2023-12-24 21:14:00 ET
Summary
- Nuvalent's stock has nearly doubled after positive phase 1 data from its second candidate, NVL-565, targeting ALK-positive NSCLC.
- The preliminary data showed early anti-tumor activity in heavily pre-treated patients, patients with ALK resistance mutations, and patients with CNS metastases.
- Nuvalent has a market cap of $4.4bn and a cash balance of $413mn, with a cash runway of nearly 20 quarters.
In May, I was skeptical about Nuvalent’s ( NUVL ) humongous $2bn+ valuation, and my opinion was that while the company seemed to be doing good medicine, its valuation was not justified by existing data. In May, NUVL had in hand only phase 1 data from lead program NVL-520 in ROS1 positive NSCLC, which, although positive, was early stage. The stock has now nearly doubled, propelled by positive phase 1 data from a second candidate in October.
This early data was from second candidate NVL-565 targeting ALK-positive NSCLC, which has a market size thrice as much as ROS1 positive NSCLC. Like I noted earlier, although there were many approved drugs, including one in 2nd line disease, there were none in 3rd line ALK+ NSCLC. Anyway, this preliminary data from the phase 1 dose-escalation part of its ongoing Phase 1/2 trial, dubbed ALKOVE-1, showed the following:
Key findings include early anti-tumor activity in ALK-positive NSCLC patients, including partial responses (RECIST 1.1) in:
Heavily pre-treated patients: An ORR of 39% (20/51) was observed in response-evaluable patients, and all patients with tumor response continued on treatment without disease progression as of the data cut-off date.
For dose levels of 50 mg or greater, which may provide increased coverage of single and compound mutations in the CNS, an ORR of 44% (18/41) was observed.
In patients who have likely exhausted all available treatment options (?3 prior ALK TKIs including a 2G ALK TKI and lorlatinib), the observed ORR was 40% (10/25) regardless of prior chemotherapy and 42% (8/19) with prior chemotherapy.
Patients with ALK single or compound resistance mutations: An ORR of 54% (15/28) was observed in patients with any ALK resistance mutation, including an ORR of 56% (9/16) in patients with compound ALK mutations, and an ORR of 71% (12/17) in patients with ALK G1202R single or compound mutations.
Patients with CNS metastases: An ORR of 52% (15/29) was observed in patients with any history of CNS metastases. All patients with tumor response who had a history of CNS disease continued on treatment without CNS progression.
Lorlatinib-naïve patients: Of patients who received at least one 2G +/- 1G ALK TKI and had not previously received lorlatinib, 5 of 7 (71%) responded.
Here, we see objective responses across a wide range of NSCLC patients who have been heavily pre-treated and are ALK-positive. Response is seen in varying degrees across multiple subgroups of patients who have previously received a 2nd generation ALK TKI and lorlatinib, have brain metastases, or have single or compound ALK resistance mutations.
That last part is especially important because the development of resistance mutations is a significant challenge in the treatment of ALK-positive cancers. ALK (Anaplastic Lymphoma Kinase) resistance mutations are genetic alterations that can occur in cancer cells, particularly in the context of ALK-positive cancers. ALK is a gene that, when mutated or fused with another gene, can contribute to the development and growth of cancer. ALK rearrangements are commonly found in certain types of cancer, such as non-small cell lung cancer (NSCLC).
Resistance mutations can emerge in response to targeted therapies that specifically target the ALK gene or its protein product. These mutations can reduce or eliminate the effectiveness of these therapies, leading to a recurrence of cancer or a decrease in treatment response. Resistance mutations can be categorized as either single or compound mutations. Selective mutations, arising out of selective pressure from ALK inhibitor treatment, are individual mutations in the ALK gene that confer resistance to ALK inhibitors. Compound mutations involve multiple alterations within the ALK gene or its signaling pathway, can include combinations of point mutations, amplifications, or other genetic changes, and may enable cancer cells to overcome the inhibitory effects of ALK inhibitors more comprehensively. These treatment-emergent ALK mutant cancers are difficult to treat, and here lies the importance of NVL-565’s treatment effect.
The highest response was seen in patients with ALK G1202R single or compound mutations, which has been identified as a resistance mutation to certain ALK inhibitors, particularly second-generation inhibitors like alectinib and brigatinib. While we do not have a breakdown of the responses, like how many complete or partial responses (I believe there were no complete responses in this preliminary data yet, or the company would have mentioned that), even the undifferentiated ORR rate at 71% for this particular mutation is a very strongly positive effect. Doubtless, this was what helped the stock go up so quickly.
Summing up the data, it is worth quoting the presenting investigator Jessica J. Lin, M.D., Assistant Professor of Medicine, Harvard Medical School and Attending Physician, Mass General Cancer Center, in full, who said :
Significant advancements have been made with the development of three generations of ALK TKIs, and the five ALK inhibitors that are currently FDA-approved provide important treatment options for patients with advanced ALK fusion-positive cancers. However, some limitations remain with the available therapies, ranging from association with TRK-related neurologic adverse events that can limit adequate coverage of ALK single resistance mutations to the emergence of refractory compound mutations following sequential treatment with ALK TKIs. These preliminary data support the potential for NVL-655 as an ALK-selective inhibitor that may combine, for the first time, potent and selective targeting of diverse ALK fusions and secondary ALK resistance mutations, including single and compound mutations involving G1202R and I1171N, brain penetrance, and the avoidance of TRK inhibition that can be dose limiting.
In that previous article, I covered the lead program, NVL-520, which targets ROS1-positive NSCLC. There too, we saw strong ORR data in heavily pretreated NSCLC patients with various ROS1 mutations. That data was from October last year, since when the stock has stayed buoyant. This year, preclinical data from NVL-565 took the stock up considerably, but it was left for this phase 1 data of NVL-565, which, although preliminary, was strong enough to boost the stock to a very high valuation.
Financials
NUVL has a market cap of $4.4bn and a cash balance of $413mn. They recently raised $300mn after this positive phase 1 data. So their current cash balance should be in the range of $700mn. Research and development (R&D) expenses were $29.6 million for the third quarter of 2023, while general and administrative (G&A) expenses were $9.2 million. At that rate, they have a cash runway of nearly 20 quarters.
At nearly 90%, the company has a very high institutional and fund ownership. The company was founded and is majorly owned by Deerfield, followed by FMR.
Bottomline
Since this company is managed by a well-known fund, they are not going to stay out of funds or high valuation if they produce good data, as they have been consistently doing. The stock has gone up a lot since my neutral stance last time, and there are catalysts up ahead. However, I am a cautious investor and do not like to invest in such “well-run” companies, because there is no chance such companies, if they have good data, will ever stay undervalued.
For further details see:
Nuvalent: Strong Data, But Properly Valued