SWTX - SpringWorks Therapeutics: Pfizer Offshoot With Interesting Pipeline

2023-04-14 10:25:31 ET

Summary

• SpringWorks Therapeutics, Inc. has had a spate of troubles with data recently.
• However, its lead asset has a near-term PDUFA, and approval looks likely.
• SpringWorks Therapeutics has a decent cash runway.

I covered Pfizer (PFE) spinoff SpringWorks Therapeutics, Inc. (SWTX) exactly two years ago , and the stock is down 65% since, mostly because each of its two lead assets - Nirogacestat and Mirdametinib - has problems. Mirdametinib has a patent problem - its composition of matter patent expired last year, but the good news is, it got a new one; while Nirogacestat has a data problem - its multiple myeloma trial testing it against GSK's BLENREP (trial conducted by GSK) was a failure, while its desmoid tumors trial - an indication for which it now has an August 27 PDUFA - has safety problems.

This is the impressive-looking pipeline of the company:

Nirogacestat is the lead candidate, and the lead indication is desmoid tumors. Desmoid tumors are noncancerous, but they are anything but benign. While their cells do not metastasize, they are locally aggressive, can be very painful, and are sometimes fatal. According to a report :

Desmoid tumors are rare; they account for approximately 0.03 percent of all neoplasms and fewer than 3 percent of all soft tissue tumors. The estimated incidence in the general population is two to four per million population per year.

Two years ago, after completing successful phase 1 and 2 trials, Nirogacestat had a phase 3 trial running in this indication. In May last year, the company announced topline data which saw the molecule meet the primary endpoint of PFS successfully, as well as meeting a number of key secondary endpoints. It was also safe and well-tolerated in the general population, however there was a singular problem :

While nirogacestat was well tolerated and found to have a manageable safety profile, many women with childbearing potential reported adverse events, which are typically seen with ovarian dysfunction, the company added. The stock had a distinct local peak in February last year, and had since been falling - this news must not have helped them recover. Indeed, while the stock was generally falling then, on May 24 there was a sharp drop and it quickly reached 1-year lows.

Despite all that, the company went ahead with an NDA, which was accepted by the FDA with a fast track designation, and PDUFA date was set for August 27 this year.

In August, there was another piece of bad news when Allogene announced it would be dropping nirogacestat from dose expansion cohorts in a cancer trial. The drug was to be tested along with Allogene's anti-BCMA AlloCart ALLO-715 in a phase 1 trial in patients with multiple myeloma. However, citing lack of evidence of efficacy, Allogene canceled the plan. This, too, did not help the stock.

Allogene's decision follows from the failure of nirogacestat in the GSK-sponsored BLENREP comparison trial in multiple myeloma. Nirogacestat had an ORR of 38% in each of the two cohorts, while BLENREP had 50%. However, there were much higher ocular events in the BLENREP monotherapy arm. Failing on efficacy, however, there's no way the safety profile alone will help the molecule. Nirogacestat for MM is a complete disaster.

I covered the company's patent estate last time. I noted that nirogacestat is well protected by composition of matter patents till 2039, but mirdametinib loses its patent protection in 2022. This was a composition of matter patent. However, in July 2021, sometime after my coverage, polymorphic forms of mirdametinib were given a composition of matter patent that would expire only in 2041. This is the same strategy the company followed with nirogacestat. Its composition of matter patent is expiring in 2025, however a composition of matter patent for certain polymorphic forms expires in 2039. Thus, this is the one good news I can see in the last couple of years.

Mirdametinib is being studied as a monotherapy in Adult and pediatric NF1-associated plexiform neurofibromas. Top line data from Phase 2b ReNeu trial in NF1-PN is expected in 2H 2023.

Financials

SWTX has a market cap of $1.5bn and a cash balance of $597mn. R&D expenses were $37.9 million for the 2022 fourth quarter, while G&A expenses were $40.5 million. At that rate, the company is well-funded for over 8 quarters.

SWTX has heavy institutional ownership, and very little retail. The top holders are all the usual names - FMR LLC, Orbimed, and Bain, which is one of the founding principles. The insider transactions are just a list of sales.

Bottom Line

SpringWorks Therapeutics, Inc.'s key catalyst right now is the PDUFA, and the underlying trial was by all reports a success. However, if you look at the graph of the stock price that day, May 24, 2022, you can see a sharp drop, from above $33 to below $20, within a matter of days:

It is difficult to explain such a large drop by profit-taking alone, especially because, unlike in profit-taking situations, SpringWorks Therapeutics, Inc. stock hasn't recovered in nearly a year. I attributed the fall to the ovarian dysfunction thing, but that alone also cannot explain this sharp drop. So that remains a worry, and the PDUFA is by no means a slam dunk.

Even if the drug gets approved, desmoid tumors is not a major market, and there's some competition in the form of a small company named Ayala Pharmaceuticals, Inc. (ADXS) which has a rival drug. Backup options like multiple myeloma have not worked out, either. True, the other drug, mirdametinib, is a backup option, but we still need to wait for data here. Meanwhile, SpringWorks Therapeutics, Inc. does have a lot of cash and some major collabs. Considering all that, I am going to watch SpringWorks Therapeutics, Inc. from the sidelines, but closely.

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