CRBU - Caribou Biosciences: Like Watching Paint Dry

2023-05-31 17:31:40 ET

Summary

• We circle back to allogenic (off-the-shelf) cell therapy concern Caribou Biosciences for the first time since last Spring.
• Caribou is advancing three early-stage candidates within its pipeline, and the stock trades for the net cash on the company's balance sheet.
• An updated investment analysis follows in the paragraphs below.

Adopt the pace of nature: her secret is patience. " - Ralph Waldo Emerson.

Today, we put Caribou Biosciences ( CRBU ) in the spotlight for the first time since our initial article on this CAR-T concern back in April 2022. We concluded that piece thusly:

The major problem for Caribou investors is that this is a very early-stage developmental concern. Its developmental technology may hold great promise but is many, many years from any potential commercialization. As such, the stock is likely to remain at the whims of the overall sentiment on the sector. With the market continuing to be in 'risk off' mode, it is hard to see when investor enthusiasm returns to this space. Therefore, despite the huge decline in the stock, I have no investment recommendation on Caribou Biosciences at this time even as the shares sell for close to the cash on the company's balance sheet. This is probably a name we revisit in 2023 and more likely 2024 after its pipeline has advanced further.

That was the right investment call, as the equity has been roughly cut in half since we first looked at it. The promised ' follow up ' on this name follows below.

Company Overview

This Northern California-based concern is focused on the development of genome-edited allogeneic cell therapies for the treatment of hematologic malignancies and solid tumors. The equity now trades at around $4.41 a share and sports an approximate market capitalization of $266 million.

The company develops potential allogeneic (off-the-shelf) cell therapy candidates off its proprietary chRDNA gene-editing platform, which it believes offers numerous advantages to earlier versions of CRISPR technology, including notably the persistence of the treatment.

Caribou's initial target for its allogeneic cell therapies is oncology. So far, it has advanced two candidates into Phase 1 development, with another at the IND (Investigational New Drug) application stage. The IND application should be submitted by the company sometime in the second half of this year. It will be evaluated to treat relapsed or refractory acute myeloid leukemia {AML}.

Its candidate CB-010 is currently enrolling second-line relapsed or refractory B cell non-Hodgkin lymphoma [LBCL] patients for dose expansion for a study called 'ANTLER'. Data from this cohort should be out sometime before the end of the year. CB-010, it should be noted, is the first allogeneic cell therapy to be evaluated clinically in the second-line LBCL setting.

Since we last visited with Caribou, the company has managed to move its candidate CB-011 from IND enabling stage to early clinical stage development. In a Phase 1 trial dubbed CaMMouflage, CB-011 will be evaluated as a potential treatment for relapsed or refractory multiple myeloma {MM} for which it has Fast Track Designation. The company has dosed the first patient at the initial dosage in this study and continues enrollment.

Analyst Commentary & Balance Sheet

The analyst community continues to be sanguine about Caribou's prospects. Since mid-April, five analyst firms including Bank of America and RBC Capital have reissued Buy/Outperform ratings on the stock. Price targets are in a wide range of $4 to $34 a share around CRBU.

Approximately 15% of the outstanding float is currently held short. One insider sold $35,000 worth of stock in early January of this year. That has been the only insider activity in the stock so far in 2023. The company ended the first quarter of 2023 with $291 million in cash and marketable securities after burning through some $25 million of cash to fully support operations during the quarter.

Verdict

The company's approach to developing genome-edited allogeneic cell therapies continues to have promise. The problem for investors is that they have to have the patience of Job in this space, as the pace of development is glacial. Since we last looked at Caribou it has moved CB-010 into the dose escalation in a Phase I study, advanced CB-011 from IND stage to initial dosage in a Phase 1 trial and advanced CB-012 to IND submission stage.

That slow pace of pipeline advancement is unlikely to accelerate in the near future. Here is what management lists as the key milestones for the rest of 2023 on its last earnings press release:

• CB-010: Caribou plans to provide a safety and efficacy update in H2 2023 from the ongoing ANTLER Phase 1 clinical trial in r/r B-NHL, including data from at least 15 patients from dose escalation with a minimum of six months follow-up.
• CB-011: Caribou plans to provide updates on dose escalation as the CaMMouflage Phase 1 clinical trial in r/r MM advances.
• CB-012: Caribou plans to submit an IND application for r/r AML in H2 2023.

Given the lack of significant milestones on the near-term horizon, the stock is likely to continue to trade near the level of net cash Caribou has in its balance sheet, and it is hard to find a compelling reason to own within the current overall market environment.

Therefore, while we find the potential of the company's developmental platform interesting, we are once again passing on any investment recommendation at this time. This is a story we will likely revisit in late 2024 or 2025 once the company advances into mid-stage development.

"The poetry of the earth is never dead ."? John Keats.

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