/registrational/approvable trial is at the end of a relatively small phase 2 trial. There are no treatments for any of the solid tumors listed in CHM's pipeline, so the FDA is likely to offer the same accelerated approval if any treatments make significant improvements to patient outcomes.. and with life expectancy being extremely poor in solid cancer patients, the bar is relatively low. Below is their current pipeline.
Also note that they appointed their CRO yesterday, who will be running the CLTX clinical trial and opening up new trial sites this year to ramp up recruitment into the phase 1 trial.
4. Elite management:Paul Hopper went out and head hunted each and every one of these people. They have worked on 25 cell therapies, and 4 of the 5 FDA approved CAR-T's. This is a far cry from other small biotechs who do not have that level of experience in commercialising cell therapy in the US. And some of know first hand how difficult it can be. The management team and Board they've put together for a newly listed ASX entity is impressive to say the least, and for these people to leave their jobs to join CHM says something about the assets and approach being taken. Jennifer Chow has recently been made CEO/MD of CHM after what I suspect a trial run since she joined in Nov20, and she's really made the role her own. 20+ years experience in cell therapy, impressive experience, passionate, and very well spoken.
5. M&A activity is hotIn Aug17; Kite pharma was acquired by Gilead for US$12bn after they filed their BLA in Mar19... the FDA approved Yescarta in Oct17.
In Jan18; Juno was acquired by Celgene for US$9bn, and Bristol-Myers-Squibb acquired Celgene in Nov19 for US$95bn. Breyanzi and Abecma (most recently approved) both came from Juno.
In Apr20 US$100m upfront and US$3bn total offered for partnership with Fate therapeutics / Janssen partnership.
In Jan21, US$90m upfront and US$1.8bn total offered for Artiva / Merck partnership.
(20min delay)