MRK - Janux: Merck Deal Loads Of Cash Solid Early Data

2023-07-25 11:56:09 ET

Summary

• Janux Therapeutics, Inc. is a small company with a deal from Merck & Co., Inc. and some solid early data.
• They are loaded with cash and have a long runway.
• Janux Therapeutics generates considerable smart money interest.

Janux Therapeutics, Inc. (JANX) is an early stage company with a billion dollar valuation. The company uses its proprietary Tumor Activated T Cell Engager (TRACTr) and Tumor Activated Immunomodulator (TRACIr) platform technologies to develop cancer therapies. The pipeline:

Lead drug candidate PSMAxCD3-TRACTr presented an interim data update in July-2023. The program, also known as JANX007, targets PSMAxCD3 and the initial indication is mCRPC. A second program, JANX008 or EGFR-TRACTr, targets EGFRxCD3, and the initial indications are a basket of solid tumors including CRC, HNC, NSCLC, and RCC. Other self-owned programs are in preclinical stages. The company has a collab with Merck & Co., Inc. (MRK) to develop TRACTr molecules targeting T1 and T2xCD3 in undisclosed indications. These are in late-stage development. Here is the trial situation from TickerBay:

Delving deeper, here's the data situation for the phase 1 trial of JANX007:

Querying the proprietary TickerBee AI, we get the following data:

Interim Clinical Data for PSMA-TRACTr JANX007 in mCRPC as of June 28, 2023: Safety: - JANX007 has been generally well tolerated, with no dose-limiting toxicities. - Grade 1 or 2 cytokine release syndrome ((CRS)) was observed in patients who demonstrated PSA reductions, suggesting cytokine release resulting from anti-tumor activity was associated with CRS. - No Grade 3 CRS has been observed. - The most common, non-CRS related adverse event observations have been generally consistent with tumor-specific activity and reduced PSMA(+) healthy tissue activity. - No transaminitis was observed. - No treatment-emergent ADA titers were observed. Efficacy: - JANX007 showed clinical activity at both 100µg and 300µg flat doses. - Best overall PSA reductions between 31% and 67% were observed in four out of the five patients who received a flat dose. PK Exposure: - Plasma levels in patients exhibited prolonged TRACTr exposure. - Clear evidence of activation as measured by a specific cleavage fragment was observed. - Lack of accumulation of the active TCE in the blood suggests that observed PSA reductions have been a result of tumor activation and not systemic TCE exposure. Overall, the interim data for PSMA-TRACTr JANX007 in mCRPC showed encouraging safety results consistent with on-tumor activity, with manageable CRS and no dose-limiting toxicities. The observed PSA reductions indicate potential efficacy of JANX007 in treating metastatic castration-resistant prostate cancer.

Thus, a safe molecule with early signs of drug activity - these are superb results for an early stage molecule. CRS was observed only (?) in patients with PSA reductions, suggesting that it was a result of anti-tumor activity and not of the drug per se. Even so, CRSs were manageable, and there were no grade 3 CRS. Flat dose PSA reductions of between 31% and 67% were impressive. Interesting approach re checking for specific cleavage fragments to see molecule attachments and ensuing drug activation. Overall, a good, solid and safe early stage response.

The company provides a nice competitive chart for rival drugs:

They also provide a comparative AE profile of various prostate molecules:

As we do see, in both measures, JANX007 holds its own against molecules from rivals. Its safety profile, especially, is very benign.

Thus, JANX007 provides proof of concept for the company's platforms. These are two - TRACTrs and TRACIrs. These consist of: a) an antigen-binding domain; b) a T cell-binding domain; c) domain-optimized peptide masks; d) an albumin-binding domain; and e) cleavable peptide linkers.

Each of these elements has its own task. The peptide mask prevents the T-cell binding domain from interacting with T-cells. The peptide linker binds this to the antigen and T-cell binding domains. These linkers consist of protease recognition sites and are highly sensitive to their removal by tumor proteases but are highly stable in their absence. This makes them target specific. The albumin binding domain extends the molecule's half life.

In 2020, Merck signed a large, potentially $1bn deal for two TRACTr targets from Janux. Merck is responsible for all research funding. Like I noted before, two trials have been initiated. The company also has a manufacturing partnership with WuXi Biologics of China.

Financials

JANX has a market cap of $587mn and a cash balance of $317mn as of the previous quarter. In July, they raised $60mn in funds through a market offering. Research and development expenses for the quarter ended March 31, 2023 were $15.9 million, while R&D expenses were $6.5mn. At that rate, they have a cash runway of more than 10 quarters.

JANX is almost exclusively owned by smart money. Key holders are Avalon Ventures, whose principal David Campbell, PhD, is the CEO at Janux. Other holders include RA Capital Management and FMR LLC.

Risks

JANX, a relatively unknown company, has been hyped up by the Merck deal, but we should remember that the deal was made under Roger Perlmutter, and Merck has changed a lot since Perlmutter's exit, and they have focused away from some of his deals. Moreover, while the deal value is large, upfront fees are very small. Right after the deal, RA Capital and others pitched in a lot of cash. However, the data is quite early stage. This is their key drawback right now.

Bottom Line

I will continue watching Janux Therapeutics, Inc. and may even consider a position. I like their early but strong data, and the strong cash position. The Merck deal I will like even more if they can sign up other big pharma companies as well, preferably Amgen (AMGN), a company that developed some of the technology.

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