Canaccord Genuity initiated a buy position in Arcellx (NASDAQ:ACLX), claiming that its multiple myeloma candidate CART-ddBCMA might become best-in-class. The firm’s price target is $32 (up 75% from Tuesday’s close). In early Wednesday afternoon trade, shares are up 9%. Analyst John Newman stated that data on CART-ddBCMA was particularly strong in extremely sick patients with the extramedullary disease, which could set it apart from competitors such as BCMA-targeted CAR-T therapies Carvykti (ciltacabtagene autoleucel) from Legend Biotech (LEGN) and Johnson & Johnson (JNJ) and Abecma (Idecabtagene vicleucel) from 2 seventy bio (BMY).
He noted that, while Arcellx (NASDAQ:ACLX) enrolled a substantially higher number of extramedullary patients in its phase 1 trial than Carvykti’s pivotal trial, overall response and full response rates were comparable in both groups. Arcellx (NASDAQ:ACLX) is anticipated to provide more data on CART-ddBCMA in the fourth quarter, which Newman expects will show durability for up to 18 months. Furthermore, the company intends to begin research on earlier lines of treatment in 2023.
About Multiple Myeloma
According to ACLX (NASDAQ:ACLX), MM is the third most frequent blood malignancy, afflicting 100,000 individuals each year, with a total addressable market of roughly $10 billion for T-cell therapy. It is vital to realize that ACLX’s r/r MM results, while promising, are preliminary, which implies that too much can be assumed. In a press statement, the business stated that a pivotal p2 trial is scheduled to begin by YE 2022 and that if the pivotal trial is successful, the company anticipates filing a BLA (Biologic License Application) in 1H 2025.
A favorable perspective is that CART-ddBCMA will continue to report positive data in both the p1 and pivotal p2 trials and will eventually be approved and marketed. Early findings from CART-ddBCMA appear to be “on par” with the current CAR-T therapy leader, Carvykti from Johnson & Johnson (JNJ) and Legend Biotech (LEGN). CART-ddBCMA has the potential to be both safer and more successful than conventional MM treatments, such as CAR-T or other therapies. If this is the case, CART-ddBCMA will undoubtedly be very competitive in this market, implying a huge potential upside.
LEGN’s primary CAR-T cell therapy, Carvykti, was authorized in March 2022, and the company is currently valued at $7.09B (as of June 7), or 15 times ACLX’s $467M market valuation. Even if it’s merely equivalent because CAR-T therapy availability is a rate-limiting step (more demand than supply), a newly licensed CAR-T should still significantly contribute to MM sufferers. Significant risks to the investment thesis include, but are not limited to, disappointing p1 and p2 data or trial failures, manufacturing delays or issues, CMC (chemistry, Manufacturing, Control) data, regulatory delays or failures, and dilution risks, and so on.
Financials
According to the most recent 10Q (page 18), as of March 31, 2022, ACLX (NASDAQ:ACLX) had $210.9 million in cash, cash equivalents, marketable securities, and a net loss of $32.4 million. According to the corporation, the cash situation is “sufficient to fund operations into the second half of 2023.” According to Newman, another possible benefit for Arcellx (ACLX) is the company’s production process, which “may be simpler, more efficient, and less expensive, thereby lowering manufacturing time” when compared to competitors. Furthermore, Arcellx’s (ACLX) D-Domain fully synthetic binding agent and ARC-SparX platform can generate long-term value.
On June 21, Arcellx, Inc. (NASDAQ: ACLX) announced the pricing of an increased underwritten follow-on offering of 7,000,000 shares of common stock at a public price of $16.00 per share. The initial offering size of 4,000,000 shares of Arcellx common stock was increased to 7,000,000 shares. Before deducting underwriting discounts, commissions, and other offering expenses payable by Arcellx, the gross proceeds from the offering are projected to be $112 million.
Featured Image: Megapixl © Jscreationzs
