OLMA - Olema Pharmaceuticals: Advancing On Multiple Fronts

2023-11-28 11:52:30 ET

Summary

• Today, we revisit Olema Pharmaceuticals, Inc. for the first time in two years. Olema is a clinical-stage biotech company focused on developing therapies for women's cancers.
• Their primary product candidate, palazestrant, has been granted FDA Fast Track designation for the treatment of metastatic breast cancer.
• Palazestrant is advancing in development both as a potential monotherapy and as part of potential combination therapies.
• The compound just initiated its first pivotal phase 3 study, and the company recently addressed its current funding needs.
• What's next for Olema Pharmaceuticals? An updated analysis follows in the paragraphs below.

It is not in the stars to hold our destiny but in ourselves. "? William Shakespeare.

Today, we put the spotlight on Olema Pharmaceuticals, Inc. (OLMA) for the first time since our initial article on this developmental name back in early 2022. We concluded that piece stating Olema merited a "watch" item holding preferably via covered call orders. The stock has crept up a bit since then despite the more than challenging times for the biotech sector over the past few years.

However, Seeking Alpha just named Olema one of their top ten small cap stocks by quant rating this week. Will the equity live up to the new billing? We circle back on Olema Pharmaceuticals below.

Company Overview:

This clinical stage biotech concern is headquartered in San Francisco. The company is focused on the development and commercialization of therapies for women's cancers. The stock current trades just above thirteen bucks a share and sports an approximate market capitalization of $720 million.

Recent Developments:

Olema Pharmaceuticals primary product candidate is dubbed palazestrant and is also known as OP-1250 and has been granted FDA Fast Track designation for the treatment of ER+/HER2- metastatic breast cancer that has progressed following one or more lines of endocrine therapy with at least one line given in combination with a CDK4/6 inhibitor.

OP-1250 is a proprietary, oral small molecule with dual activity as both a complete estrogen receptor ((ER)) antagonist ((CERAN)) and a selective ER degrader ((SERD)). Leadership believes this approach could lead to more durable and deeper anti-tumor activity.

Palazestrant is being evaluated as a monotherapy in second- and third-line metastatic breast cancer. The initial patient in the company's first pivotal phase 3 trial "OPERA" should be enrolled sometime this quarter. Management presented encouraging data from a Phase 2 study for this indication at the European Society for Medical Oncology ((ESMO)) Congress in late October of this year.

Management also plans to present additional Phase 1b/2 clinical study results around Palazestrant as part of combo therapy with Pfizer's ( PFE ) CDK4/6 inhibitor, palbociclib to treat the same indication at the San Antonio Breast Cancer Symposium ((SABCS)) next month. Interim results from this study were disclosed in May of this year. A Phase 2 study evaluating palazestrant in combination with Novartis's ( NVS ) CDK4/6 inhibitor, ribociclib is currently enrolling patients.

The company has a couple of other much earlier stage developmental efforts that are not germane to this analysis.

Analyst Commentary & Balance Sheet:

The analyst firm community is sanguine on Olema's prospects. Since the company posted its third quarter results on November 7th, five analyst firms including JP Morgan and Jefferies have reissued Buy/Outperform ratings on the stock. Price targets proffered range from $25 to $28 a share. Here is the recent commentary from TD Cowen on Olema.

The upcoming OPERA-01 trial, which Olema Pharmaceuticals expects to initiate soon, has a high likelihood of success, particularly in treating ESR1 and WT 2/3L mBC patients. This confidence stems from the robust mPFS of 7.2-7.3 months and Clinical Benefit Rate [CBR] of 48-59% reported in the Phase II 2/3L subgroup analysis. The Phase III OPERA-01 trial won't allow prior chemo exposure which, based on the EMERALD retrospective analysis, is likely to further improve Palazestrant's results. Therefore, if Palazestrant achieves the expected mPFS of 6-7 months, it would be a game-changer and become the preferred option in both WT and ESR1 patients ."

Just over 10% of the outstanding float in the shares are currently held short. Several insiders have been frequent and consistent sellers of the equity throughout 2023. They have sold just over $1.5 million worth of shares collectively so far in the fourth quarter.

Olema Pharmaceuticals ended the third quarter of this year with just over $275 million worth of cash and marketable securities on its balance sheet after posting a net loss of $21.5 million for the quarter. The majority of the company's cash balance is due to an approximate $180 million capital raise executed this September. The company cut one quarter of its workforce early this year to conserve cash and concentrate on the development of OP-1250.

Verdict:

Since we last took a look at Olema, the company has progressed on several fronts. It produced solid results in a Phase 2 trial evaluating its primary candidate as a monotherapy and has advance it to Phase 3 development. It has recently addressed its near-term funding needs. While almost completely reliant on the success or failure of Palazestrant, the compound is being evaluated in several studies both as a monotherapy and as part of combination therapies with established CDK4/6 inhibitors.

The insider selling a bit concerning but Olema Pharmaceuticals, Inc. enjoys strong support in the analyst community. Taken all together, Olema continues to merit a " watch item" position as its pipeline continues to advance.

No one saves us but ourselves. No one can and no one may. We ourselves must walk the path ."? Gautama Buddha.

For further details see: