INKT - MiNK Therapeutics: iNKT Therapy Data Should Drive Stock Price Up

2023-03-25 02:17:53 ET

Summary

• AgenT-797 data presented at SITC in November was encouraging.
• More AgenT-797 cancer data expected at AACR on April 18.
• But cash is low, so will need to raise more to continue operations.

MiNK Therapeutics ( INKT ) was formed in 2021 to explore the use of engineered Natural Killer T cells to treat cancers. In 2022 it showed encouraging results from its first Phase 1 trials. Despite that it has a bargain-basement stock price. It closed on March 23, 2023, at $2.01 per share, giving the company a market capitalization of just $69 million. I believe iNKT cell therapy has enormous potential, but the proof will be in the future data presented from clinical trials. Here I will bring readers up to date as of the March 21, 2023, Q4 2022 MiNK Therapeutics results and conference. The next major data release on April 18 could drive the stock price higher, presuming the results are impressive enough. I will also cover the funding issue, which has become a significant issue for many small-cap biotech companies due to the recent bank turmoil.

I last wrote about MiNK in MiNK Therapeutics Undervalued Given Potential of Platform in December 2022. Since then we have had the update for Q4 and preliminary data that reinforced my conviction.

Q4 2022 MiNK financials

So far MiNK Therapeutics has generated no revenue. The net loss in Q4 2022 was $7.8 million, versus just $5.8 million year-earlier. That equates to a diluted EPS loss of $0.23. Research and development expense was near $6 million, while general and administrative expense was $2 million. Expenses usually scale with trial size, so when (or if) a therapy graduates from Phase 1 to Phase 2, the expense rate will likely go up. I also suspect that, if there is success that drives the stock price higher, administrative expense will go up because it seems quite low compared to other companies.

SITC data for AgenT-797 for cancers

AgenT-797 has two current targets, cancer and ARDS (acute respiratory distress syndrome). I will focus on the cancer indication because I think that is where the money is. In fact MiNK is looking for outside funding for ARDS. MiNK is confident enough to have expanded its manufacturing capability for 797. This facility, which has been cleared by the FDA, is the first known example of a native iNKT manufacturing lab.

AgenT-797 is an allogeneic (from a different donor) invariant natural killer T cell therapy. Because it is allogeneic, cells do not need to be harvested from the target patient. They work through multiple effects on T cells, NK cells, and the tumor microenvironment. The mechanism of action and the initial results are displayed in SITC Poster 647 . The first two cohorts of solid cancer patients were given 797 alone, in ascending dosage. Then enrollment began on the same two 797 dose levels combined with a PD-1 agent. There were separate multiple myeloma cohorts, in three ascending doses.

The single doses of 797 caused no cytokine release syndrome, which has been a significant, sometimes deadly side effect in early CAR T therapies. They also resulted in no neurotoxicity, another issue with first-generation therapies. The study did not reach a maximum tolerated dose. The patients were heavily pretreated (had failed multiple prior therapies). For solid tumors 27% of the monotherapy patients and 66% of the combination therapy patients showed reduction in cancer lesions. In multiple myeloma 2 of 8 evaluable patients, or 25%, showed some disease stabilization.

New therapies are often tested on the sickest cancer patients who have no other viable options. Response rates tend to be low. When there are response rates in this type of patient, when the group tested is large enough that statistics have become reliable, then usually earlier-line patients respond better. Given the preclinical work and the signs of clinical effectiveness in some of the patients, it would make sense to continue to enroll patients and, at some point, proceed to a Phase 2 trial. It also likely makes sense to focus on a more select group of cancer types (go to the poster link above to see the long list of solid cancer types in the study so far). At the MiNK Q4 analyst conference four types were called out for possible further investigation: lung, liver, bladder, and kidney.

AACR as a catalyst

The stock price did not respond strongly to the SITC data, but then so far MiNK is an obscure company and the data was very preliminary. The next data release will be at AACR (American Association of Cancer Research) on April 18. This will be for advanced solid tumors. Given the length of time since the last presentation, I would guess the sample size might approximately double. It is possible some data from the fourth cohort, the higher iNKT dose combined with a PD-1 agent, will be included. Expert doctors and scientists will be looking at this data. If they are impressed, the word will filter out to investors. But of course the earlier, encouraging data may turn out to be a statistical fluctuation (sometimes even the most advanced tumors shrink a bit without treatment). That is why data releases are exciting; that is why we conduct trials. Larger pharma companies may also be on the lookout for worthwhile investments or partnerships.

Rest of Pipeline

MiNK-215, a novel FAP-CAR-iNKT, had preclinical data presented at SITC. A MiNK-215 FDA IND filing (to start human trials) is planned for 2024. FAP is often found on cancer cells but rarely on healthy cells.

MiNK-413, a differentiated allogeneic armored-BCMA-CAR-iNKT, also had preclinical data presented at SITC 2022. There are already BCMA targeting cancer therapies, with more in development, but an iNKT therapy might have advantages. No timeline for an IND has been given. It is possible MiNK-413 could be licensed to generate cash to continue prioritized pipeline development.

Cash, cash burn, and financing options

MiNK Therapeutics has run through about half of the $40 million cash generated from its IPO in 2021. At the end of 2022 it had a cash balance of $19.6 million. Cash used in operations in the quarter was $4.4 million. That is despite net loss being near $8 million. Using a $5 million burn rate, cash will be gone by the end of 2023. That might be a reason for the low stock price. A cash raise when the stock price is low can be very dilutive to prior investors. The only way to avoid that would be to partner one or more therapies with a larger pharma company. A significant upfront payment could provide cash to operate until Phase 2 results come in. Strong Phase 2 results often mark the point where it is easier to raise cash. But the banking situation may also affect willingness to invest in companies with long timelines to first commercial sales.

Conclusion

Despite the cash crunch and the preliminary nature of the Phase 1 data, I believe MiNK Therapeutics is grossly undervalued. I would note that the revenue run rate for one advanced CAR T therapy I have followed, Gilead’s ( GILD ) Yescarta , is now over $1 billion per year. While it took years to shepherd Yescarta (and other cell therapies) through the clinical trial and FDA approval process, in the end it proved to be a major benefit to cancer patients. My impression is that iNKT therapies may improve on the first round of CAR T therapies. If so, they are valuable enough to invest in now, if you can stand the risk of failure and are investing for the long run. In particular, iNKTs do not need to be manufactured from a patient’s own white blood cells. That could make them more readily available and less expensive to manufacture, if they prove to be safe and effective. Compared to my analysis in September, I would say MiNK has been somewhat derisked by new data, though plenty of risk remains.

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