PNT - POINT Biopharma: Stock Has Upcoming Catalysts With 2 Therapies In Phase 3 Trials

2023-08-01 00:23:22 ET

Summary

• POINT Biopharma has two therapies in Phase 3 development with fast track designation, which creates the potential for positive catalysts as early as this year.
• Positive results from the Phase 2 study of PNT2002 provide optimism for successful results in the Phase 3 SPLASH trial.
• I see plenty of potential stock price appreciation upon possible positive Phase 3 results and FDA approvals.

POINT Biopharma Global ( PNT ) has a bright future with two therapies in Phase 3 stages of development. I see plenty of potential upside for the stock if the company has success with these two therapies. If the company achieves successful results from the Phase 3 studies, it would likely be a positive catalyst for the stock. The possible FDA approvals for these therapies would provide steady revenue for POINT.

Company Background

POINT Biopharma develops radioligands to treat cancer. The company's 2 therapies that are in the Phase 3 development stage include PNT2002 for the treatment of metastatic castration-resistant prostate cancer and PNT2003 for the treatment of neuroendocrine tumors. POINT Biopharma also has PNT2004 in early stages of development for the treatment of various tumors. The company is also developing PNT2001, a next generation PSMA-targeting therapy which is in early stages of development for the treatment of prostate cancer.

POINT Biopharma also has products being developed on CanSEEK technology which is sub-licensed from Bach Biosciences LLC and Avacta Life Sciences Limited. However, the targeted conditions for this have not been disclosed.

The focus of POINT Biopharma as a potential investment should be on the two therapies in Phase 3 development since they can have a significant impact on the stock over the next few years.

POINT Biopharma and Lantheus Holdings ( LNTH ) entered into a license agreement for PNT2002 and PNT2003. Lantheus will license exclusive worldwide rights to POINT Biopharma for these 2 compounds. Under the agreement, Lantheus will pay POINT upfront payments of $260 million and milestone payments of approximately $1.8 billion based on US FDA approvals, net sales, and commercial milestones. Lantheus will also pay POINT Biopharma royalties of 20% of net sales for PNT2002 and 15% for PNT2003. I previously wrote about Lantheus here .

PNT2002

Under the agreement with Lantheus, POINT Biopharma will fund and complete the Phase 3 study of PNT2002 which is known as the SPLASH trial. PNT2002 is for prostate cancer that has spread beyond the prostate to other areas of the body. This will help patients with prostate cancer that does not respond to treatments such as surgery, radiation, and hormone therapy. There are few treatment options for patients facing this situation.

PNT2002 works as a radioligand therapy, providing a therapeutic dose of radiation directly to specific targets. In April 2023, the US FDA gave PNT2002 Fast Track designation , which allows for expedited review and a better chance for a quicker path to approval. The primary endpoint for the SPLASH study is radiographic progression-free survival. The secondary endpoints are overall survival, overall response rate, and duration of response.

Phase 2 results for PNT2002 were positive. The results of PNT2002 therapy demonstrated that it may potentially further forestall disease progression. Initial Phase 3 data showed that 78% of 27 patients remained event free after 7.5 months with 29.6% of patients reporting adverse events. This should provide optimism for the final results of the Phase 3 SPLASH trial to also have successful results.

PNT2003

PNT2003 which is also known as lutetium-177 Octreotate (177-Lu-DOTATATE) is a somatostatin-targeted radioligand for the treatment of neuroendocrine tumors. Phase 2 results demonstrated promising efficacy with low toxicity. The objective tumor response among 96 patients was 66% stable disease, 16% partial response, and 19% progressive disease. The study concluded that PNT2003 has the potential to further improve outcomes beyond the standard approach. PNT2003 is now in a Phase 3 stage of development. Unfortunately, I couldn't find when the results of this study are expected. With its fast track designation, it could occur within months.

Technical Perspective

POINT's stock price has been consolidating in a large bull flag formation since May 2023. The MACD indicator is showing a decrease in negative momentum as the red lines on the histogram have shortened. The RSI is showing a double-bottom which is in-line with the stock price. This set-up looks poised for the stock bounce higher. Of course, this depends on positive news going forward as negative news would likely drive the stock lower.

Balance Sheet/Cash Flow

Since POINT Biopharma is still in the development stage without commercial therapies on the market, it is important to assess the balance sheet and cash flow . POINT has $430 million in total cash and short term investments. One bright spot is that POINT carries zero debt. The company has 5.6x more current assets than current liabilities and 6.4x more total assets than total liabilities for total equity of $471.8 million. This puts the company in good shape to fund its research.

Usually, I would calculate a burn rate for biotech companies in the development stages as most are not yet profitable. However, POINT produced positive operating cash flow in 2022 and over the past 12 months. The company had $171.6 million in operating cash flow over the trailing 12 months. This was derived from positive net income of $98.1 million during that period. POINT spent $15.4 million in CapEx during the period.

POINT is in good shape for a company that doesn't have a therapy on the market yet. The partnership with Lantheus helps with this situation. Lantheus will bear the costs of commercializing PNT2002 & PNT2003 if they get FDA approvals. This reduces the need for POINT to do a share diluting capital raise. POINT will benefit from the milestone payments and royalties on net sales.

POINT Biopharma's Long-Term Outlook

POINT's stock is poised for a significant potential pop in price upon positive news for Phase 3 studies of PNT2002 and PNT2003. Possible FDA approvals of these therapies could also act as positive catalysts. Final results of PNT2002's SPLASH study could occur later in 2023. Of course there are no guarantees that positive results will be reported and delays in the Phase 3 studies could also occur. So, I would consider POINT Biopharma to be higher than average risk as an investment.

If things do go well for POINT in terms of the Phase 3 studies, then the stock could potentially outperform the market over the next year. Analysts have a one-year price target of $16 for the stock which is about 79% higher than the current price. This would price in a positive outcome for POINT's Phase 3 studies and possible FDA fast track approvals.

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