Edison initiates coverage of Chimeric Therapeutics at 93 cents per basic share with launch of scorpion venom CAR-T seen in 2027 or earlier

Edison has initiated coverage of newly-listed Chimeric Therapeutics Ltd (ASX:CHM), valuing the biotech at $307 million or 93 cents per basic share or 87 cents per diluted share, with peak sales of $3.21 billion and a launch of its scorpion venom CAR-T therapy for glioblastoma multiforme (GBM), in 2027 or earlier.  If the data is strong enough, the approval timeline may be accelerated due to the high unmet medical need in GBM.  Edison's assumptions will be adjusted as CLTX-CAR T advances through clinical studies. Potential for use in other tumour types Chimeric in-licensed the CLTX-CAR T programme from the City of Hope National Medical Center in September 2020. Under the terms of the agreement, Chimeric will pay US$10 million in six instalments over 30 months. There are also potential development, regulatory and commercial milestones as well as a single-digit royalty and a 5% equity stake in the company. The initial focus of the new programme will be glioblastoma multiforme (GBM), but it could potentially also be applied to other tumour types, especially those of neuroectodermal origin (primarily brain but also including melanomas and small cell lung cancer). Start of Phase I The Phase I study dosed its first patient in September 2020 and so far, two patients have been dosed. The company expects to enrol about 18 patients with recurrent/progressive glioblastoma. The goal of the study will be to determine a maximum tolerated dose schedule and a recommended dosing plan for the Phase II trial, as well as to get initial evidence of efficacy and assess safety. Development schedule The Phase I trial is scheduled to complete in 2023. However, Edison believes the programme can be accelerated once initial patient responses are seen. “We currently assume approval for CLTX-CAR T in GBM in 2027 though there is potential for acceleration if the data are strong enough. We also expect the company to begin development in additional cancers (such as melanoma, breast and lung), potentially as early as 2021,” Edison said. Competition If the programme yields positive data, the FDA may grant a breakthrough therapy designation (BTD), which would help accelerate programme development. Gilead Sciences Inc’s (NASDAQ:GILDY) (FRA:GIS) escarta (axicabtagene ciloleucel), also a CAR T programme, was approved on the basis of a single-arm, open-label trial in 101 patients. Contingent on study results, Chimeric believes accelerated approval may be possible from a pivotal Phase II study with 50–75 patients - fewer patients than Yescarta mainly due to the level of unmet medical need and relative size of the market compared to Yescarta’s approved indication in large-B-cell lymphomas. Edison noted that while there are a lot of CAR T programmes ongoing for GBM, most are sponsored by academia and not by well-funded corporates that can develop the medicines to approval. Well-funded into 2023 Following its IPO, Chimeric had $36.9 million in net cash and Edison estimates a need to raise an additional $52.5 million through 2026 to fund operations based on the current business plan. Edison estimates with burn rates (operating cash burn of $16.2 million and $11.2 million for financial years 2021 and 2022, respectively, this cash should last the company into financial year 2023. “We project a need to raise an additional $52.5 million through 2026 to fund operations based on the current business plan, modelled as illustrative debt,” Edison analysts Maxim Jacobs and Nathaniel Calloway said in a broker note. Better GBM-targeting CLTX-CAR T uses a 36-amino acid peptide sequence first isolated from scorpion venom chlorotoxin to help target the GBM tumour cells. Chlorotoxin has been shown to bind to a wide variety of GBM cells in preclinical testing, which may make it a better GBM-targeting mechanism than others currently being tried. Unmet medical need GBM accounts for 60% of brain tumours in adults and continues to have a poor prognosis with five-year survival of only 5.1%. Surgery, radiation and temozolomide are the current standards of care but patients typically recur due to the infiltrative nature of the GBM tumours. Experienced management team It said although the company was only recently founded in 2020, the management team is experienced, with the chief operating officer coming from Kite Pharma/Gilead and the chief medical officer from Legend Biotechnology, a US$3.7 billion NASDAQ-listed firm. “They provide Chimeric with a greater level of experience than for many other firms at the same stage,” Edison added.