2023-06-20 19:22:03 ET
Summary
- BCEL has improved enrollment rates in its phase 1b ATRC-101 study, with 81 patients enrolled as of May 10, 2023.
- The company has enough cash to reach the readout from another round of data in the ATRC-101 trial, but may only have a couple of quarters of cash left after that.
- Despite concerns about the study generating high-impact data, BCEL has potential upsides such as the XNCR deal and its antibody generation platform.
When I last wrote about Atreca ( BCEL ) in April, the company had just provided an update on results from its phase 1b trial of ATRC-101 in various cancer types. At that time I rated the name a hold on the basis that the updated data from the trial didn't include any new partial or complete responses, which might have otherwise allowed BCEL's stock to run and the name to raise cash. ATRC has since reported Q1'23 results and provided an update on enrollment which allows a reconsideration of the BCEL thesis.
Figure 1: Past six months of BCEL trading.
Patient enrollment rates in focus
When BCEL reported data on March 29, 2023, the company noted it had enrolled 71 patients as of the data cutoff of February 17, 2023. At that time, BCEL was planning to enroll a further 30-40 patients before year-end 2023, to make a go or no-go decision. With BCEL's Q1'23 earnings reported on May 10, we find the company has now enrolled 81 patients "to-date" in its ATRC-101 phase 1b study. That means in the 82 days between February 17 and May 10, BCEL had enrolled 10 more patients.
If ATRC continues to enroll patients at a rate of 10 per 82 days, then in 164 days from May 10 (October 21, 2023) it could enroll 20 more patients, thus reaching the target of 30 patients by early Q4. There needs to be time, however, to dose those patients and evaluate any response to the therapy prior to reporting.
Judging by the current enrollment rates, on which the company has made progress, BCEL should be able to report data from 30 new patients by year-end, but probably not 40 new patients, unless enrollment rates tick up further. It previously took a year from the March 2022 update to the March 2023 update to enroll another 21 patients. As such BCEL has delivered on improving enrollment rates, as it discussed in its Q4'22 earnings call in March. Still, 40 new patients of data would have me feeling more positive about BCEL's odds of reporting another PR or CR that might excite the market and allow BCEL to raise cash.
Financial Overview
As of March 31, 2023, BCEL had cash, cash equivalents and investments of $56.4M. Net loss was $21M for Q1'23 with R&D expenses of $13.5M, although that included the non-cash item of $1.4M in stock-based compensation, and SG&A expense was $8.1M, with $1.8M of that being non-cash. Net cash used in operating activities was $14.4M in Q1'23, so with $56.4M in cash at the end of the quarter, BCEL can make it about four quarters from the end of Q1'23 (i.e., to Q1'24). What matters right now is making it to the readout from another round of data in the ATRC-101 trial and the company can certainly make it there, they just won't have much cash when they get there unless they raise some between now and then.
As of May 10, 2023, there were 32,441,143 of BCEL's Class A stock outstanding and 6,715,441 shares of BCEL's Class B stock outstanding (39,156,584 shares total) corresponding to a market cap of $45.03M ($1.15 per share). ATRC then trades below cash, but I'd expect the name to burn through another ~$14M per quarter in Q2 and Q3'23, before it is likely to produce a readout from the additional 30-40 patients it had hoped to enroll.
Conclusions
BCEL's update on enrollment numbers in the phase 1b ATRC-101 study with Q1'23 earnings in May has provided us with confirmation of improved enrollment rates. Generating another 30-40 patients worth of data by year-end, with which to make a go/no-go decision on a phase 2 study, seems likely, but more so on the bottom end of that range. Either way the name has the cash to make it to that readout, but it might only have a couple of quarters of cash when it gets there. Certainly it can cut back on R&D expense if it isn't going ahead with a phase 2 study of ATRC-101, but it still has the Xencor ( XNCR ) development to engage in, and the company is planning to progress some of its other pipeline members to the clinic.
I still can't rate BCEL a sell despite my concerns on whether or not the ATRC-101 study will generate enough high impact data to move the stock, because of a number of upsides that remain. Firstly, even with 30 patients worth of data rather than 40, there is still a chance ATRC-101 impresses. Secondly, the XNCR deal is still in place and BCEL won't be completely out of cash by the end of 2023. Lastly, BCEL's antibody generation platform is certainly of value and even if the ATRC-101 data isn't strong enough to provide much of a rally in the stock a partner might be interested in stepping in to fund further development of ATRC-101 or its modification (such as weaponization into an antibody-drug conjugate). In any case slide 36 of ATRC's June Corporate Presentation notes that the company is exploring potential partnership opportunities for ATRC-101.
The risks of holding BCEL are severalfold, a few of which a discussed here. Firstly, if subsequent updates on enrollment rates disappoint BCEL could trade down and the risk it doesn't produce strong enough data to move the market increases. Secondly, even if BCEL enrolls the target 30-40 patients, the data could disappoint. Lastly, cash burn picking up could create even greater concerns on how much cash BCEL will have left over when the phase 1b study reads out.
For further details see:
Atreca Approaches A Major Go/No-Go Decision