ALLO - Allogene Therapeutics: A Promising Biotech With A Concerning Lag Time Ahead

2024-01-08 00:00:11 ET

Summary

• Allogene Therapeutics is developing allogeneic CAR T-cell therapies for cancer management, offering advantages over autologous therapies.
• ALLO-501A, a CD19-directed CAR T-cell therapy, is in phase 2 trials for B-cell lymphomas and has shown promising early signals of activity.
• While their cash pool is healthy, it's going to take a long time to reach the next milestones, and the market may not be so patient.
• I think there is likely to be a better entry point for ALLO than at a $500 million market cap in the near future.

Topline Summary

Allogene Therapeutics ( ALLO ) is a biotech working on developing a "next generation" of chimeric antigen receptor [CAR] T cell therapy for cancer management. Specifically, they're one of a handful of companies working on CAR T-cell therapies that don't come from cancer patients, but from healthy donors. This offers some distinct advantages, but the question for you is whether this technology is worth investing in, especially after new data at last year's ASH. Let's explore this cell therapy company.

Pipeline Overview

ALLO-501A

The product furthest along in the pipeline for ALLO is ALLO-501A, a CD19-directed CAR T-cell therapy currently in phase 2 trials for B-cell lymphomas (where multiple autologous CAR T-cell therapies are currently approved).

In a separate phase 2 study, ALLO-501A is being given after lymphodepletion which includes another ALLO candidate, ALLO-647. This is an anti-CD52 antibody that is intended to deplete the patient of CD52-positive immune cells , with intention of deepening the depletion of the immune system in anticipation of receiving the CAR T-cell therapy.

In a study presented at ASH 2023 , addition of ALLO-647 to lymphodepletion before ALLO-501 was feasible, with low risk of high-grade toxicities like CRS and ICANS that remain an issue for approved CD19 CAR T-cell therapies. Earlier in the year, the company presented findings at ICML highlighting early signals of activity for ALLO-501, with an ORR of 58% among patients with B-cell lymphoma who had not had prior CAR T-cell therapy.

Interestingly, the time from enrollment to receiving treatment was just 3 days, highlighting an important time factor in the use of allogeneic therapies (approved CAR T-cell treatment takes on the order of weeks to be manufactured and given, assuming it can be made at all).

ALLO-605

ALLO-605 is the first of ALLO's so-called "TurboCAR" platforms to reach clinical study. It is targeted against BCMA, an important antigen in multiple myeloma therapy. By incorporating a "Turbodomain" that helps to selectively activate the CAR T-cell, ALLO hopes to circumvent issues relating to long-term persistence and activity of the donated T cells.

This product is currently being evaluated in a phase 1 trial called IGNITE, which is expected to be complete in July 2025 but will likely provide some interim readout later this year.

ALLO-715 is another BCMA-targeted allogeneic CAR T-cell therapy being studied in refractory myeloma. In a 2023 Nature Medicine publication, findings from the ongoing phase 1 UNIVERSAL study showed moderate risks of high-grade CRS (55.8%) and neurotoxicity (14%). However, 70.8% of the 24 patients who received the ALLO-647 lymphodepleting regimen and 320 x 10^6 cells achieved a clinical response, with median duration of response of 8.3 months.

These findings are encouraging in a preliminary sense since we're talking about a population of patients that has exhausted almost all other alternative therapies.

Other Pipeline Projects

For the sake of brevity, I wanted to focus this article on projects in clinical trials. However, it is worth noting that ALLO has a number of other allogeneic CAR T-cell therapies in development, including those targeting Claudin18.2 and CD70, among others, with potential implications for treatment of gastric and renal cancers, etc.

Financial Overview

As of their latest quarterly filing , ALLO held $473.5 million in total current assets, including $69.2 million in cash and equivalents and $396.3 million in short-term investments. Their operational expenses, meanwhile, reached $63 million, and after interest and other expenses, the net loss for the quarter was $61.3 million, down substantially from the same quarter 2022.

At this current cash burn rate, ALLO has between 7 and 8 quarters of cash left to fund operations. These holdings do take into account the $91.1 million in proceeds from selling shares over the course of 2023 under their sales agreement with Cowen and Company.

Strengths and Risks

Upwards of 2 years of cash is good to have on hand, but it's not quite that much for a company that's only in phase 1 trials, even if they're talking plans for starting up big, phase 3 studies. We don't have those yet. All we have is preliminary, though promising, findings from very early studies.

Don't get me wrong. The time from enrollment to treatment is really impressive for a cell therapy, enough so that it gives me pause to wonder about what's really possible and what we should be demanding from this approach in cancer medicine. However, ALLO's approach is far from proven here, even if the allogeneic story plays out in their favor.

Time is the biggest risk to an investment right now. Getting good data takes time, and investors are not often willing to wait for it. Buying in right now could pay off, but it carries a serious risk of further dilution and relative stagnation. It is unclear when the next catalyst is going to arrive for this company.

Bottom-Line Summary

With a valuation of around $500 million at the time of writing, ALLO is trading at slightly above their total current assets. This is relatively fair valuation for a company that has not had time to develop definitive evidence of clinical efficacy for its products. That, coupled with the new frontier that we're moving in, means that the wait could be relatively long for big, needle-moving events. At this time, I think ALLO is worth watching, but ultimately they are not a buy right this second. It is likely that impatience will take hold and cause the share price to drift further down from here. But there will likely come an inflection point before an important catalyst, and it's worth keeping this ticker on your radar.

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