PFE - GlycoMimetics: Unraveling The Tea Leaves

Summary

• Today, we take a look at a small biopharma concern called GlycoMimetics that is focused on developing treatments for disease through the inhibition of a subset of proteins known as selectins.
• The stock plunged more than 50% earlier this week on news of a capital raise and key trial development around its primary drug candidate.
• Are the shares oversold now as the result of the kneejerk sell-off or more downside to come? An investment analysis follows in the paragraphs.

There can never be surprises in logic. "? Ludwig Wittgenstein

Today, we take a look at small biopharma concern called GlycoMimetics, Inc. (GLYC) . The stock plunged more than 50% earlier this week on two pieces of news. Management announced that it had sold approximately 11.8 million shares of its common stock in an " at-the-market " offering from the start of Q4 2022. This action raised nearly $33 million worth of proceeds and push back the company's ' cash runway ' approximately one year to year end 2024.

The bigger news was leadership also disclosed that an independent panel recommended that its pivotal Phase 3 study for its lead drug candidate uproleselan in relapsed/refractory (R/R) acute myeloid leukemia (AML) will go forward as initially designed.

This was very disappointing to investors. Trial data that came out in November (more on that in the sections below) was so encouraging that the FDA elected to conduct a utility analysis in which this independent data monitoring committee would review the data at 80% of planned events to determine if the study should proceed to 100% events triggered (near YE23) or unblind the data early due to compelling evidence of benefit. Unblinding the data would have resulted in a soon to follow NDA filing. Instead, because of this recommendation that will not happen be able to occur until full data from this study comes out late this year.

Company Overview:

GlycoMimetics, Inc. ( GLYC ) is a Rockville, Maryland based clinical-stage biopharmaceutical concern focused on the development of glycomimetic therapies that address orphan diseases with high unmet needs. GlycoMimetics are small molecules that mimic the structure of carbohydrates, some of which are believed to play a role in inflammation, cancer, and infection. The company has one clinical asset (uproleselan) that is pursuing the acute myeloid leukemia (AML) indication and another one that is clinically cleared but looking for a development partner. GlycoMimetics was formed in 2003 and went public in 2014, raising net proceeds of $57.2 million at $8.00 per share. Its stock trades just under two bucks a share, translating to a market cap of approximately $95 million.

Proprietary Platform

Most human proteins are modified by carbohydrates, which in turn affect how those proteins function. The company is focusing on a certain subset of proteins known as selectins, which serve as adhesion molecules that bind to carbohydrates and are involved in inflammation, driving a wide range of maladies, including cancer, cardiovascular disease, and hematologic disorders. In cancer, they are believed to play a significant role in tumor metastasis and chemotherapy resistance. By developing compounds that mimic the bioactive function of carbohydrates with drug-like properties (a.k.a. glycomimetics), the company believes it can inhibit the selectins, and halt the advance of disease.

Pipeline

Uproleselan . GlycoMimetics' lead candidate is uproleselan, a specific E (as in endothelial)-selectin inhibitor that is being investigated in combination with chemotherapy in the treatment of patients with AML. It has been granted Fast Track designation from the FDA, Breakthrough Therapy Designations from regulatory authorities in the U.S. and China, and Orphan designations from the FDA and EMA.

AML, like most leukemias, is treated with chemotherapy, which comes with its attendant side effects, including bone marrow toxicity resulting in neutropenia - severe infections due to an abnormally low number of white blood cells known as neutrophils - and mucositis. E-selectin binds cancer cells within vascular niches of the bone marrow, preventing the cells from entering circulation, where they would be more susceptible to chemotherapy. In preclinical animal models, uproleselan was able to draw AML cancer cells out of the bone marrow, resulting in less cancer burden in combination with chemotherapy versus chemotherapy alone. Furthermore, the animals experienced less severe neutropenia and mucositis and lower bone marrow toxicity versus chemo monotherapy.

In a Phase 1/2 trial that was completed in 2018, uproleselan with chemotherapy demonstrated complete responses with or without complete blood count recovery (CR/Cri) in 41% of patients in the refractory/relapsed cohort. Median overall survival [OS] was 8.8 months versus ~5.3 months on chemo alone (as per historical norms). Also, 69% of evaluable patients (11/16) achieved measurable residual disease negativity. In the newly diagnosed cohort, the CR/CRi rate was 72% while median OS was 12.6 months. Event free survival was 9.2 months as compared to 2.0-6.5 months on chemo alone (as per historical norms for a lower risk population than the one treated with uproleselan). These were very impressive results considering AML patients experience some of the worst 5-year OS rates relative to other leukemias - 30.5% (2011-2018) versus an average of ~75% amongst chronic myeloid leukemia, chronic lymphocytic leukemia, and acute lymphoblastic leukemia.

Based on these results, uproleselan has been entered in multiple late-stage trials, including a double-blinded, placebo-controlled Phase 3 study to evaluate it in the treatment of 388 relapsed/refractory AML patients. The patients are randomized 1:1 to receive either an introductory round of uproleselan and chemo followed by three additional cycles of uproleselan and chemo -OR- an introductory round of placebo and chemo followed by three additional cycles of placebo and chemo. The returns to date have been potentially groundbreaking. The OS event trigger was initially anticipated at ~22 months - excellent considering that Astellas' ( OTCPK:ALPMF ) Xospata and Jazz Pharmaceuticals' ( JAZZ ) Vyxeos were approved with median OS rates of 9.3 months and 9.5 months, which were triggered at 17.8 months and 20.5 months, respectively. However, in an update provided in November 2022, management indicated that median follow-up is now anticipated to be triggered at 34.5 months, providing significant improvement over the other two therapies.

Furthermore, GlycoMimetics' compound is being assessed as a front-line therapy in a 262-patient Phase 2/3 study in which newly diagnosed individuals will be randomized to receive either an introductory round of uproleselan and chemo followed by three rounds of uproleselan and chemo -OR- an introductory round of chemo followed by three round of chemo. The Phase 2 portion was fully enrolled in December 2021 with an interim readout expected sometime in 2023.

If successful, uproleselan would enter a market where ~20,400 new cases of AML were diagnosed in the U.S. in 2021, of which ~12,000 were eligible for intensive chemotherapy. Although the median age of diagnosis is 68 years, with an overall five-year relative survival rate of 30.5% there is considerable need for improved therapies. That said, the competition in the AML space is significant with nine non-chemo drugs approved, mostly in combination with chemo or to treat a specific AML mutation. Furthermore, the market is not particularly robust, measured between $659.6 million (according to Industry Research) and $1.74 billion (iHealthcare Analyst) in FY22, with expectations for the opportunity to grow at an 8%-9% CAGR for the balance of the decade.

GMI-1687 . The reason GlycoMimetics' stock had previously on the floor was due to the comprehensive failure of selectin antagonist rivipansel, which flopped in a Phase 3 trial conducted by development and commercial partner Pfizer ( PFE ) in the treatment of patients with vaso-occlusive crisis, a debilitating and painful condition that periodically afflicts patients with sickle cell disease [SCD]. Shares of GLYC plummeted 69% in the following trading session (August 5, 2019) to $2.80, initiating a death march to $0.51 by June 2022. Unsurprisingly, Pfizer pulled out of the collaboration in February 2020.

In the meantime, GlycoMimetics developed a potentially self-injectable version of uproleselan (GMI-1687), and undeterred by its first failure, is re-pursuing the vaso-occlusive crisis indication. Similar to its first foray, before advancing it through the clinic, it is looking for a development partner. The FDA gave GMI-1687 a " Safe to Proceed " clearance for IND in June 2022.

China Collaboration

GlycoMimetics does have one development partner in the form of Hong Kong biotech Apollomics. In return for an upfront consideration of $9 million, potential milestone payments of $180 million, and tiered royalties up to 15%, Apollomics has the development and commercial rights to both uproleselan and GMI-1687 in Mainland China, Hong Kong, Macau, and Taiwan.

Balance Sheet & Analysts Commentary:

The company only held cash of $51.6 million on September 30, 2022, providing it a cash runway until YE23 - made possible after it laid-off 20% of its workforce (mostly preclinical staff) in April 2022. Clearly, management was gambling on uproleselan's success and was waiting to see if the FDA would unblind its Phase 3 study. With the recent capital raise, the company now has funding in place until late in 2024.

H.C. Wainwright did reiterate their Buy rating and $8 price on GLYC, down from $13 previously, after Wednesday's announcement. It is the only analyst firm to chime in so far on the company since news was disclosed this week.

It should be noted that beneficial owner Scott Sandell, representing the interests of NEA Management, has unloaded approximately $13 million worth of shares since December 30, 2022.

Verdict:

With patients continuing to live significantly longer than expectations in the Phase 3 AML trial, the bet was that the FDA will unblind the study for utility at the end of 1Q23.

Obviously, since it wasn't, GlycoMimetics was forced into a capital raise. However, continuation does not negative the positive data generated so far in that key Phase 3 study. The AML opportunity is not massive, but peak uproleselan sales for this indication could easily triple GlycoMimetics current market cap. More importantly, its glycomimetic approach is being validated, setting it up for additional indications. Given that GLYC seems to merit a small speculative investment as the stock appears to be oversold. I have a position in GLYC via covered call orders which provides significant downside risk mitigation.

Illogicality is the deficiency of common sense ."? Sukant Ratnakar

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