SRRK - Scholar Rock: Solid Data And Good Prospects

2024-01-12 05:32:53 ET

Summary

• Scholar Rock's stock price has increased from $6 to $16, indicating increased market interest.
• Scholar Rock develops apitegromab, a targeted therapy for Spinal Muscular Atrophy (SMA) that inhibits myostatin activation.
• Phase 2 data shows sustained improvement in motor function for non-ambulatory SMA patients receiving apitegromab. Phase 3 data expected in 4Q 2024.

In August, I said that Scholar Rock ( SRRK ) has good data, but the market isn't interested. That particular day, SRRK traded at $6. Today, SRRK is priced at $16 - the market seems to have taken notice of my article's points.

SRRK develops apitegromab, a growth factor targeted therapy for Spinal Muscular Atrophy or SMA. Apitegromab selectively inhibits the activation of latent myostatin. Myostatin is a protein found in skeletal muscles where its function is to inhibit muscle growth. This may have been a natural selection to avoid excess muscle growth that may inhibit growth in other areas of the body, like the heart or the brain. However, studies have discovered that myostatin inhibited mice - and at least one little German toddler - have enormous muscle mass. That kid, when yet a baby, could hold a 7 pound weight with his arms extended, something many adults cannot do.

This same myostatin is a legitimate target in developing therapies for various growth and muscle related diseases - muscular dystrophies. Here, the target is one such, SMA. In my earlier coverage, I highlighted the difference between apitegromab and other myostatin targeting SMA therapies. Current therapies try to deactivate mature, activated myostatin. Apitegromab, however, targets precursor myostatin, which the company says helps reduce side effects that may occur in broad-based TGF? superfamily targeting. The validity of this has been demonstrated in in-vitro studies.

The company has phase 2 proof of concept data where efficacy was observed in patients with Type 2 and Type 3 SMA over a 12-month treatment period. From TotalPharmaTracker.com, here's the efficacy data I quoted earlier:

The efficacy data from the Phase 2 TOPAZ trial extension period showed sustained and continued improvement with apitegromab for non-ambulatory patients with Types 2 and 3 SMA receiving an SMN therapy. The mean change from baseline in Hammersmith Functional Motor Scale-Expanded (HFMSE) scores at 24 months was 4.0 points (95% CI: 1.5, 6.5) for the pooled non-ambulatory patients. Additionally, the Revised Upper Limb Module (RULM) scores continued to increase at 24 months, with a mean change from baseline of 1.9 points (95% CI: 0.8, 3.0) for the pooled non-ambulatory patients. These results indicate a sizable and sustained improvement in motor function for non-ambulatory patients with SMA receiving apitegromab.

There are multiple big name drugs approved for SMA, including spinraza (nusinersen), zolgensma and evrysdi. These drugs work by preventing motor neurone degeneration, but do not directly address muscular dystrophy, unlike apitegromab which is designed to do just that. The July data readout showed that apitegromab was able to perform better than nusinersen. The actual text said:

[Apitegromab produced] substantial and sustained improvement in motor function, as well as improvements in patient-reported outcome measures in patients with nonambulatory Types 2 and 3 spinal muscular atrophy ((SMA)) receiving survival motor neuron ((SMN))-targeted therapy [here, nusinersen].

The company has completed enrollment for apitegromab's pivotal Phase 3 SAPPHIRE trial in patients with SMA, and topline data is anticipated in 4Q 2024. This is its nearest major catalyst.

The company's second clinical stage candidate is SRK-181, a selective context-independent, anti-latent TGF?-1. In a phase 1 trial, the molecule showed positive results in locally advanced or metastatic solid tumors. In heavily pretreated clear cell renal cell carcinoma (ccRCC) patients, the trial saw an objective response rate (ORR) of 21.4% and disease control rate of 57%, and the combo with pebrolizumab was generally well-tolerated. SRK-181 works by reducing anti-PD-1/PD-L1 resistance in solid tumors.

Financials

SRRK has a market cap of $1.17bn and a cash balance as of year-end 2023 of $280mn. The company completed a $98mn secondary offering in the November quarter. Research and development expense was $30.3 million for the quarter ended September 30, 2023, while general and administrative expense was $13.3 million. At that rate, they have a cash runway of 5-6 quarters.

SRRK is mostly owned by institutions and PE/VC firms, followed by a 10% retail stake. Key holders are Artal Group, FMR LLC and Samsara Capital. Insider transactions are a mix of buys and sells.

Bottomline

SRRK has a lot going besides what I discussed, including the fast moving obesity program for apitegromab, and the SRK-439 program which is fast moving to the clinic, and so on. Overall, I like SRRK. Although the price is much higher than where it was last year, the company is now more thoroughly derisked than it was last year. I like to play in the middle of the price curve - get in when the stock is derisked, get out before or during approval. That, to my mind, is a safer way to play than getting it long before PoC, and then holding on beyond approval. Considering that, I think SRRK merits cautious watching right now for a proper entry point, and if I buy, I plan to hold on till the phase 3 data, at the least.

For further details see: