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Allogene Therapeutics, Inc. (NASDAQ:NASDAQ:ALLO) is a great speculative biotech play to look into. That’s because it offers the potential to be the first in being able to initiate a pivotal phase 2 study using an allogeneic CAR-T for the treatment of patients with non-Hodgkin’s Lymphoma (NHL). Such a pivotal study is expected to be initiated in the coming weeks.
Why is such a study so important, though? The reason why such a study is so important is because right now the majority of CAR-Ts are offered as autologous therapies (meaning T-cells engineered from the donor patient themselves). This is not a good thing as it gives less access to patients for which CAR-T might be effective. Well, Allogene’s CAR-T, known as ALLO501A, is allogenic. Think of allogeneic CAR-T as taking cells from donors from the same species (not necessarily from the same patient). As such, this provides quicker off-the-shelf access for these patients with various types of cancer.
There are other advantages as well, such as being able to manufacture product more rapidly and lower cost as well. As I will describe below, there are 4 pillars for which Allogene stands on in advancing allogeneic CAR-Ts. Another unique item to note is that this company is advancing its own lymphodepletion agent known as ALLO-647 (given before CAR-T to increase persistence/efficacy of T-cells against tumor).
Being able to initiate the first pivotal phase 2 study using an allogeneic CAR-T isn’t the only thing investors have to look forward to for this company. There are going to be trial results released from several long-term follow-up studies including ALPHA, ALPHA2 and UNIVERSAL as well. All of these results will be released by the end of 2022. With a proven allogeneic CAR-T for the treatment of patients with NHL (specifically B-cell lymphoma), plus several trial updates expected by the end of 2022, these are the reasons why I believe that Allogene Therapeutics is a great speculative biotech play to look into.
First Pivotal Phase 2 Study With Allogeneic CAR-T Expected In Coming Weeks
It has been stated that Allogene expects to be able to initiate the first pivotal phase 2 study in the coming weeks using an allogeneic CAR-T known as ALLO-501A. As I stated in the introduction summary, the main problem now for cancer patients is access with autologous CAR-Ts. If this biotech can successfully develop an allogeneic CAR-T that could be capable of being able to treat these patients with cancers, like B-cell Lymphoma, then it would change the landscape of CAR-T in my eyes. Why is this? Well, that’s because it would expand access for these patients who desperately need new treatment options. Especially, where a caregiver has to decide who deserves to have an autologous CAR-T first over another.
This goes back to what I stated above about Allogene establishing 4 pillars of its ALLOCAR T products. These pillars are as follows:
- Access – Potential to treat most/all patients who need a CAR-T
- Cost – reduced manufacturing cost compared to Autologous CAR-T; Potential to treat more than 100 patients from a single run of development
- Speed/reliability – The platform technology mainly collects healthy donor cells, as such effectiveness should be increased; off-the-shelf for quick access when needed right away
- Innovation – potential to use multigene knockout effectiveness with gene editing (not limited in gene targeting)
I believe all these 4 pillars makes ALLOCART a great technology for Allogene. However, I think the most important pillar would be access. Think of being able to treat a lot more patients than previously one physician could.
ALLO-501A as an allogeneic CAR-T highly focuses on being able to recognize CD19 cell surface proteins. CD19 cell surface proteins are expressed on B-cells, including cancerous B-cells. Other positive developments that Allogene has done to improve its CAR-T technology is to reduce the risk of graft-vs-host disease (GvHD) and allogeneic rejection. How has it made this possible? After collecting the healthy donor cells, it removes the T-cell receptor (TCR) expressed on the surface of it. By removing this TCR, it reduces the risk of the body rejecting the engineered allogeneic CAR-T. Lastly, the biotech is developing its own lymphodepletion agent known as ALLO-647, which is an anti-CD52 monoclonal antibody. This antibody was developed to suppress the immune system (keep immune system from attacking infused CAR-Ts) and to allow them to achieve full therapeutic effect.
ALLO-501A is being developed for the treatment of patients with Non-Hodgkin’s Lymphoma (NHL). Lymphoma is cancer that develops in the lymphatic system, which is the body’s fighting immune system network. The lymphatic system is composed of: Lymph Nodes, spleen, thymus gland and bone marrow area. This type of cancer affects these organs and several others. There are two main types of lymphomas that you are likely aware of, which are:
- Hodgkin’s Lymphoma
- Non-Hodgkin’s Lymphoma
These are the two main ones, although there are some other types. Both of these types are lymphomas that have problems with the B-cells in the body, which are responsible for fighting off infections in a person’s body. The main difference is found under a microscope where each of the cells are shown to be different. This is not the only difference between Hodgkin’s and Non-Hodgkin’s lymphoma. Hodgkin’s Lymphoma is a rare type of lymphoma and only about 8,500 cases diagnosed in 2016. This compares to Non-Hodgkin’s Lymphoma which had 72,500 cases were diagnosed in 2016 and is the seventh most diagnosed type of cancer.
In addition, there is a difference in 5-year survival rates, which are shown directly below:
- Hodgkin’s Lymphoma – More than 86% of patients diagnosed with this type of cancer survive 5 years or more
- Non-Hodgkin’s Lymphoma – More than 70% of patients diagnosed with this type of cancer survive 5 years or more
The main thing is that a majority of biotechs targeting the large non-Hodgkin’s lymphoma market. That’s because the global Non-Hodgkin’s Lymphoma market is expected to reach $12.5 billion by 2027. This is a large market opportunity for Allogene to go after. However, as I stated specifically at the beginning it is first focusing on patients with diffuse Large B-cell Lymphomas (DLBCL). Again, Large B-cell lymphomas being a target indication because their surfaces express CD19. Low and behold, ALLO-501A targets and binds to CD19 expressed the surface of B-cells. Diffuse Large B-cell Lymphoma (DLBCL) is a type of non-Hodgkin lymphoma (NHL). What NHL means is that a patient has cancer of the lymphatic system in the body.
With respect to DLBCL, this occurs when the body produces abnormal B lymphocytes (cells). They are important white blood cells in the body that would typically be responsible for fighting off infections like the cold or flu. What makes this a good target is that it is not only an unmet medical need, but in addition it is a large market. It is expected that the global Diffuse Large B-cell lymphoma market could reach $1.79 billion in 2026. If Allogene gets ALLO-501A through the pivotal study, plus FDA approval, then it will be in good shape to be a good long-term hold.
What makes this program great is that Allogene had already established some proof of concept in using ALLO-501 and ALLO-501A for the treatment of patients with relapsed/refractory Large B Cell Lymphoma. Not only that, but the drug was safe for the most part. There were no dose limiting toxicities (DLTs) which were observed, plus no evidence of Graft-versus-Host-Disease (GvHD) either. There were some low rates of Grade 3 adverse events like cytokine release syndrome (CRS) and Immune Effector Cell-Associated Neurotoxicity Syndrome (ICANS). It was revealed that patients who took ALLO-501A ended up achieving a 44% complete response (CR) rate in Large B-Cell Lymphoma, with the CR ongoing at 9 months. For patients who were CAR-T treatment naive (meaning they didn’t take any type of prior CAR-T), there were no relapses observed for those who achieved a complete response (CR) at 6 months. The bottom line is that for those who did achieve a CR the longest time running now is 15+ months.
There are a few catalysts for investors to look forward to. The first catalyst being if and when the company initiates the dosing of the pivotal phase 2 study using ALLO-501A. This study is expected to start within the next few weeks. There will be updates on results from two other studies expected by the end of 2022. There will be updated results from both the ALPHA and ALPHA2 studies using ALLO-501A for the treatment of patients with NHL. As far as the company’s very own lymphodepleting agent ALLO-647, it is going to be tested in a trial known as EXPAND. This trial is expected to begin in 2022 at some point and will hopefully truly show how strong it is as a lymphodepletion regimen to be given prior to ALLO-501A.
Financials
According to the 10-Q SEC Filing, Allogene Therapeutics had $686 million in cash, cash equivalents and investments as of June 30, 2022. The reason for the cash on hand is the financing activities it has done over the last several years. In June of 2020 it sold about 13,457,447 shares of its common stock at $47 per share. In addition, there was a full exercise of the underwriters’ option to purchase additional shares at the very same price. Total proceeds from this offering was $595.7 million.
Besides this, it had also been using an ATM offering to raise cash as well. Back in November of 2019, it entered into a sales agreement with Cowen and Company, LLC (Cowen) under which it could from time to time issue and sell shares of its common stock through this ATM. The total aggregative offering of which it could use this is up to $250 million. As of June 30, 2022, it is stated that there is still a total of $167.3 million remaining for sale under this AGM agreement with Cowen. Therefore, if it needs to in the short-term, it can tap into this ATM to raise money.
It could also choose to enact an offering like it did back in June of 2020 instead. The point being is that there are a few options to raise cash. Based on its existing cash on hand, the company believes it has enough to fund its operations for at least the next 12 months from the date of the 10-Q SEC Filing, which was filed on August 9, 2022. My guess is that it would likely have to raise cash again by the 1st half of 2023. Where it might raise cash earlier than expected is if it reports positive results from the few study updates expected by the end of 2022. If the stock trades higher by a huge percentage, then I believe it could take advantage and raise cash earlier than expected.
Risks To Business
There are several risks that investors should be aware of before investing in this biotech. The first risk deals with the pivotal phase 2 study expected to start, which is using ALLO-501A for the treatment of patients with NHL. This study is expected to start in the coming weeks, but FDA approval will ultimately depend upon how good the final results are. If the primary endpoint is met in this trial, then Allogene can file for regulatory approval for this CAR-T for NHL. Otherwise, it will have to rely on its other indications in the pipeline that it is developing.
In addition, the FDA has to end up classifying this phase 2 study as a pivotal one, which is expected within the next few weeks. If it doesn’t, then the biotech may have to ultimately run a phase 3 study as well. This remains a huge risk to consider, depending upon what happens. The second risk relates to the development of its very own lymphodepletion agent, which is ALLO-647. A study is expected to begin in 2022 and the hope is that this proves itself in achieving its intended function as being a strong lymphodepletion agent. In the off chance it doesn’t succeed, then the company will have to rely on current standard lymphodepleting agents to make its CAR-Ts work.
The final risk would be with respect to the financial situation. As I stated above, the company believes that it has enough cash to fund its operations 12 months from August of 2022. My estimate is that it will look to raise cash by the beginning of 2023. I don’t believe it will wait till mid-2023 or later to raise additional cash.
Conclusion
The final conclusion is that Allogene Therapeutics is a great speculative biotech play to look into. The reason why I state that is because it is expecting to achieve a first in being able to initiate a pivotal phase 2 study using an allogeneic CAR-T, which again is ALLO-501A.
There were a few reasons I gave above (the 4 pillars) on why it is crucial to get a CAR-T such as this to market. The most important being patient access. That is, the ability to provide a CAR-T too as many cancer patients as possible. I like the fact that it is developing its own lymphodepleting agent known as ALLO-647. I think this can help with CAR-T persistence and making ALLO-501 and other ALLOCAR Ts from Allogene stronger. It has another allogeneic CAR-T known as ALLO-715, which is being developed for the treatment of patients with relapsed/refractory multiple myeloma (r/r MM). ALLO-715, like ALLO-501A, also has been given RMAT designation from the FDA. It is currently in talks with the FDA in hopes of initiating a pivotal study for this program using ALLO-715 for r/r MM. Whether such a study begins or not depends on interactions with the FDA.
In the meantime, investors/traders can look forward to updated results expected from the ongoing phase 1 UNIVERSAL study. This study is using ALLO-715 for the treatment of patients with r/r MM and update from it is expected by the end of 2022. This will include long-term follow up of patients who received a single dose of ALLO-715. There is also potential to improve the CAR T landscape with an ongoing study. This would be an ongoing phase 1 study known as IGNITE, which is using ALLO-605 (TurboCAR candidate) for the treatment of patients with r/r MM. The goal is to see if this enhanced CAR T can do well in improving efficacy, keeping CAR-T cells alive for extended period of time, reduce dosing needed and other improvements. In addition, if ALLO-605 does well with respect to this indication, then it could be worth exploring it against solid tumors.
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