CRVS - Circling Back On Corvus Pharmaceuticals

2023-08-01 15:53:10 ET

Summary

• Today, we take our first new look at a small biopharma firm called Corvus Pharmaceuticals in over 18 months.
• The company is getting closer to moving its primary drug candidate into a potentially pivotal trial to treat a form of T-cell lymphoma.
• An updated investment analysis follows in the paragraphs below.

We often confuse what we wish for with what is .”? Neil Gaiman

It has been more than a year and a half since our last look in on Corvus Pharmaceuticals ( CRVS ) . We passed on any recommendation around this small cap stock at that time but did promise to circle back on this name at some point in the future. The shares have had a nice little spurt up in recent months, making it good time to revisit the investment case around Corvus. An analysis follows below.

Company Overview:

Northern California based Corvus Pharmaceuticals is focused on the development and commercialization of immuno-oncology therapies. After its recent surge, the equity trades near $2.25 a share and sports an approximate market capitalization of $105 million.

The company is pursuing ITK (interleukin-2-inducible T cell kinase) inhibition as a new approach to immunotherapy with a differentiated mechanism of action that targets T cells.

Corvus' lead product is called CPI-818. This compound is targeting several indications. The most advanced target in the pipeline is a form T-cell lymphoma or TCL. This is a rare form of cancerous lymphoma affecting T-cells. This is more prevalent in males and those over 60 years old. The affliction currently has a poor prognosis for those unfortunate to develop this disease.

The company explains why it is focusing here on its website .

ITK is an enzyme expressed predominantly in T cells and that plays a role in T cell and natural killer (NK) cell lymphomas and leukemias, as well as in normal immune function. CPI-818 binds to ITK and modulates T cells, similar to the way Imbruvica (ibrutinib) binds to BTK and modulates B cells for the treatment of B cell lymphomas and autoimmune diseases. In addition, preclinical data suggests that ITK inhibition has the potential to treat a variety of solid and hematological cancers based on a novel immunotherapy mechanism of action ."

Corvus is currently conducting a Phase 1/1b trial in patients with relapsed/refractory TCL with its partner in China, Angel Pharmaceuticals. This study is designed to select the optimal dose of CPI-818. It will also evaluate its safety, pharmacokinetics, target occupancy, immunologic effects, biomarkers and efficacy. Interim results have demonstrated tumor responses and appear to have identified the optimum dose of CP1-818. Angel Pharmaceuticals was co-founded by CRVS to develop its pipeline in greater China and this study was given the go ahead by Chinese regulators in 2022. Angel Pharmaceuticals has licensed the rights from Corvus to develop, manufacture and commercialize CPI-818 in greater China.

The company did provide this update on this study as of May 1st:

28 patients were enrolled at the optimum dose of 200 milligrams BID and 19 are evaluable for tumor response. There have been two complete responses, one nodal complete response and three partial responses. two of the patients with partial responses continue on therapy and are doing very well. A total of nine patients remain on therapy, including five that have not yet been evaluated for tumor response ."

In addition, for patients with lymphocyte counts above 900 per cubic milliliter of blood.

Objective tumor responses were seen in six of 13 that includes complete responses and partial responses with disease control in 11 of 13 that includes CR, PR and stable disease. No responses were seen in six patients with ALC less than 900, 06. The median progression-free survival is 19.9 months versus 2.1 months for patients with ALC above 900 and below 900 respectively ."

The company has two other compounds in its pipeline (CPI-444 and CPI-006) but development has been put largely on the back burner while Corvus focuses on advancing CPI-818. Both are being evaluated within partner led development. One Phase 1b/2 clinical trial of CPI-444 also known as ciforadenant is currently enrolling. This trial will look at CPI-006 as a potential first-line therapy for metastatic renal cell cancer in triplet combination with ipilimumab and nivolumab.

Analyst Commentary & Balance Sheet:

Since May, Cantor Fitzgerald maintained its Buy rating on CRVS and doubled its price target to $4, while Ladenburg Thalmann reissued its Buy with a $12.00 price target in July, up from $10 previously. Mizuho Securities stuck with its Hold rating and $3.50 price target on the shares in mid-June. Those are the only analyst firms I can find that have posted ratings on Corvus so far in 2023.

Just over four percent of the outstanding shares of the stock are currently held short. An insider bought $24,500 worth of stock in mid-May. That has been the only insider activity in the stock so far in 2023. The company ended the first quarter with $34.5 million in cash and marketable securities on its balance sheet and expects to end FY2023 with between $20 million and $23 million worth of cash on hand.

Verdict:

Leadership continues to believe that CPI-818 will develop into an ' important new treatment option for patients with relapsed peripheral TCL or PTCL and might also represent a platform opportunity across a broad range of cancers and immune diseases .'

The problem is the slow pace of the development since our last article in December of 2021. Since then, the company has kicked off an early-stage trial, produced some encouraging trial results, selected the optimum dosage for CPI-818, and made some presentations around that data.

Now management stated in its last conference call, it was planning to meet with the FDA, hopefully this quarter but definitely before the end of this year. That sit down will be to discuss a Phase 3 potentially pivotal trial of CPI-818 to treat PTCL. This study would involve approximately 150 patients and would compare CPI-818 against standard of care chemotherapy agents with the primary endpoint being progression-free survival or PFS. Depending on when that meeting takes place and assuming the FDA greenlights the study, the trial could begin as soon as year end and if not, sometime early in 2024.

My guess is the company will either raise additional capital soon after FDA approval or on the initiation of the proposed pivotal trial for CPI-818. Given the recent run-up in the stock, I would probably avoid the shares until the FDA greenlights that critical trial and/or Corvus raises additional capital.

People don't expect too much from literature. They just want to know they're not alone with being confused .”? Jonathan Ames

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