2023-08-24 08:40:40 ET
Summary
- Nanobiotix is an oncology-focused biotech aiming for its first drug approval, with a tripled value since the beginning of 2023.
- Their flagship molecule, NBTX3-RT, is showing promising results in enhancing the efficacy of radiotherapy for various solid tumors.
- A recent licensing agreement with Janssen provides significant funding and de-risking for Nanobiotix's next steps.
Topline Summary
Nanobiotix (NBTX) is an oncology-focused late-stage clinical biotech headquartered in France. Their main deliverables include radiosensitizers designed to improve the efficacy of radiotherapy for various solid tumors. Having tripled in value since the beginning of 2023, NBTX is poising itself for key data readouts in head and neck cancer in 2024. While they reported a substantial net annual loss in 2022, they have the funds to see through the initial stages of filing, making this stock have some significant risk but with substantial upside.
Pipeline Overview
NBTX's flagship molecule is NBTX3-RT, comprised of nanoparticles of hafnium oxide. This agent is injected into tumors, where it is intended to enhance the absorption of ionizing radiation, in essence allowing the tumor to capture more of the radiation than surrounding tissues.
The company is investigating this approach in a number of hard-to-treat tumors. Arguably the most important of these right now is as an add-on to chemotherapy and radiation therapy for patients with head and neck cancer. In a phase 1b/2 study that was terminated due to the cancellation of a partnership with the company conducting the study, patients with locally advanced disease had a disease control rate of 100%, with 58.3% achieving an objective response.
These findings are now being confirmed in a phase 3 pivotal study called NANORAY-312 , which is enrolling elderly patients with locally advanced head and neck cancer to undergo radiotherapy ± cetuximab, with or without NBTXR3. The primary objective is progression-free survival, and the company guides that interim phase 3 data will be available in the second half of 2024.
NBTX is also planning a study evaluating NBTX3 with radiation therapy plus anti-PD-1 therapy for patients with recurrent and/or metastatic head and neck cancer, based on the finding that enhancing radiation responses could improve the efficacy of immunotherapy .
The potential pipeline doesn't end there. NBTX has also provided preliminary evaluations of their approach in other therapeutic contexts. For example, in a phase 2/3 study in patients with soft tissue sarcoma, NBTXR3 doubled the rate of pathological complete response (16% vs 8% observed with radiation therapy alone; P = .044), with no apparent increase in toxicity due to NBTXR3 treatment. Furthermore, more patients were able to undergo complete resection with NBTXR3.
In another phase 1b/2 study , out of all evaluable patients with locally advanced rectal cancer, the disease control rate was 100%, with 64.5% having an objective response.
Beyond these early findings, NBTX has published some very early findings suggesting that NBTXR3 treatment is feasible in patients with other cancers like pancreatic cancer . So there are many tendrils to this project, and it will be exciting to see how the story continues to evolve.
Financial Overview
In their annual 2022 filing, NBTX reported that they held 41.4 million euro, with total assets rising to 59.8 million euro. Their net loss was a reported 57.0 million euro.
At this rate, the company had roughly 1 year's worth of capital if they are able to tap assets, as well.
However, a licensing agreement announced in July 2023 with Janssen has come to the rescue, providing $30 million in upfront cash, along with regulatory and developmental support for the NANORAY-312 study. The deal is worth a total of up to $1.8 billion, taking into account various milestones, in addition to another potential $650 million for five new indications, with another $220 million per indication as decided between the two companies.
In exchange, NBTX has ceded rights to commercialize NBTXR3 in most markets around the world, save for those previously licensed to LianBio. NBTX will still get double-digit royalties.
This partnership is set to both help control cost overgrowth and seed the funding for NBTX's final push toward regulatory approval.
Strengths and Risks
The science behind NBTX is interesting and encouraging so far. There has not been very much disclosed in the way of long-term efficacy outcomes, especially from their larger sarcoma study. Complete resection and pathologic complete response rate improvements are great, but they don't mean as much if they don't end up leading to improvements in survival. And the only long-term follow-up we've seen relates to safety findings only. This is their largest study, and unfortunately it's not yet enough to change practice.
So it goes with all of their early studies. This is an approach with an interesting signal of efficacy, but any investor should come in being very skeptical of what we're going to find from larger trial readouts. So the science is an interesting, novel nanotech, but one that's unproven. Don't get married to phase 1/2 data.
That said, without a doubt, a big pharma partnership provides a massive amount of de-risking to NBTX. Being able to carry through the program's FDA submission and await a decision with basically no risk of further dilution (although it's not off the table completely) makes this an attractive investment opportunity, even after the partnership's gains have been factored in.
A note for those watching: NBTX announced that they were in final contract negotiations 2 months in advance of announcing the partnership .
Bottom-Line Summary
At a total market cap of $339 million at the time of writing, NBTX stands poised to gain its first approval, with basically no risk of significant dilution needed to reach the market. Even though they've realized a lot of the value from this news, there's still room to climb further. Companies marketing somewhat similar sphere-based technologies like Sirtex have been offered buyouts ranging on the order of $1.4 billion, so it's not a far cry to see NBTX being valued in the realm of $1 billion. (Author's note: Obviously, the products are very different, since NBTX's nanoparticles do not deliver the radiation themselves)
For me, this places NBTX in the realm of the tentative buy. Lots of negative things could happen since we've only seen pretty early data, but there are strong signals that NBTXR3 is at least doing what the company has established in preclinical studies. Their bigger trials could prove negative, but this is a strongly de-risked developmental biotech as long as Janssen is on board. Just be cautious about putting too much faith in that partnership, as Janssen has been known to be a fickle partner (ask Geron shareholders for a start!).
Overall, I feel the company is at an impressive juncture that you don't want to miss out on. Definitely take a look and consider your risk tolerance here.
For further details see:
Nanobiotix: At A Crucial Juncture For Data