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Calithera Biosciences, Inc.

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Msg  2687 of 2688  at  8/7/2019 1:13:57 AM  by

Pacific


Our Take On Calithera Biosciences

https://www.seekingalpha.com/article/4282355-take-calithera-biosciences


Aug. 6, 2019
Summary

•Today, we take a look at a small California-based developmental biotech concern called Calithera Biosciences.

•The company recently reported promising data on its CB-839 candidate in combination with mTor inhibitor everolimus in the treatment of advanced renal cell carcinoma.

•The company has plenty of potential catalysts, including a 2H19 data presentation concerning its CB-1138 candidate – in the treatment of multiple cancers, and some recent insider buying.

Today, we take a look at a 'Busted IPO' from the biotech sector. The company's pipeline continues to slowly advance, and the stock has seen some insider buying in recent months. Like many small biotechs, the stock has been taken out and shot in the past few sessions during the market swoon.




Company Overview:
Calithera Biosciences, Inc. (CALA) is a South San Francisco-based clinical-stage biopharmaceutical concern focused on the treatment of cancer and other diseases by targeting enzymes that control metabolically critical pathways in both tumor and immune cells. To date, the company has developed four enzyme inhibitors, three of which are being evaluated in the treatment of cancer. It was founded in 2010 and went public in October 2014, raising net proceeds of $71.1 million at $10 per share. Calithera has ~79 employees and commands a market cap of ~$190 million.

Pipeline:

As cancer cells grow, they develop nutrient dependencies that are slightly different than those of normal cells. The scientists at Calithera are targeting the specific enzymes that are responsible for the absorption of these nutrients in cancer cells.

Telaglenastat (CB-839). For example, the company's lead candidate, CB-839, targets cancer cell consumption of the nutrient glutamine. Glutamine is also necessary for the proper functioning of healthy immune cells, but the key differentiator lies in the enzymes employed in its uptake. Cancer cells use the enzyme glutaminase-1 to help absorb glutamine; immune cells employ glutaminase-2. Calithera expects CB-839 to inhibit glutaminase-1 to disrupt cancer cell growth.

In a 69-patient Phase 2 trial that readout on June 17, 2019, CB-839 in combination with mTor inhibitor everolimus doubled the median progression free survival (PFS) in heavily pre-treated patients with advance renal cell carcinoma (RCC) versus everolimus alone. Patients with a median of three prior treatments (including tyrosine kinase inhibitors (TKIs) and PD-1/PD-L1 therapies) achieved PFS of 3.8 months on CB-839 and everolimus versus 1.9 months solely on everolimus (p = 0.079; statistical significance <0.2). Data for the secondary endpoint of overall survival (OS) is not yet mature. Grade 3 adverse events that appeared attributable to CB-839 included abdominal pain (6.5%) and thrombocytopenia (6.5%).

In a parallel, potentially registrational trial (CANTATA), CB-839 is being studied in combination with TKI cabozantinib as a second and third line therapy for the treatment of ~400 patients with RCC. The primary endpoint is the PFS of patients taking the combo therapy versus cabozantinib alone while OS is the secondary endpoint. Enrollment is underway, and top-line data are expected in 2H20.

CB-839 has a Fast Track designation from the FDA.

If successful, CB-839 will enter an indication where there is a significant unmet need. RCC has a 5-year survival rate of 12% with ~65,000 new cases reported just in the U.S. last year. The global RCC therapy market is ~$2.7 billion but is expected to grow to $7 billion by 2025. Second line and beyond therapies presently account for 49% of the market.


CB-839 is also being studied in combination with chemotherapy agent capecitabine in the treatment of late line PIK3CA-mutated colorectal carcinoma (CRC) in a Phase 1/2 study. For CRC patients with PIK3CA-mutated cancer (n = 7), median PFS was 26 weeks, and for patients with PIK3CA wild-type cancer (n = 5), the median PFS was 16 weeks (p = 0.058). These outcomes compare favorably to third line CRC standard-of-care therapies, where median PFS is ~8 weeks. The Phase 2 dose expansion portion of the trial is ongoing.

Through a collaboration with Pfizer (PFE), CB-839 is being studied in combination with poly adenosine diphosphate ribose polymerase inhibitor talazoparib on patients with advanced or metastatic solid tumors in a Phase 1/2 study that initiated in March 2019. An additional trial in combination with Pfizer's CDK4/6 inhibitor palbociclib in patients with Kirsten Ras (KRAS) mutated CRC and KRAS mutated non-small cell lung cancer (NSCLC) is expected to initiate shortly.

INCB001158 (CB-1158). Calithera's second most advanced candidate is CB-1158, an oral inhibitor of the enzyme arginase, which is being co-developed with Incyte (NASDAQ:INCY). Arginase depletes arginine, a nutrient critical for the proper functioning of the body's cancer fighting immune cells, such as cytotoxic T-cells and natural killer (NK) cells. In many tumors, arginase-expressing myeloid cells accumulate and maintain an immunosuppressive environment, obstructing the ability of T-cells and NK-cells to kill cancer cells, which limits the effectiveness of checkpoint inhibitors. The highest concentrations of arginase are found on NSCLC cells, but also preponderate in gastric, bladder, and CRC cells.

Patients are being enrolled in two Phase 1/2 solid tumor studies evaluating CB-1158. In the first trial, it is being assessed as a monotherapy and in combination with PD-1 inhibitor pembrolizumab. In the second study, CB-1158 is being evaluated in combination with three chemotherapy regimens. Primary endpoints include safety and objective response rate. In a Phase 1 study, it was well-tolerated and inhibited ~90-95% of plasma arginase with plasma arginine levels increasing several-fold. Incyte and Calithera plan to present additional solid tumor data in 2H19.

CB-280. In addition to its 1158 program with Incyte, Calithera has developed its own non-oncology arginase inhibitor called CB-280. In addition to preventing proper T-cell and NK-cell function, reduced arginine levels are believed to play an important role in exacerbating pulmonary disease in cystic fibrosis (CF) by impairing production of nitric oxide (NO). Lower NO production is directly correlated with worsening lung function. Calithera believes that by inhibiting arginase, arginine and consequently NO levels will rise, resulting in improved lung function in CF patients.


In February, the company initiated a first-in-human Phase 1 study to evaluate the safety, tolerability, and pharmacokinetic profile of oral CB-280 in healthy subjects, which should be completed by YE19.

CB-708. In addition to these three clinical candidates, Calithera has also developed an oral CD-73 inhibitor called CB-708. CD-73 produces adenosine, which is a powerful inhibitor of immune function, expressed on a wide range of tumors and is highly correlated with poor prognosis. CB-708 is expected to enter the clinic in 2H19.

Incyte Collaboration:

As part of its 1158 co-development program with Incyte, Calithera received a $45 million upfront payment as well as an $8 million equity investment in February 2017, followed by a $12 million development milestone a month thereafter. The company is eligible to receive an additional $418 million in milestones, 40% of the profit in the U.S., and low to mid-teens royalties ex-U.S. In return, Incyte has worldwide commercialization rights to any arginase inhibitor for hematology and oncology indications. Development costs are split 70/30 Incyte/Calithera.

Balance Sheet & Analyst Commentary:
On the back of the positive CB-839 combo data in the treatment of RCC, the company executed a secondary offering, raising gross proceeds of $57.5 million at $4 a share on June 18th, 2019. Added to its balance sheet cash and equivalents of $117 million as of March 30th, 2019. This represents more than half its market cap at current trading levels.

The company has a small but positive Street following comprising two buy ratings and one outperform rating. Their median twelve-month price target is $10 per share.

Also enthusiastic about Calithera's prospects is President and CEO Susan Molineaux, who invested ~$200,000 at $3.88 per share on June 25th, 2019, upping her total holdings to over 460,000 shares.

Verdict:
Calithera's stock traded at $20 nearly two years ago but has declined gradually ever since with the most noteworthy event being underwhelming results from a phase 1/2 study evaluating CB-839 in combination with Bristol-Myers Squibb's (BMY) PD-1 inhibitor nivolumab (Opdivo) in patients with advanced melanoma, RCC, or NSCLC back in November 2017. However, with promising outcomes in combination with an mTor inhibitor established and a registrational trial underway in combination with a TKI, CB-839 is back in play. With that said, the Incyte collaboration on CB-1138 could propel this stock substantially forward if the solid tumor data, due to be read out in 2H19, is positive. Throw in the CB-839 combination trials with Pfizer and early-stage candidates CB-280 and CB-708, and it is easy to see why the CEO recently added to her position.

Calithera is years away from commercialization. However, for patient and aggressive investors, Calithera seems to merit 'watch item' status within a well-diversified biotech portfolio at this time as its risk/reward profile seems favorable. As the company advances its pipeline, we may revisit this name again in 2020.

Bret Jensen is the Founder of and authors articles for the Biotech Forum, Busted IPO Forum, and Insiders Forum.



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