JANX - Janux Therapeutics: Precision Immunotherapy But Overpriced For Such An Early Stage

2023-12-13 07:12:15 ET

Summary

• Janux Therapeutics is a biotech focused on developing novel immunotherapeutic approaches for cancer patients.
• Their lead candidate, JANX007, is a tumor-activated T-cell engager that targets PSMA in prostate cancer.
• Janux also has two other molecules in development, JANX008 and JANX009, targeting EGFR and PD-L1/CD28, respectively.
• While interesting, these platforms have a long time before they have a good chance to mature, with likely price degradation coming for anyone currently holding.

Topline Summary

Janux Therapeutics (JANX) is a biotech focused on developing novel immunotherapeutic approaches for patients with cancer. Using a unique T-cell engaging approach, the company hopes to avoid some of the issues that have faced the main players in multi-specific antibody development, particularly relating to toxicity and pharmacodynamics. While they have cash to move through the early years of development, this remains a "watch and wait" kind of equity for me, since there's plenty of promise but not yet very much to back it up.

Pipeline Overview

JANX007

Arguably the candidate furthest along for JANX is JANX007, a "tumor-activated T cell engager" that acts as a sort of bridge between the immune system and a target of interest associated with tumors. In this case, we're focused on PSMA, the nigh-obligatory target for patients with prostate cancer.

These TRACTr molecules work similar to bispecific T-cell engagers (ie, blinatumomab) in that they bind the target of interest at the same time as CD3, a coreceptor that binds and contributes to the activation of T cells, with the idea of bringing T cells straight to the tumor.

Where TRACTr differs from other T cell engagers is that it has a cleavable "mask" that shields the molecule from binding CD3. Once the target of interest is engaged, presumably within the tumor microenvironment, proteases that are more highly expressed go to work removing the mask, thus allowing the molecule to work. A sort of Trojan horse-type approach to immunotherapy, which JANX hopes will help to reduce the various toxicities that are associated with these CD3-binding molecules (especially cytokine release syndrome and neurotoxicity).

It also has an albumin-binding domain designed to be cleaved by the tumor proteases, helping to ensure that any TRACTr molecule that does leave the tumor microenvironment gets cleared quickly, since it's no longer bound to albumin that would normally shield it from being bound up and degraded.

It's a really cool hypothesis on the bispecific molecule story. JANX007 is currently being assessed for safety and preliminary signals of efficacy in a phase 1 trial that began in October 2022 . An interim update from summer 2023 showed that JANX007 treatment was well tolerated in the 8 patients treated at that time, with evidence of PSA reductions in a few of these patients. The trial is continuing to enroll, with the promise that more information will be updated in 2024.

JANX008

The other TRACTr molecule being developed by JANX is JANX008, which binds CD3 and EGFR. As you may know, this is an important target of interest for solid tumors, particularly in non-small cell lung cancer, where driver mutations of EGFR can be targeted in a minority of cases to significant effect.

However, EGFR targeting has an important place in other malignancies, such as head and neck cancer and colon cancer, and it has been proposed as a viable target for a variety of other cancers, though without quite as much success as in lung cancer. JANX initiated a phase 1 trial of JANX008 in patients with various solid tumors back in April 2023.

JANX009

The final molecule of interest I want to highlight is JANX009, a "tumor activated immunomodulator" (TRACIr) that binds both PD-L1 and CD28, the latter being another costimulatory molecule marking activated white blood cells. It is hoped that by homing activated immune cells to the tumor in addition to releasing the brakes (via PD-L1 binding), JANX can help achieve a more robust immune response. Again, the concept of masking here is used to prevent binding of the T cells outside of the tumor microenvironment.

JANX has guided that "IND-enabling" studies have been completed for JANX009, with the potential to head to clinical trials in the relatively near future.

Financial Overview

Per the company's Q3 filing, JANX held $386.8 million in total current assets, including $17.2 million in cash and equivalents and $332.6 million in short-term investments. Meanwhile, their operating expenses were $15.8 million, offset by $2.5 million in collaboration revenue and another $4.2 million in interest income. All in, the company reported a net loss of $11.6 million.

At this burn rate, JANX has a cash runway of between 7 and 8 years, which is probably a large overestimate given likely increases in cost and decreases in collaboration revenue.

Strengths & Risks

JANX has one key strength in that it's taking a fundamental premise (immunotherapy can work in cancer), a riff on that premise (bispecific molecules are gaining more and more wins as time goes on), and spinning it off in a tweaked direction. There's a lot of potential if they can realize just some of what they're seeking.

However, it's a good thing they have years and years of cash available, because this is going to be a long ride. And what tiny fragments of clinical data we've seen so far are not convincing that the safety impacts of CD3-targeted agents have been mitigated with this TRACTr approach; the phase 1 study of JANX007 have already reported cytokine release syndrome, though none so far of high grade.

So anyone looking to get in right now needs to be aware of that risk of a nasty surprise, and this company is being valued like they've got positive phase 2 data already. That's a recipe for trickling down as they march on for a few more years.

Bottom-Line Summary

The JANX thesis is a cool story with a kind-of-tested but novel path. This makes it a very enticing investment idea, as well, since the proof of concept has already been laid out with drugs like blinatumomab; this is just building further on that.

However, given just how early these programs remain at this time, I feel strongly that there are better places where you can find value. As I write this, JANX sits at a market cap of $416 million, placing it in the same valuation as later-stage companies. For me, excepting any kind of hype-driving catalyst that comes out of nowhere, there's a lot of time yet to wait. Its valuation puts this equity just on the "sell" side for me, but not because I don't like their science. I think that this has time and room for share price fall before we reach any major catalysts.

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