GLYC - GlycoMimetics: Q2 2024 Data Readout Makes This Worth A Look But Cash Is A Problem

2023-08-14 08:55:03 ET

Summary

• GlycoMimetics is a biotech focused on developing novel agents that utilize carbohydrate chemistry for therapeutic effect.
• They have promising mid-stage clinical data and a projected critical data readout in late 2024.
• Operating costs and funding may be a challenge for the company, potentially impacting their stock price and drug approval.

Topline Summary - GlycoMimetics

GlycoMimetics, Inc. ( GLYC ) is a biotech focused on the development and discovery of novel agents that take advantage of carbohydrate chemistry for therapeutic effect. While they have some promising mid-stage clinical data and, most importantly, a projected critical data readout in late 2024, operating costs are putting some serious brakes on the current stock price, and their current funds might not carry them through to a drug approval, assuming that the data from their phase 3 trial are strong.

Pipeline Overview

GLYC is a unique company in that their pipeline is one of the first I've seen to advance the idea of manipulating carbohydrates in biotech. In the body, processing of molecules using a complex array of sugar molecules is a critical process and one that we have struggled to understand as deeply as we need to.

Of course, that's similar to a lot of processes that we discover in biology. Something like the gut microbiome comes to mind: we know it's important, and we have signals of what makes it tick, but a thorough understanding eludes us.

So the GLYC approach is to target proteins in the body that bind to carbohydrates, with the hope of correcting any number of issues. Before I delve into the agents worth highlighting, I'll just state that this kind of research is always exciting, because you never know when you'll find the next "immune checkpoint inhibition" when you're diving into biochemistry that hasn't really been exploited yet.

GMI-1687

One early-stage molecule that may be about to enter clinical study is GMI-1687, an antagonist of E-selectin delivered subcutaneously. By disrupting the binding between pro-inflammatory cells and blood vessels, GLYC believes this agent could be useful as an outpatient tool to treat pain crises in patients with sickle cell disease. Preclinical work has shown an ability to prevent clot formation in mouse and in vitro models.

Uproleselan

GLYC's main drug of interest is uproleselan, which is being developed mainly for patients with acute myeloid leukemia (AML), a form of cancer that has remained a large unmet need in hematology. While there has been significant progress made in recent years, we still need more treatment options in this space, particularly in patients who do not have favorable baseline health.

So far, 2023 has been quiet on data readouts for uproleselan. The big news so far this year was the announcement of a positive interim review by their independent data monitoring committee, who concluded that their phase 3 trial should continue. In the press release, GLYC alluded to patients in the study living longer than historical benchmarks, suggesting a potential positive outcome for the study.

A few words of caution when interpreting this press release:

1. The results of the study are still blinded as of now, so the CEO of GLYC does not know the results of the trial, only that patients overall appear to be doing better than we've seen in the past.
2. This does not necessarily mean that the drug is working. It could be a reflection of the overall improving standard of care. If that's the case, then we'll see no significant overall survival benefit, and there will be a "surprising" survival result in the control arm.

Of course, I don't know either, but it's a distinct possibility, so we should all be cautious against reading too much into this press release.

That said, there is also reason to be optimistic, given some of the earlier results we've seen. In particular, a pair of phase 1 studies presented last year at ASH showed encouraging results in challenging groups of AML patients. One focused on "elderly or unfit patients," showing a complete response (with or without complete hematologic recovery) in 6 of 8 patients. On the other, uproleselan was used in 15 patients with "secondary" AML , which is AML that occurs after treatment for myelodysplastic syndrome, and it is generally understood to be worse than AML that arises on its own.

The phase 3 trial that is expecting a readout is not focused on either of these populations, though. That would be NCT03616470, a phase 3 study combining uproleselan with chemotherapy versus placebo plus chemotherapy for relapsed/refractory AML in patients who are still fit for intensive chemotherapy. Based on recent guidance from the FDA , GLYC is expecting a top-line data readout by the end of Q2 in 2024.

Financial Outlook

As of the 2nd quarterly filing in 2023, GLYC held $58 million in cash and equivalents, with total assets of $61.8 million. Their total costs for the quarter were $8.9 million, which is relatively modest for a company deep into phase 3 trials.

One factor for would-be shareholders to consider is the recent round of dilution, with total shares outstanding rising from 52.4 million in 2022 to 64.3 million at the end of June 2023. This is a likely contributor to the significant downtrend in share price observed over the course of the year, along with the strong likelihood that no meaningful clinical data are going to be presented this year.

Continuing at the current burn rate, and assuming no other cash raises, GLYC has enough cash on hand to fund activities through 2024, but they would be running very low on cash, and it may not be appropriate to expect costs to remain this low for the entire year. GLYC already cut costs substantially by reducing its workforce in 2022, so it is likely the cost to run the trials will continue to creep up, making the cash challenges even more pressing.

Strengths and Risks

GLYC has a lateral approach to leukemia therapy that is not really matched by any other company. This has the possibility of being a big blockbuster if it pans out, but we won't know until at least the middle of 2024 how it's shaping up. And assuming it's positive data, it will still take a significant amount of time to get the drug to market.

As I stated before, I would exercise caution in taking the beating-around-the-bush optimistic interpretation of the blinded results. The fact is that not even the investigators have an idea if this drug is working, and leukemia (in particular AML) is full of drugs with so much promise that fail with a lot of surprise and fanfare.

At this point, GLYC remains a highly unknown quantity, with the only certainty being the need to raise another big chunk of cash before they're able to capitalize on their research.

Bottom Line Summary

GLYC may have a big winner on its hands, as evidenced by the optimism from different analysts on Seeking Alpha. I can't predict whether the drug will be successful in the phase 3 study, but I do know that they're going to need to address the cash issues in at least one more significant round of dilution. For me, GLYC is a stock to watch for now, not buy.

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