ALVR - AlloVir: Several Late-Stage Programs Make This Worth A Look

2023-07-01 03:48:14 ET

Summary

• Positive final results from the phase 2 study, using posoleucel for BK Virus, were presented at the American Transplant Congress 2023.
• Discussions with FDA and key opinion leaders to align on phase 3 study design of posoleucel for BK Virus are ongoing.
• Enrollment is ongoing in three phase 3 studies using posoleucel to prevent or treat infections in allogeneic hematopoietic stem-cell transplant patients; results from these late-stage studies expected in 2024.
• As of March 31, 2023, AlloVir had cash, cash equivalents, and short-term investments of $202.6 million; underwritten public offering of $75 million before deducting expenses achieved, thus, no near-term risk of dilution.

AlloVir , Inc. (ALVR) is a good speculative biotech play to look into. The reason why I state that is because it has a great late-stage program, whereby it is advancing posoleucel for the treatment and prevention of several transplant related disorders. Not only that, but it has potential to get another indication to a phase 3 study as part of its posoleucel clinical program. The reason why is because it just reported positive results from its phase 2 study using posoleucel for the treatment of patients with BK virus. That is, earlier in the year it presented positive top-line results from this phase 2 study and just recently presented full results at the American Transplant Congress [ATC] 2023 medical conference. Thus, the next step of this process is for it to meet with key opinion leaders and meet with the FDA to design a phase 3 study that will determine if posoleucel is an effective treatment option for kidney transplant patients with BKV infection.

The company's three posoleucel phase 3 global registration studies, which are for three distinct, first-to-market indications, are expected to have data released in 2024. The company has also seen investor interest from a big pharmaceutical company. That's because on Wednesday in an SEC Filing, it was noted that Gilead Sciences (GILD) had purchased about 2.9 million AlloVir shares at $3.75 apiece . With this transaction, Gilead's stake in AlloVir had increased by 21%. With an ability to advance another phase 3 study with posoleucel, plus proof-of-concept established against several other transplant infection indications, these are the reasons why I believe that AlloVir is a good speculative biotech play to look into.

Successful Phase 2 Study Leads To Another Late-Stage Program

A good thing about AlloVir is that it is already having its drug posoleucel being explored in several phase 3 studies. Well, with the full positive results reported from the phase 2 study in targeting BK Virus, it is in preparation to begin a phase 3 study for this specific program. I'm talking about the use of posoleucel to treat BK Virus [BKV] infection in adult kidney transplant recipients. Before diving into the clinical data, it is important to understand what BK Virus is. BK virus [BKV] is a type of virus that mostly everyone gets in their childhood. However, it is suppressed by a strong immune system. Thus, it doesn't cause any issues for most people. Once the immune system is no longer able to block the virus, that's when it gets out of control. With respect to the kidney transplant recipients, they may obtain the virus because of the need to take anti-rejection medications after having done their respective transplant.

These anti-rejection medications weaken the immune system, thus in some instances can allow the virus to awaken. Other ways the BK Virus can activate besides a kidney transplant would be as follows:

• Kidney injury
• Old age
• Having HIV
• Having Diabetes

Why is there a need for a treatment such as posoleucel for BK Virus? Well, it all has to do with the fact that there are no approved treatment options for this virus. At best, what a Doctor would do as a recommended option to help with BK Virus would be to reduce immunosuppressive [anti-rejection] medications. That's because then it might allow for the immune system to then fight off the infection. However, should posoleucel ultimately be approved to treat BK virus for kidney transplant recipients, then it would be the first treatment option to do so. The way that this virus is detected is that after a transplant has been done, it is checked through the patient's blood and/or urine whether or not they have it.

The mid-stage study recruited BKV infected adult kidney transplant recipients who had viral load between 350-10,000,000 copies/mL [stratified by low (<10,000 copies/ML) or high (?10,000 copies/mL) viral load at study screening). What is the reason for me listing the 10,000 copies/mL viral load for this article? That's because many consensus groups, such as the "American Society of Transplantation, consider BK Viral load of greater than or equal to 10,000 copies/mL to be presumptive of BK Virus associated nephropathy [BKVAN]. The primary endpoint of this study was safety, which was met. The secondary endpoint looked to see a change in BK viral load in patients who received posoleucel compared to those who had instead took placebo. It was noted at the Week 24 efficacy analysis that 39% (15 out of 38) patients who received posoleucel experienced a ?1-log viral load reduction , which was more than double the placebo rate of 14% (2 out of 14 patients). In addition, it should also be noted that both bi-weekly dosing of this drug and such BK virus patients with higher viral load did much better in this study. Additional results were presented at the American Transplant Congress [ATC] 2023 medical conference. Where a catalyst opportunity might present itself for investors would be with the initiation of the phase 3 study for this program. However, at the moment, AlloVir is working with its key opinion leaders and FDA to gain alignment on what a phase 3 clinical study should be designed as.

Financials

According to the 10-Q SEC Filing , AlloVir had cash, cash equivalents and short-term investments of $202.6 million as of March 31, 2023. It believed that it would have enough cash to fund its operations for a while, but in the end, it just recently chose to raise cash. This does makes sense though, because it has many late-stage trials currently ongoing. Not only that, but it also gave guidance whereby it expected operating expenses to be in the range of $150 million to $170 million for 2023, excluding non-cash expenses. It chose to price an underwritten public offering of 20,000,000 shares of its common stock at a public offering price of $3.75 per share. The gross proceeds to AlloVir from this offering, before deducting expenses, are expected to be approximately $75 million. In addition, AlloVir has granted the underwriters a 30-day option to purchase up to an additional 3,000,000 shares of its common stock at the very same public offering price. With the cash on hand that it had, plus the most recent cash-raise, I don't believe that there is any near-term risk for any dilution.

Risks To Business

There are several risks which investors should be aware of before investing in this biotech. The first risk to consider would be with respect to the ongoing phase 2 program, which is posoleucel for the kidney transplant recipients with the BK Virus [BKV]. The trial concluded with positive results being obtained, but the next step in the process is to speak with the FDA and key Opinion Leaders on being able to advance the use of posoleucel for this specific patient population into a phase 3 study. Only if AlloVir gets a green light from the FDA will it be able to start such a late-stage study and there is no guarantee that it will receive permission to do so. A second risk to consider would be with respect to the other ongoing phase 3 studies, which are also exploring the use of posoleucel, for several transplant related viruses. As I stated above in the beginning, this company intends to release results from three phase 3 studies using posoleucel in 2024. While proof-of-concept was established beforehand of posoleucel for these indications, there is no guarantee that a similar outcome will be achieved in these late-stage studies.

Conclusion

The final conclusion is that AlloVir is a good speculative biotech play to look into. That's because it is in the process of already exploring the use of posoleucel for the treatment/prevention of several transplant related viruses. Best of all, is that investors can benefit greatly with several catalysts that are expected to be released next year. That is, this biotech expects to release results from three phase 3 studies using posoleucel for transplant associated viruses, in 2024. That doesn't mean that investors can't capitalize on another catalyst, which might be an initiation of a phase 3 study using posoleucel for the treatment of BK Virus in kidney transplant recipients. Such a study might be initiated at some point in 2023, should discussions with the FDA go well. With an ability to advance another phase 3 study with posoleucel, plus proof-of-concept established against several other transplant infections, these are the reasons why I believe that AlloVir is a good speculative biotech play to look into.

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