INCY - Replimune: Q4 2023 Data Readouts Of RP1 Makes This A Must Watch

2023-08-14 17:28:47 ET

Summary

• Replimune Group, Inc. results from the registration-directed phase 2 CERPASS trial, using RP1 + Libtayo for the treatment of patients with cutaneous squamous cell carcinoma, are expected Q4 of 2023.
• The cutaneous squamous cell carcinoma treatment market is expected to reach $16.86 billion by 2027.
• Potential to tap into neoadjuvant cutaneous squamous cell carcinoma setting with RP1 by combining it with Incyte's oral PD-L1 inhibitor INCB99280.
• Results from the anti-PD1 failed melanoma cohort from the IGNYTE study, using RP1 in combination with Opdivo, are expected Q4 of 2023.

Replimune Group, Inc. ( REPL ) has been making great progress lately with respect to its advancement of RP1, which is being advanced for both cutaneous squamous cell carcinoma [cSCC] and melanoma patients. There was a small delay in the data which caused the stock to trade lower a few weeks ago. However, since then it has been able to recover back to trading around the $19 per share range. Why I believe that REPL might offer investors the potential to make gains is because the catalyst that was supposed to come out in Q3 of 2023 hasn't been pushed up that far. It is expected that results from the registration-directed phase 2 CERPASS trial now will be released early Q4 of 2023. This was a small delay, but I believe that this catalyst is still not that far away.

Should the data turn out to be positive, that is, meet the primary endpoint of the study, then Replimune intends to file its Biologics Licensing Application [BLA] to the FDA in either Q1 or Q2 of 2024. However, such potential can be further expanded upon. How so? Well, that's because RP1 is not only being explored in the phase 2 CERPASS trial for the treatment of patients with cSCC. It is also being explored in another potential registration-directed phase 1/2 study known as IGNYTE. This other IGNYTE study is exploring the use of RP1 for the treatment of patients with melanoma. In particular, should positive data come out from the anti-PD-1 failed melanoma cohort from it, then the company could also file a BLA of RP1 for this indication along with the cSCC patient population. That is, it could combine the BLA submissions together if warranted.

Q4 Of 2023 Catalyst of RP1 In Patients With Cutaneous Squamous Cell Carcinoma Approaches

Replimune has been advancing its registration-directed CERPASS clinical study , which is using RP1 in combination with Libtayo [cemiplimab] to treat patients with cutaneous squamous cell carcinoma. Cutaneous squamous cell carcinoma is a type of skin cancer which is characterized as accelerated growth of squamous cells. It is the second most common form of skin cancer and is said to be five times more prevalent than melanoma in the United States. It is said that cSCC has a poor prognosis and this is especially true if it invades vital structures in the body such as the lymph nodes. It can be a devastating type of disease, because cancer cells may grow beyond the epidermis of the body. Not only that, but sometimes it can metastasize and become fatal. These are some of the symptoms that might be associated with this disease:

• Rough scaly area.
• Brown spot on the skin.
• Open sore on skin.
• Wart-like growth being formed.
• Sore developing into an old scar.

The cutaneous squamous cell carcinoma treatment market is expected to reach $16.86 billion by 2027 . This is a large market opportunity for sure, and if Replimune is successful with its data readout in Q4 of 2023 from its CERPASS trial, then it will be a good first step in tapping into this market. That's because successful results won't be the only hurdle, should the primary objective of the study be met. That's because then the company would have to file a Biologics Licensing Application [BLA] of RP1 for the treatment of patients with cSCC thereafter. Such a filing is expected to happen either in Q1 or Q2 of 2024. Thus, the second hurdle that it would have to do would be to receive U.S. marketing approval from the FDA for this patient population.

What might reduce risk slightly of RP1 for cSCC, is that Replimune has already been able to form a collaboration agreement to advance RP1 together with Incyte's ( INCY ) oral PD-L1 inhibitor INCB99280 for this patient population. Specifically, this combination is going to be given to patients with unresectable, high-risk cSCC in the neoadjuvant setting. Hopefully, the CERPASS trial will turn out to be successful, but if not, this neoadjuvant patient setting provides another shot on goal for this cSCC patient population.

As I noted above, it is possible that the company might be able to submit the BLA of RP1 for both the cSCC indication and the anti-PD1 failed melanoma cohort as well in the 1st half of 2024. That's because RP1 is also being explored in the IGNYTE study. This particular study is exploring the use of RP1 in combination with Bristol Myers Squibb ( BMY ) Opdivo for the treatment of patients with multiple tumor types. However, there is one cohort that is registration-directed, which is the anti-PD1 failed melanoma one. Enrollment of 141 patients in this registration-directed portion of the trial is complete. It is expected that data for all of these 141 patients from this cohort will be released in Q4 of 2023.

Meeting the primary objective of this study would also allow a BLA filing for the anti-PD1 failed melanoma patient population as well. Thus, if it all works out, then Replimune will have the ability to be able to file a BLA for both of these patient populations. It remains to be seen how this data will turn out, but there was some prior positive data taken from the first 75 anti-PD1 failed melanoma cohort combined with 16 anti-PD1 failed melanoma patients from the prior all comes 30 patient melanoma cohort [91 patients in total]. Such data showed that patients who took RP1 in combination with Opdivo achieved an overall response rate [ORR] of 37.4% in a median follow-up of 75.9 weeks.

Financials

According to the 10-Q SEC Filing , Replimune had cash, cash equivalents and short-term investments of $539.1 million as of June 30, 2023. It has been able to fund itself to date primarily through the sale of equity securities and to a lesser extent proceeds generated from borrowing under a secured loan facility. Through June 30, 2023, has been able to receive net proceeds of $935.9 million through the sale of shares of common stock and warrants exercisable for common stock in public offerings and at-the-market offerings. As well as receiving a net of $27.8 million from the incurrence of debt under the term loan agreement with Hercules.

Based on its expenses, the company believes that its existing cash will be enough to fund its operations into the 2nd half of calendar year 2025. With the cash on hand it has, there is no near-term risk of dilution. On the flip side, I believe it just highly depends upon what happens in Q4 of 2023. It is expected to deliver a few data readouts at that time. Thus, if the stock trades higher on the back of positive results from either the CERPASS trial or the IGNYTE trial, then it's quite possible management may choose to raise cash a lot earlier than expected.

Risks To Business

There are several risks that investors should be aware of before investing in Replimune. The first risk to consider would be with respect to the upcoming data readout of the phase 2 registration-direct CERPASS trial, which is using RP1 in combination with Libtayo for the treatment of patients with cutaneous squamous cell carcinoma [cSCC]. Such data is expected in early Q4 of 2023 and there is no guarantee that the primary endpoint will be met.

A second risk to then consider would be the BLA of RP1 for the treatment of this patient population. Even if the primary endpoint of the CERPASS trial is met, along with the BLA being filed, there is no guarantee that the FDA will approve this drug.

A third risk would be with respect to the advancement of the phase 1/2 IGNYTE study program, with respect to the anti-PD1 failed melanoma patients. Results are expected to be released in Q4 of 2023 and there is no assurance that the primary endpoint for this study will be met either.

In addition, should successful results be achieved here, then a BLA filing of RP1 for this patient population would also be possible. However, there is no assurance that Replimune will receive FDA approval of RP1 for this particular indication.

Conclusion

Replimune has made great progress in advancing RP1 for the treatment of patients with cutaneous squamous cell carcinoma [cSCC] and anti-PD1 failed melanoma. Should it be able to file a BLA of RP1 for either one or both of these indications, then it could tap into a few huge market opportunities. Just being able to tap into the cSCC market alone would be huge. It is expected that the cutaneous squamous cell carcinoma treatment market could reach $16.86 billion by 2027.

A good thing about this biotech is that it is already thinking about expansion opportunities for its pipeline. For instance, when looking at the cSCC patient population, it has already started a way to explore the use of its RP1 drug together with Incyte's oral PD-L1 inhibitor INCB99280 in patients with unresectable, high-risk cSCC in the neoadjuvant setting. While RP1 has been designed with the backbone of HSV backbone of GALV-GP R- protein to enhance tumor killing, there are other drugs in the pipeline that are encoded with additional proteins. RP2 adds an anti-CTLA-4 antibody into the mix and then RP3 adds activating ligands CD40L and 4-1BBL.

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