RHHBF - Poseida: Allogeneic CAR-T Biotech With Established Partner

2023-04-25 08:35:07 ET

Summary

• Updated results from phase 1 studies, using P-MUC1C-ALLO1 for epithelial cancers and P-BCMA-ALLO1 for multiple myeloma, are expected at upcoming medical conference in 2023.
• Partnership with Roche to advance several allogeneic CAR-T cell therapies; Potential for Poseida to earn up to an aggregate $6 billion in milestone payments based on this partnership.
• An IND to initiate a phase 1 study using P-CD19CD20-ALLO1 for the treatment of patients with B-cell malignancies is expected to be filed in mid-2023.
• Several gene therapy candidates in the pipeline being advanced to treat patients with Hemophilia A, pulmonary arterial hypertension and OTC Deficiency.

Poseida Therapeutics ( PSTX ) is a great speculative biotech play to look into. The reason why I state that is because there are three key programs to keep an eye on, which might even produce shareholder value in 2023. The three clinical candidates to keep an eye on would be P-MUC1C-ALLO1, P-BCMA-ALLO1 and P-CD19CD20-ALL01. All three of these clinical candidates are allogeneic CAR-Ts. Two of them are in phase 1 testing and then the third one P-CD19CD20-ALLO1 is expected to enter the clinic in humans this year. Another huge positive for this biotech is that it has already entered into a partnership with Roche (RHHBY) to advance several CAR-T clinical candidates. Speaking of which, two of them I noted above P-BCMA-ALLO1 and P-CD19CD20-ALLO1, are being advanced in collaboration with Roche. In addition, it has several gene therapies which are being advanced for liver diseases. However, such programs are in very early-stage testing, so they may be relevant to consider a few years from now. This all sounds great, but what exactly is in it for an investor now? The reason why I believe it is a good time to point out this particular biotech at this time is because it has a few catalysts to be released in 2023. Matter of fact, there are going to be three catalysts to keep an eye one. The first catalyst would be results from a phase 1 study, using P-MUC1C-ALLO1 targeting solid tumors that are composed of epithelial cell type cancers (breast/ovarian cancers), which are expected at a medical meeting coming up in 2023. A second catalyst would be results from a phase 1 study, using P-BCMA-ALLO1 for the treatment of patients with relapsed/refractory multiple myeloma [R/R MM], which are expected at a medical meeting in 2023. One quick item to point out is that the release of data from this particular study is going to be subject to permission from Roche to do so. In essence, this catalyst remains up in the air, but still good to mention nonetheless. The final catalyst to consider would be an IND filing of P-CD19CD20-ALLO1 to be explored in a phase 1 study, which is expected to start in mid-2023. The company is also advancing several gene therapy programs either alone or with a partner.

P-MUC1C-ALLO1 For The Treatment Of Patients With Epithelial Type Cancers

The main clinical program in the pipeline involves the use of P-MUC1C-ALLO1 (allogeneic CAR-T), which is being developed to treat patients with epithelial type cancers. Such cancers that are considered to be composed of epithelial cells might be breast cancer and ovarian cancer. Ovarian cancer is a type of cancer that occurs in the ovaries of a woman. The female reproductive system contains two ovaries. These ovaries are important because they produce eggs, release estrogen and progesterone hormones. What makes this type of cancer difficult to treat, like some others, is that it often goes undetected until it has spread to other parts of the body. In the case of ovarian cancer, the cancer spreads to the stomach and pelvis areas. When this type of cancer is found early on, there are hardly any symptoms and it can be treated easily. Unfortunately in the advanced stage this cancer is hard to treat. There are symptoms that occur, but can often be mistaken for other possible diseases. Such symptoms are:

• Urge to urinate frequently
• Quick weight loss
• Pain in the pelvic area
• Abdominal issues/pain

This is quite a large market opportunity for Poseida Therapeutics to go after. It is expected that the global ovarian cancer market is expected to reach $4.6 billion by 2026 . Even then, it is growing by 18% each year which is also good news. Breast cancer occurs when the cancer has gone into cells of the breasts. It more so occurs in women, but on rare occasions can occur in men as well. Symptoms that these patients might experience are as follows:

• Lump in breast
• Changes in shape or texture of nipple or breast
• Discharge of blood from nipple

Typically, you would see these patients receive chemotherapy, radiation/surgery. However, there have been several drugs approved to treat breast cancer. It is estimated that the global breast cancer therapeutics market size could reach $55.27 billion by 2027 . This is another large market opportunity for Poseida. This is the phase 1 program which Poseida Therapeutics is running on its own (not partnered with Roche for this one). However, to date the biotech had established preliminary safety and efficacy data , which was presented at a medical conference back in 2022.

Major Partnership With Roche

It's important to note that Poseida has already established a partnership with Roche to advance several candidates in its pipeline. That is, Poseida Therapeutics had already established a major partnership With Roche back on August 3, 2022 . It entered into a broad strategic collaboration and license agreement with Roche in order to advance allogeneic CAR-T therapies to treat patients with hematological malignancies. Such hematological malignancies it is advancing "off-the-shelf" cell therapies against are as follows: Multiple Myeloma [MM], B-cell lymphomas and other types. Under the terms of the deal, Roche obtained exclusive rights or options to develop and commercialize a number of allogeneic CAR-T programs in Poseida's pipeline. Two of the clinical candidates, being advanced in collaboration with Roche, are P-BCMA-ALLO1 for the treatment of patients with multiple myeloma [MM] and then P-CD19CD20-ALLO1 for the treatment of patients with B-cell malignancies. The reason why I call this a major partnership is because of the large amount of potential milestone payments possible. What does this mean? Well, under the agreement Poseida received an upfront payment of $110 million and could be eligible to receive up to as much as $110 million in near-term milestones and other payments over the next several years. More importantly, should all programs being advanced pan out (get to phase 3 studies/regulatory approvals), then Poseida could earn milestone payments up to as much as an aggregate amount of $6 billion. Along with the potential to receive tiered net sales royalties into the low double-digits.

Financials

According to the 10-K SEC Filing , Poseida Therapeutics had cash, cash equivalents and short-term investments of $282.5 million as of December 31, 2022. The reason for the cash on hand is likely thanks to the partnership that Poseida established with Roche, where it received an upfront payment of about $110 million which was recognized in Q3 of 2022. It believes that it has enough cash on hand to fund its operations into at least mid-2024. This means, that I do expect a cash raise to occur in the coming months. That's because biotechs tends not to wait until the very end to raise cash. They try to raise cash at least 6 to 10 months before they run out. In my opinion, I believe that it might try to raise cash in the coming months after it releases results again from the ongoing phase 1 studies it has. It expects to reports results from two phase 1 studies at an upcoming medical conference in 2023. Of course, it could also choose to raise cash immediately before such events. My point here is that you should expect a cash raise to happen with this biotech at any moment.

Risks To Business

There are several risks that traders/investors should be aware of before investing in this biotech. The first risk to consider would be with respect to the ongoing allogeneic CAR-T cell therapies of P-MUC1C-ALLO1 and P-BCMA-ALLO1. While positive preliminary results were released back in December of 2022, there is no guarantee that both therapies will continue to deliver positive data as the trial progresses. That's why it will be important to see if, updated data to be released at a medical meeting in 2023, will continue to show positive progress for both of these allogeneic CAR-T cell therapies. Again, the ability to release data specifically for P-BCMA-ALLO1 will highly depend upon if partner Roche wants to do so. A second risk to consider would be with respect to the ongoing partnership that Posedia has with Roche. Such a partnership will only remain intact if clinical data generated over the years is positive. If Roche feels that results from several of the ongoing programs don't live up to expectations, then it's possible it could terminate the partnership agreement. In that case, Poseida won't be eligible to receive up to $6 billion in potential milestone payments. The final risk to consider would be with respect to the financial position. With funds expecting to last until at least mid-2024, I believe that it will need to raise cash again in the coming months. Thus, the raising of cash through an offering or other means would dilute shareholders.

Conclusion

The final conclusion is that Poseida Therapeutics is a good speculative biotech to keep an eye on. That's because preliminary proof of concept data had already been released at a medical conference back in 2022, both for P-MUC1C-ALLO1 and P-BCMA-ALL01 allogenic CAR-T cell therapy programs. Not only that, but this company has already gained the interest of Roche as a partner to advance several of these CAR-T cell therapy programs. Matter of fact, it could earn up to an aggregate amount of $6 billion should all the clinical candidates succeed. I also mentioned above in the beginning that it has gene therapy programs it is advancing in the pipeline. Two of the gene therapy programs dealing with Hemophilia A and pulmonary arterial hypertension [PAH] have been partnered out with Takeda Pharmaceuticals. Then, P-OTC-101 is being advanced by Poseida alone for the treatment of patients with OTC Deficiency. With Proof of concept established with two allogeneic CAR-T cell therapy programs, plus the advancement of several gene therapies in the pipeline, these are the reasons why I believe that Poseida Therapeutics is a good speculative biotech play to look into.

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