NUVB - Nuvation: Cash Is King Science Is An Afterthought

2023-10-03 04:47:57 ET

Summary

• Nuvation Bio is developing BET inhibitors for solid tumors, with lead asset NUV-868 in phase 1/1b trials.
• BET proteins play a role in gene regulation and chromatin remodeling, and inhibiting them may be therapeutic for cancer.
• NUV-868 is highly selective for BD2, potentially reducing toxicity compared to other BET inhibitors.

Nuvation Bio ( NUVB ) is a never-covered developer of BET inhibitors targeting solid tumors. It is backed by a billionaire investor, so it has a cash stockpile unlike its early stage peers. While the company is in early stages and do not have human data, its scientific logic makes sense. All these are reasons for my moderate bullishness about NUVB, although I do not own stock, nor do I have plans to own them in the near future.

The company's lead asset is a BETi called NUV-868 targeting various solid tumors as monotherapy and in combinations in phase 1/1b trials. The pipeline looks like this:

BET proteins, otherwise known as Bromodomain and Extra-Terminal domain proteins, play a significant role in gene regulation and chromatin remodeling. They have two functional domains: the bromodomain and the extra-terminal domain. These proteins form part of the epigenetic system that controls gene expression.

Each of the two domains has specific functions. Bromodomain binds to acetylated lysine residues on histone proteins, which are structural proteins associated with DNA in the cell nucleus. This sort of binding facilitates the recruitment of other proteins and complexes to the chromatin, ultimately influencing gene transcription.

The Extra-Terminal domain, on the other hand, has a role in gene regulation, chromatin remodeling, and various cellular processes. It allows BET proteins to interact with other proteins and transcriptional complexes, facilitating their function as transcriptional regulators.

BET proteins are important in cancer therapeutics because they have a key role in controlling the expression of genes involved in cell growth, proliferation, and inflammation. One well-known BET protein is BRD4 (Bromodomain-containing protein 4), which has been the subject of significant research due to its involvement in regulating the expression of genes critical for cell cycle progression and cancer development. Additionally, there are other BET family members like BRD2, BRD3, and BRDT, each with its own unique functions and tissue-specific expression patterns.

A number of BET inhibitors have been developed. The company calls these first generation BET inhibitors because of their lack of selectivity, which causes safety issues. NUVB provides a comparative list, below:

In this table, there is a descending order of selectivity, with NUV-868 being the most selective. The company notes that many of these BETis have been associated with poor tolerability because many of them non selectively bind to and inhibit BD1. The essential difference between BD1 and BD2 is that BD1 maintains normal, baseline gene expressions, while BD2 is associated with the rapid activation of gene expression in response to specific signals or conditions - like cancer. Thus, when you inhibit BD2, that could have therapeutic benefits, while, on the other hand, if you allow normal BD1 expression, that may be therapeutic. This is theory, and we have to see how the ongoing trials go to figure out if theory translates to practice.

In terms of data, the company cites competitor data: “BD2-selective BET inhibitor (ABBV-744) causes less thrombocytopenia and GI toxicity than BET inhibitors that potently inhibit BD1 (e.g. ABBV-075).” Then the company says that NUV-868 is even more BD2 selective than ABBV-744 - hence its rationale for development. ABBV-744 is ~300x more selective for BD2 than BD1, while NUV-868 IS 1500X more selective, or 5x more than ABBV-744. In trials, “ABBV-744 demonstrates a superior therapeutic window compared to pan-BET inhibitors,” so the company expects NUV-868 to have a solid tox profile as well.

In animal models, NUV-868 has shown less bone marrow toxicity, including no bone marrow suppression at efficacious doses in rat models. In an AML xenograft model, there was dose dependent reverse platelet suppression with the molecule, meaning better immune response and healing.

NUVB also compared gut toxicity metrics between selective and pan-BETi models. It was observed that whereas non-selective inhibitors like ABBV-075 caused marked reduction in rat small intestine goblet cells, mice treated with NUV-868 showed no evidence of goblet cell loss [Note - goblet cells secrete mucus which protects the health of mucous membranes in the gut, making these cells critical in maintaining the integrity of the gut and for protecting against environmental threats and pathogens.]

In preclinical models, NUV-868 has shown considerable rationale for development as combo therapies, for example with enzalutamide, because treatment with NUV-868 restored enzalutamide-sensitivity in patient derived prostate cancer xenografts.

The company mentions a long list of product differentiations in its Corporate Presentation . Development plan includes a flexible trial design, switching patients from monotherapy to combo therapy as needed, with phase 2 studies that will evaluate NUV-868 in combination with olaparib and enzalutamide in six solid-tumor specific expansion cohorts.

Financials

NUVB has a market cap of $306mn and a cash balance of $631mn. For the three months ended June 30, 2023, research and development expenses were $18.6 million, while general and administrative expenses were $7.5 million. That gives them a long cash runway of over 24 quarters.

Nuvation was founded by Dr. David Hung, previously the founder and CEO of Medivation who also developed XTANDI (enzalutamide) & TALZENNA, two major oncology drugs. The company was formed in 2020 by combining with “Panacea Acquisition Corp., a special purpose acquisition company sponsored by EcoR1 Capital; CEO David Hung has agreed to provide more than $850M in funding to boot.” Lead candidate then was NUV-422, a CDK2/4/6 inhibitor, in patients with high-grade gliomas, but this asset was discontinued last year following a partial clinical hold on a phase 1/2 trial due to uveitis. The company cut 35% of its workforce and began afresh.

Most of the stock is held by institutions, with a small retail presence. Insiders have a few buy and sell transactions.

Risks

The company is currently in early stages, with no clinical data to support any of its theories. Such companies are inherently risky. The company may need to spend hundreds of millions on proving its scientific hypothesis, however, because their molecules are in early stages and unproven, there is no assurance that those hundreds of millions will be well-spent. As an example, this company already lost 40% of its value over the past 12 months. Just the presence of a billionaire backer makes it more solid than it actually is.

The company has a history - well, a single case of - failure. That should count for something.

Bottomline

Overall, NUVB is an attractive early stage company with a logically sound development pipeline. It is supported by a billionaire investor-founder, hence the huge cash reserve. The company's focus on selective BET inhibitors makes scientific sense. There is preclinical data supportive of their hypothesis that more selective BET inhibitors are safer and provide a superior therapeutic window. To top it all up, we have a source of funds in the form of its principal backer. All in all, NUVB looks attractive for an early stage biopharma.

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