2023-06-12 04:39:44 ET
Summary
- CytomX Therapeutics has an interesting platform.
- Its own proofing trials for the platform failed.
- However, big pharma is still very much interested, as 3 recent collaborative developments show.
Two, three years ago, CytomX Therapeutics ( CTMX ) was at the cusp of greatness. It had three things going for it. First, it had a novel, conditionally activated Antibody Drug Conjugate ((ADC)) platform that could be used to target previously undruggable proteins. Second, it had major (on-paper) partnerships with multiple big pharma companies. Third, there was early data showing signs of efficacy of lead candidate Praluzatamab ravtansine (CX-2009) in TNBC and HR+/HER2- breast cancer patients.
The platform works using a masking/unmasking process where a part of the ADC latches on to a protease when it is present in or near the tumor microenvironment, but avoids that same protease when it is present in healthy cells. These are proteins which were previously undruggable because they were present in both tumor and healthy cells. This platform produced considerable interest in big pharma, with Pfizer, AbbVie, BMS, Astellas and Amgen partnering with this small company. To top it all, the company produced strong phase 1 data at ASCO 2021 which showed encouraging anti-cancer activity, including multiple partial responses in heavily pretreated advanced tumors, and an acceptable toxicity profile. Phase 2 data from both CX-2009 in breast cancer and CX-2029 in advanced squamous non-small cell lung cancer and head and neck squamous cell carcinoma were due in a few months, and investors were looking for a windfall.
However, by early 2022, the company was in tatters, following phase 2 data readout from these candidates. The stock has been on a downward slide ever since, and hasn't recovered.
Interim phase 2 data for CX-2029 was published in December 2021. Data showed ??an objective response rate of 18.8% and a disease control rate of 87.5% rate in lung cancer patients. For head and neck cancer patients, the figures were, respectively, 4% and 56%.
ORR Is the sum of complete responses and partial responses, divided by the total number of patients, expressed in percentage. DCR is a broader measure, including not only CR and PR but also patients with stable disease, i.e. where the tumor is neither shrinking nor progressing. It is simple mathematics to see that when the DCR is high but the ORR is low, a lot more patients are getting SD than PR or CR. This would not have been so bad if the CR+PR rate was at least in an acceptable zone. However, the trial saw no CRs and the following few PRs:
Trial data (CTMX website)
This was a disappointment.
6 months later, CTMX announced data from CX2009 in breast cancer. Data was poor once again. While there was some positive in HR/HER2- breast cancer, there was nothing good in TNBC. Here's the data :
- CTMX said the study met the primary endpoint of objective response rate of greater than 10% in HR+/HER2-non-amplified breast cancer.
- However, in arm B of the study, the objective response rate was less than 10% in patients with advanced triple-negative breast cancer.
- Subsequently, CTMX said enrollment in arms B and C of the study will be discontinued.
- The study showed a clinical benefit rate of 40% and the patients showed a median progression-free survival of 2.6 months.
- CTMX CEO Sean McCarthy also said that the company does not plan to further advance the praluzatamab ravtansine program alone due to current market conditions and will seek a partner.
Several analyst firms downgraded the stock. CTMX cut its workforce by 40%. Most unfortunately for the company, in March this year, AbbVie cut itself loose from the CX2029 deal it had struck with CTMX in 2016. The stock went into a slump.
It is only in the last 6 months that CTMX is showing some signs of recovery. These developments stem from CytomyX's original prowess as a leading developer of conditionally activated antibodies, a leadership that was marred by its own poor trial data, as well as by earlier issues with its BMS and PFE collabs (old news, discussed in my earlier coverage, and probably not related to any loose ends in CTMX technology). These collaborations show that, although CTMX failed to do its own trial well, there is persistent interest in its conditional activation technology, and that the technology has value.
In November, Regeneron signed a $2bn, $30mn upfront deal with CTMX to combine CTMX's conditional activation technology with Regeneron's Veloci-Bi bispecific antibody development platform. The agreement requires CTMX to collaborate with Regeneron to identify and validate conditionally active bispecific antibodies, whereafter Regeneron will take over preclinical and clinical work. The collaboration puts CTMX in a very early stage R&D stage position, where it demonstrated its abilities earlier.
The companies said this technology has the potential to minimize off-target effects for these next-generation T-cell engaging therapies, potentially addressing tumor types that have historically been unresponsive to immunotherapy.
In January, Moderna signed a deal with CTMX to collaborate and develop mRNA-based therapies for oncology and non-oncology conditions. CTMX received an upfront payment of $35M, including $5M of pre-paid research funding, and is eligible to get up to about $1.2B in future development, regulatory and commercial milestone payments.
In January, the company also received a $5mn milestone payment from Astellas after getting the first clinical candidate under their Probody T-Cell Engaging Bispecific (TCB) agreement. In the same quarter, Bristol Myers Squibb also advanced their partnered Anti-CTLA-4 non-fucosylated Probody®, BMS-986288, from Phase 1 to Phase 2 clinical trial.
These developments helped the stock spruce up a little. These showed that despite its fall from grace, CTMX still had respectable technological prowess, and that their conditional activation platform still had value. The key problem, though, is that this value needs to be demonstrated at least once in a registrational clinical trial. Whether BMS does it or some other partner, or whether CTMX does it themselves is moot. But for the company to unlock its value, such a proof of concept - not proof through collabs but through trials - is necessary.
Financials
CTMX has a market cap of $111mn and a cash balance of $204mn, a rare occurrence which again demonstrates the validity of my opinion. Research and development expenses decreased by $9.4 million during the three months ended March 31, 2023 to $21.2 million, while general and administrative expenses decreased by $2.6 million during the three months ending March 31, 2023 to $8.0 million. At that rate, they are funded for 5-6 quarters.
Risks
Lack of a proof of concept despite being in the market for 15 years is their key limitation. Cash is, surprisingly, not a problem right now. The small market cap, coupled with low volatility, may create some problem for investors.
Bottomline
CTMX is still a stock to watch. The BMS phase 2 trial may deliver proof of concept eventually. I will stick to the sidelines until that happens. Some years ago, I bought some shares at around $5/share and was able to sell out at a small profit. As is my strategy, I retained some shares, but got out in January last year at a small loss.
For further details see:
CytomX Therapeutics: Three Reasons That Show It Is Down But Not Out