NVCT - Nuvectis: Early Stage Company That's Low On Cash

2023-09-06 08:03:53 ET

Summary

• Nuvectis is developing precision medicines for cancer patients, with lead asset NXP800 targeting ARID1a-mutated ovarian cancer.
• Preclinical trials have shown strong antitumor activity of NXP800, including in cisplatin resistant patients.
• NVCT also has a second asset, NXP900, which has shown significant single-agent activity in squamous cell cancer models.

Nuvectis ( NVCT ) is a small New Jersey company developing precision medicines for cancer patients. The lead asset is NXP800, a heat shock factor 1 pathway inhibitor in a phase 1b trial targeting ARID1a-mutated ovarian cancer, which forms between 30% and 50% of all patients of two different forms of ovarian cancer. It is an orally bioavailable small molecule discovered and developed at the Institute of Cancer Research ((ICR)) in the UK.

In preclinical trials in ARID1a-mutated ovarian cancer xenografts, strong antitumor activity even in comparison to cisplatin was observed, with marked improvements for both cisplatin-resistant and cisplatin-sensitive patients. The difference was, for obvious reasons, more pronounced in the former group, but in both groups, at 30 days, NXP800 was able to reduce tumor volume by a decidedly large factor.

Summary of the data presented at ESMO in February showed :

Two in vivo experiments in models of ARID1a-mutated ovarian carcinoma resulted in robust tumor growth inhibition ("TGI") by NXP800 (70% in one model and 82% in the second model, including tumor regression in both models, versus 42% and 20% TGI with cisplatin with no tumor regression).

Preclinical models tested NXP800 in other cancers and also saw such differences in outcomes. Such cancers included cholangiocarcinoma and gastric carcinoma. In the former, Nuvectis has an orphan drug designation. It already has a Fast Track designation for the NXP800 program.

NXP900 is the second asset, also in phase 1b trials. It is a small molecule inhibitor targeting the SRC/YES1 kinases. Among key preclinical data are the following:

• POC in multiple xenograft models - significant single-agent activity in squamous cell cancer models
• Ability to re-sensitize resistant NSCLC cells to osimertinib (2022 paper)
• Ability to reverse resistance to enzalutamide in mCRPC (2023 paper)

Squamous cell cancers are a type of cancer that originates from squamous cells, which are flat, scale-like cells found in various tissues of the body, including the skin and the lining of organs. The Hippo pathway is a signaling pathway involved in regulating cell growth, proliferation, and organ size. Genetic alterations (mutations or changes) in specific genes within this pathway, including FAT1, FAT2, FAT3, FAT4, YAP1, and TAZ, are quite common in squamous cell cancers.

Preclinical models showed that these genetic alterations in the Hippo pathway make cancer cells more responsive or sensitive to NXP900, which could form a basis for selecting patients who might benefit from NXP900 therapy. In other words, individuals with these genetic alterations in the Hippo pathway may be more likely to respond positively to NXP900 treatment.

One of these alterable genes is YAP1, where the YES1 gene comes into play in promoting tumor growth. It does this by activating phosphorylation (a chemical modification) and nuclear localization (movement to the cell nucleus) of YAP1. This activation of YAP1 through YES1 is considered central to the development and progression of the disease. By targeting YES1, NXP800 targets the root of the disease's origin.

In squamous cell cancers like Esophageal Cancer and Head and Neck Cancer (tongue), significant single agent activity was observed. There was, again, markedly increasing reduction in tumor growth volume between NXP900 and vehicle control.

Another key aspect is NXP900's ability to work in combination with other blockbuster medicines by re-sensitizing cancer cells to them. Thus, YES1 produces resistance to osimerinib (Tagrisso) in NSCLC and SRC to enzalutamide (Xtandi) in mCRPC. In in vitro and in vivo models respectively, NXP900 combined with these two medicines to overcome resistance to them, making them more effective.

A phase 1 trial is to begin shortly.

Financials

NVCT has a market cap of $254mn and a cash position of $24.6mn. Research and Development (R&D) expenses were $4.3 million for the three months ended June 30, 2023, while general and administrative (G&A) expenses were $1.5 million. At that rate, they have cash barely enough to last them 3 more quarters. They are, thus, in a dire financial situation, and they have no major upcoming catalysts that could work to boost the stock. Thus, expect a near-term dilution from a position of weakness, i.e., one that will significantly devalue the stock. The company says its cash position will see it through H1 2025. I have no idea how that is going to happen.

NVCT is mostly held by insiders, and Founders and >5% holders hold 66% of the stock. Key holders are CEO Ron Bentsur, Chief Scientific & Business Officer Enrique Poradosu, and Shay Shemesh, Chief Development & Operations Officer. These people regularly buy stock, and never sell. I am not sure I quite like this setup. This seems like an operation run by a close-knit group of people.

Risks

There's very little to like here. There's no clinical data, and the cash balance is poor. The company is owned by a close-knit group of people who will jointly work for the benefit of themselves. There is nothing wrong with that as long as it does not conflict with benefits to retail shareholders. However, I would have preferred a more divergent pool of opinions.

Bottomline

NVCT is too early stage to evince much interest from us. That, plus their risk profile makes me wary. I will stay away.

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